I remember at a Icici Pru Amc sponsored training program…Naren said “If you are like Subra and me…you have been in equities long enough to know that volatility is part of the market and you have to know how to use it…so if you were investing when everybody else was panicking..that itself was enough to give you a good return” – or something to this effect. It was in Lonavala…and I think it was about 6-8 years ago.
Seriously if you have been an investor long enough, and stayed the course you should have a good portfolio. One second, is this true? NO. NOT AT ALL. It depends on whether you are a serious investor or a guy who keeps buying something new and sundry and has a long dhobi list without any great sense. No not a portfolio. A dhobi list.
Franklin India Blue Chip because Subra said so in 2009, Hdfc top 200 because Prashant Jain said so. Quantum funds because Pattu said so. A DSP small cap fund because it was the best performer in its category. Hdfc Prudence because it is a big balanced fund, and Hdfc Balanced because it is better than Hdfc Prudence. So you have a great logic for your dhobi list but no strategy.
Based on my reading of Bernstein and personal observation I would classify the people I have met into the following categories:
1. Afraid of equities: all money in government bonds, post office, bank fixed deposits,…I wonder why we should be talking about her.
2. A dhobi list: this category earns well, thinks they control their investment but have no clue on what they have. One ING PMS scheme, 14 mutual fund schemes, 2 Icici Pms schemes – one real estate and one private equity (both sold to him by Citibank), 3 ULIPs, a motley bunch of equity shares, a couple of RE. Earns well, but has no clue about what is happening to his money. Or his real estate. Has no clue. Really nothing can be done. This person has a net worth of Rs. 10 crores and a POST TAX salary of Rs. 2 crores and annual expenses of about Rs. 10Lakhs. He needs a complete make over. Many others in this genre and not having such a huge income are doomed is their money does not work for them.
3. Those who have a written down plan and a portfolio: this set of people articulate well, can build a slightly more coherent portfolio, can argue for hours on whether a Nifty Index fund will work better than a Sensex fund….but sometimes they are lost busy discussing. Sometimes in their quest for timing the market they could be sitting on the sidelines for too long. The equity market can test ones patience and justify its name of being “The Great Humiliator” as Ken Fisher calls it. They are like algorithms – mostly useless but sometimes useful!!
4. Those who specialize in their lives and leave the wealth creation to a friend who is a professional. I know many people in this category who will sit for an hour every quarter – or even skip a quarter or 2 – and will go on EARNING well. These people will have a good hand on the pulse – but not bother about the speed of the journey. They know that as long as they have a handle on the direction and average speed they will reach their destination in the stipulated time frame.
5. Wondering in which category do they fall!!
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