“Subra how do you think the markets will be?”

Has always met with the answer: Volatile.

NO. Not an original answer – J P Morgan said it a few decades ago.

Well not knowing how the market will behave over the next few hours, weeks, months or even years has not stopped people from predicting. The greatest prediction machine has been the television, and of course Cnbc is perceived to be the market leader. At least in India it has been Cnbc TV 18 led by the Pied Piper Mr. Udayan Mukherjee. Well he has some nice things to say, but first the caveats.

  1. Television thrives on viewership: Imagine if I came on TV EVERYDAY and said ‘if you are a long term investor and are not in the markets for a living, put your money in an index fund and go to sleep’ or worse ‘when you get that index fund statement, do not open till about 2 years before the goal’ – WILL YOU WATCH TELEVISION AGAIN?
  2. People love action, media loves people.
  3. Media loves telling people EXACTLY what it likes to listen.
  4. Enough people in the media believe LONG TERM GOOD = SHORT TERM GOOD+S.T.GOOD+….A series.
  5. There are enough managing directors who think a marathon can be run like 42 runs of 1km sprints.

Well the market is made of short term traders, positional traders, indexers, active fund managers, contrarians, value investors, IPO stags, bulls, bears, pigs,….let us not get into who is right and who is wrong. All of us have worn various hats (at least I have) for various parts of our portfolio. I am a long term investor in Colgate (and most value investors would rather die than hold such an expensive stock). I might still take a position for the short term in Colgate and trade without disturbing my long term portfolio. So 2 hats in the same stock. Possible? yes I do it. I know many people who do it.

So we need short term traders as much as we need long term investors. In fact we need all these above mentioned animals. Having been a member of the NSE I can assure you that as a broker I loved, loved, loved my traders. Just like the media does. I love the media, who else would have sent me so many trades my way?

Did I make money trading or investing? well both. In fact I made more money when YOU traded on my stock exchange membership.

Now lets come to the next point…’we are responsible not to misdirect’.

Investment is not a game, hey, it is a profession.

Well I will leave the above 2 things…

He also said that the smart investors look for only two things

Is the business a good business

Valuation at which you are entering

Again Mr. Mukherjee, sorry that again is bunkum for the retail investor looking for fun and action.

Asian Paints, Hdfc, Hdfc bank, HuL, Colgate, Gillette – simple, dull, boring business. Amazing regularity of shareholder rewarding.

Supreme Industries. Heard of it? worse than those above mentioned names. Super wealth creator.

Is this a good business? yes. Meru and Tab Cab good business? yes brilliant. Brought to their knees by one app called Uber. Or Ola.

Is the valuation right? well who is to decide? and when?

I remember a school teacher in Siliguri being given this advice on television: “Before you invest you should do a fundamental analysis of the company – and a Technical view will also help”. Perfectly correct advice, the person saying that was sounding so right.

Tell me one thing, how will a school teacher find the time, tools, and techniques to do it?

Is she not better off investing in the most inexpensive index fund?

Sad we do not have a nice index fund for bonds. I am still searching for the best Dynamic Bond fund. Looks like I will die searching.

here you can see what Udayan said. Somebody said about a Haj trip. I did not.

By the way the TV commentator does not know you, your risk profile, your bank balance….so read on

http://alphaideas.in/2015/12/22/honest-confession-by-udayan-mukherjee/

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  1. mangoMan…I fully agree

    arguably I am the biggest fan of UM….however he is now “confessing” when he has almost retired…he would not have dared to say these about a decade ago when he was just making his career….I wonder anuj (of cnbc) would agree to these…..may be a decade from now,…but not today 🙁

    subra ..how do you manage first in first out while investing and trading with the same stock??? you may be actually selling your investments rather than ur trading positions…where am I wrong??

  2. I gaveup. For the last 3 years all my debt investments are in ST or UST funds. Frankly dynamic bond funds are not performing better than these funds most of the time and when they do it will be for brief duration and so you have to time your exits and entries. Not worth the energy and time and not much information to educate yourself.

  3. Above comment was in response to subra trying to find a good dynamic bond fund. Some how that point missed from the response

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