Ego and pride are not really useful elements while investing. Many investors I know have made money because of luck or research done by some other person. Yes, yes, of course including lucky me. I got lucky that myf parents choose to stay in a Gujju locality of Ghatkopar instead of Tam Brahm locality of Matunga. I did not choose my parents (well philosophically the soul choose thelu body!)….nor did i choose where to grow up. Lucky. Bloody lucky.
However when they apply their minds a little on the shares that they buy, they think they are doing research! My research for example, is completely outsourced to a friend who has been in this business for a very long time. My research is restricted to arm chair research and then talking to people in the business – from 25 year old to 74 year old board members. Awesome research abilities I have, do I not?
And many others have made money because about say 30 years back (or say 50 years back) it was not very fashionable to “trade” equity. So when an electrode supplier liked the way L&T, Tata steel, Tata Motors or Hindalco were run, he was impressed, he bought the share and today is sitting on a few million rupees. Of course, we do not give enough credit for sitting tight for real long time.
However some so called smart people have not chosen the shares to keep! They have got rid of Colgate, Hero Honda, Hindustan Unilever, State Bank of India, and invested in ‘B’ or even ‘E’ grade companies! The lure of the multi bagger is really huge. For me, the probability of an event happening is far more important – expected PV of the action is more important. I am convinced (like Buffett?) that you just need a few nice working ideas – and not one BRILLIANT idea a week. Amazing how an idea like Coromandel International, Eid Parry have worked for me (dammit, they are commodities). I bought Eicher Motors and sold it because the LCV did not do well. I loved the quality of the people they had. Enfield under a very good management could not encash on the Bullet brand. Eicher did. I obviously did not participate in the growth.
It is not uncommon for intelligent, competent people who have been successful in business or an academic environment to try their hands at trading on the markets. If I have been better than my peers in academics, I should be better than them in investing is it not? Again a myth. I was never good academically – even in our extended family I would not rank in the top. Thank God for that!!
In essence, because they have managed to outpace the competition in the business or university sector, they think they can do the same with investments. However, while this logic may be appealing, it does not always pay off and many of these individuals lose money for a variety of reasons. A good sportsman need not be a good businessman. A good businessman need not be a good investor. Earning well, does not mean you can invest well or manage well.
If in a small incident like being “first” in a lunch queue happens by luck, or rather you are willing that it happened by luck, why will people not admit that they got a good share by luck? I do not know maybe a doctor can answer this question!
Speaking of doctors, they make excellent investors – ask the bank RMs who deal with them .
Speaking to doctors? ask me. I do that every week.
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