Look it is not very difficult to invest directly in equities..provided you have TIME and ALL of these skills:
- Ability to read balance sheets – not just the ratios etc….but the WHOLE boring, balance sheet including the NOTES on accounts, auditors report, MDA, and of course the cash flow, etc. If you cannot or will not do this, please do not bother about direct equities.
- Access to research reports from sensible sources – for most professionals it is Bloomberg, as an individual investor you need to find your own resources.
- Lots of meditating ability and keeping away from herd mentality. Look at the latest Cyrus Mistry incident. Tata Steel was supposed to be a sitting duck for going short -but it did not happen. If you had gone short on Tata steel at 406, you would have been thrilled that it came down to 392,,,but in one day it was back to 406. Staying calm would have been better..
- Reading the classics – Security Analysis, Fisher…http://www.subramoney.com/2011/06/investing-books-the-must-read-types/
- Creating or Joining Equity investment clubs – where equity addicts can meet and talk equities..like a man possessed…
- Understanding a few industries and their jargon: Largely all businesses are about buying/making at a particular price and selling it at a profit. Knowing what strategy will work, how long, why, what is the edge..those are the questions to answer..
- Understanding how media works – even better is to keep away from noise caused by the media
- Understanding your own biases – recency, confirmatory, mental accounting, …and reading enough to make sure that when you catch yourself making that mistake you hit the STOP button.
- Creating an investment philosophy statement, and knowing how to implement it.
- Maintaining an Investment diary, updating it, reading it again and again and learning from it
- Understanding the Investment ecosystem – taxation, capital gains,…etc…
hey this is just the beginning…knowing this is a necessary condition, not sufficient!!
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