Let us say you have reached a stage in life that you can afford to retire. I mean physically and financially. Should you retire?

I do not have an answer..but an investor with nothing to do is a dangerous animal. He is likely to be tempted to trade. Or sell of some share ‘hoping’ to buy it back – the IDLE MIND IS REALLY THE DEVIL’S WORKSHOP.

So lets take the case of a 60 year old investor with about Rs. 10 crores in equities. He has a dividend income of about Rs. 20 lakhs and annual expenses of Rs. 5 lakhs for his household, vacations, gifts, attending marriages…all inclusive.

He has nothing to do. What happens? he gets bored.

Now his RM from the bank, RM from the brokerage house, etc. know that here is a guy a little slow in understanding, sitting with tons of money and children busy with their own lives. Fixating on a dull market can leave you restlessly craving excitement that just isn’t there. Well, it is not supposed to be there. He is now an amazing sitting duck for selling – any of the following – leveraged funds, gold funds, gold mining funds, inverse funds, ETF, Chinese Real estate funds, venture funds, private equity fund, pms, BTST strategies (for people like me – buy today, sell tomorrow is BTST), And they do attack. What happens next?  Your guess is as good as mine. First of all these are not investments at all. They are speculations dependent on guessing which direction prices will twitch next or finding a buyer with an itchier trigger finger than your own. The greater fool theory has been taken over by the greater itch theory.

Why cannot this client be held back? Simply because the bank rep is too attractive for him to say no. He does not want to tell his RM that she can add NO VALUE AT ALL to his investing life. If you are trying to find something interesting in investing, you are obviously in the wrong place. Go to the races, or go to the gambling houses for excitement…looking at the screen or at your portfolio for looking at something exciting while investing is absolutely foolish. In fact if you do find something interesting and exciting – you must have spotted a mistake. Your food, your exercise regime and your investing have to a great extent get boring and routine.

Read this para from a classic “All of this is true for professional as well as individual investors. In his classic book Where are the Customer’s Yachts?’ published in 1940, Fred Schwed wrote: “Your average Wall Streeter, faced with nothing profitable to do, does nothing for only a brief time. Then, suddenly and hysterically, he does something which turns out to be extremely unprofitable. He is not a lazy man.”

So whether you work for yourself or work as a fund manager it is important that you do not take any action just for action sake. Like a goal keeper handling a penalty kick. He should be looking at the foot of the person kicking – not at his eyes..and the goal-keeper may actually have to do NOTHING – but normally he jumps to the right or left..and the ball passes without any problem.

 

 

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  1. Last para is exceptional-

    So whether you work for yourself or work as a fund manager it is important that you do not take any action just for action sake. Like a goal keeper handling a penalty kick. He should be looking at the foot of the person kicking – not at his eyes..and the goal-keeper may actually have to do NOTHING – but normally he jumps to the right or left..and the ball passes without any problem.

  2. I had a three month break before joining a new job and used to look at screen daily and impulsively trade on most days. Accumulated losses doing that. The next three years I was so busy with work that I may have placed three trades in three years, that too buy when markets corrected significantly. To my surprise portfolio had doubled in those three years. Interesting fact being, there were shares which dropped to nearly 30% from buy price that later recovered and almost doubled the money. As I was not checking my portfolio daily, I could ignore these vicious gyrations. Had I been glued to the screen I would have booked losses, missed the up move and raked up trading costs.

  3. There’s always plenty to do which could help others. Starting a company (high risk venture but the high risk is not a problem for the financially free person) can change the society and generate employment and can keep you really occupied also. Besides like Buffett says, you’re a better investor if you’re a businessman.
    If not there’s plenty of volunteering opportunities also. Pick something simple make it a regular part of your life. My mom does charity work in a hospital twice a week. Works wonders, makes you feel great to be contributing to the society

  4. Anything we do repeatedly for a week or two becomes a habit. I could not stop myself watching the market opening and market closing every day. It took a while to stop the habit.

    On MMB platform, see a lot of people dabbling in F&O. Brokerage firms got innovative and luring people with lowest charges. Recently saw an article that buying & selling of F&O 10 scrips intraday will make easy money for anyone and am sure thousands if not millions would have switched to this brokerage player.

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