What are your visions of being an entrepreneur or an investor?

When I mean investor, I mean investing your own money, time, labor, sweat and tears. Not taking money from friends, relatives, banks, clients and running a sinking ship. I mean entrepreneur in the real old sense.

If you think of a big office, great people, lots of high class travel, staying in good hotels, etc. – you are wrong. Employees and consultants are more likely to get all this. I cannot imagine a small to medium entrepreneur being able to get all this. Just does not happen.

Actually for being an entrepreneur or an investor, having a high threshold for pain is important in a field where there is no upside without downside, no reward without risk – and worse no guarantees EVEN if you take risk!  If your family – parents, sibling and spouse are NOT used to see you sitting for long periods of time not having any energy to do anything, you are in more trouble. You are likely to get advice like “why can’t you get at least a bank job” or such stuff.

Every great (good, ordinary, …) investor has experienced periods of severe pain. This may not be known to ordinary market observers because the media has no time to write about the real events of life. They tend to glorify successful investors by focusing only on the end result! Have they ever written about Mohd. Kaif, Vinod Kambli, or that ilk? They pick an eye-catchingly high rate of return over a long period of time, and write stories on ‘how investing Rs. 10,000 in Wipro is now worth Rs. 900 crores’ – making it look like a straight line up. They forget that it was a jagged path with troughs, valleys, and worse flat straight lines.

How did Sachin achieve that success? How did Yuvraj Singh fight cancer, bias, bad form and survive such long battles? What made him come back? AMAZING threshold for pain. Ditto for investing.

Imagine being a long term investor, how did you draw down from 1999 to 2002? How did you stick through 2008?

For any long-term investor, under performance for long periods of time is a given. The years 2003-7 was so painful for people like my dad whose FMCG/PHARMA portions of the portfolio did nothing, when the market went up 7 times. Sure Siemens, Tata Power, Cummins, Hdfc, Kotak, Chola did well – and I did some profit booking too, but the fmcg sleeping was tough.

Imagine how good Warren Buffett was at keeping the noise out of his investment thinking. In the internet boom of 1998-2000, WB had NO MONEY in tech stocks. Imagine him being interviewed at the height of the tech boom. The questions would have been:

  1. WB you have no investment in tech…did you see the success of Cisco, Microsoft….blah blah
  2. Do you not owe an explanation to your investors?
  3. If one of your clients had sold B H in 1998 and invested in Xyz technologies his $100 would have become 200 by now but it is less than 53 in B.H.
  4. Mr. Buffett are you past the retirement age…is BH as an investment vehicle seen its best already..

“Value is Dead” “Buffett is Broken” “Has the world’s most famous investor lost his Midas touch?”

these 3 are real life headlines in top US media, no names!

Lucky Mr. Buffett. Idiotic us, we do not ask the really right questions.

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  1. So, so true!! In my case, I chucked my MNC software job (all the 5 star hotels and business class travel) to start on my own. Then, the dot com bust and 9/11 happened. Almost as if fate conspired against me. During these down times, you suddenly seem to have a lot of time to introspect and constantly question whether you did do the right thing. You do not feel like meeting curious ex-colleagues, college reunions etc etc. Now, the pain has passed and I feel good that I did what I did but the journey was hard.

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