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. 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.

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.

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.

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?

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. And good portfolios are not created by too much of intelligence. You invested (or your father did) in 1975 and he never needed money for his expenses – so the portfolio grew. It had nothing to do with KNOWING that it would grow, or that they knew about compounding, or these shares being was/is sheer luck.

If in a small incident like being “first” in a lunch queue happens by luck, or rather you are willing to accept 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!


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