It is not being an investor for long periods of time and not get bored. Think of investing like running a marathon. Somewhere in the 19th km you are wondering why you did not sign up for 21km. Not just that your body is tired, it is that your mind is bored. Then think of those runners who sign up for Comrades – it is 89km! How much more ‘mind’ training is necessary than a full marathon. That too with tight cut off. You have to finish in `12 hours, or you do not get a certificate.
Let’s see what you can do:
- Read a lot: there is a lot of literature on investments, do read them. Most of the celebrated books are about the American markets. Simply because they are marketed better. Do remember American literature is not the only one on investing, but yes that is what you will get a lot.
- Do remember that Buffett or Soros or…..may have an amazing PR team which says something different from what they do. So do not give it too much importance, just learn some of the things, but for heaven’s sake, do not copy. It does not work. Anyway to invest like Buffett or Ambani, you should be like them.
- Review EVERY share that you hold on a regular basis, and get a different view than the one you hold. I actually thought MRF was over-priced at 39000 and sold. Company’s results were bad (as expected) but the PE expanded (no clue why) and the share price went to 68000 Rs. In such cases, your expectation on results was right (rejoice) but the share price actually went up (oops). However, I need to celebrate the 15 years of holding, do I not?
- Get contrarian views on everything. Why did people vote Trump? Look at the upside of H1B visa issue. See the impact on the Mexican economy. Will Trump be impeached? People who think differently are just as important – remember the intelligensia of India did not want NaMO and the intelligensia of US did not want Trump!
- Good investors can have amazing trading spells! Do not be tied into a particular ‘trap’. Many people think of me as a ‘value’ investor. I am one. However, that does not mean I cannot trade, day trade, do short term investing,…do not be stuck by a label. Labels do not matter. Break it.
- Good investors can go through a bad phase – different from the markets. For every MRF that I sold, there are Gillettes and Colgates and Cummins that I have not sold for upwards of 30 years. Sorry, more like 40 years. However, I have had bad spells when I have made mistakes. I am not afraid of mistakes (I make too many of them anyway), I am afraid of mistakes which I have no way of explaining why it happened.
- If your goals are met, it means you got the Asset allocation right. If you get up at 2am and wonder whether you have too much in shares, you have a bad asset allocation. What experts say should not matter.
- Get up and switch channels – Animal Plant is an awesome choice.
- Identifying growth stocks is very very difficult: Exactly for the reasons for which Hdfc bank was a good investments, I cannot blindly hold on to Hdfc life insurance for 30 years. I may not even buy Hdfc Life shares when they do list. I do think the life insurance industry does not deserve its PE. It makes a product against which there is a huge cry…right? WRONG. In the growth phase it could still make money for its shareholders.
- Read a lot about bias, and catch yourself falling into such traps. Do not let ‘obvious’ and ‘logical’ things fool you into believing that you could have seen them coming!
- It is easier to see a good well grown company doing well over long periods of time. A Case in point for me is Coromandel International. Supreme. Gillette. Siemens, Cummins – dull boring companies without the glamor of Hdfc bank. However all have made more money than Hdfc bank at various points in time.
- Say you have a portfolio worth Rs. 10 lakhs (or Rs. 20 crores) – assume that all you have is cash, and re build a portfolio. Save it in a website. Keep evaluating the ‘new’ portfolio. Now pick winners and losers. A very good exercise to be done every 6 months.
- Keeping noise out of your portfolio is an art. All the best.
13! not a bad start…….
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