My broker called and said “Subra xyz looks like a good buy, what do you think”.

I said I know the promoter, and I personally know the person running it also, I do think it is a good buy.

My broker was surprised because he thought that the share was over priced and knew that I did not think too high about that group.

So one FUNDAMENTAL LESSON:

Yes the promoter is not great and the MD is not really a paragon of virtue, but if you know that this combination will work on the PE and the EPS should you get ‘fundamental’ or ‘philosophical’ or ‘moralistic’?

I was clearly that I would buy say 5000 shares of xyz and keep selling 200 at ever rise and keep say 1000 in my portfolio.

Clearly one should not worry too much about morals and ethics while investing. Nestle is spreading illness in Brazil, Monsanto is killing farmers in India, Itc spreads cancer – and all of them make money for the shareholders. We of course have good companies in the world which use plastic, burn fuel, …..MAKES NO SENSE, DO NOT BE MORALISTIC.

Some shares look currently out of favor whereas some are finished. So I have no clue about what to do with Bharti Airtel but if I had Reliance Communication (Adag) I would have sold it long ago – simply because I did not see any cash cow in the portfolio.

LESSON TWO: Some are broken (Adag), some look like they were broken. How do you decide, and when do you decide to keep or sell off at a loss? I do not know I rarely looked at bad shares for too long.

So if a Colgate or a Siemens is currently not doing well, I am happy to give 3 quarters to start worrying…

Most companies adapt to new technology. Remember Tata Engineering and Locomotives? It was an Engine manufacturer and a Locomotive manufacturer, then started making Medium sized trucks, then heavy trucks, then cars, and now gets most of its revenues from luxury cars! Name changed to Tata Motors.

Sadly investors KNOW this, but act ONLY to what suits them or what is aligned to their belief. For example i am still sticking around with Tata power – hoping in its ability to go to the appropriate fuel and appropriate technology.

Investing is somewhat akin to Exercising too. Exercising involves short term pain. It involves getting up in the morning and hitting your gym at 6am, and after you finish there is pain. You do stretching. Then life goes on…

Investing is SURELY data driven. However, at the end of the day you need to develop a gut ability to take a decision. Numericals hopefullly, will reduct your mistakes.

 

 

 

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