This is a result of being in the 4th decade of my investing life. Not all the lessons were personally learnt – some where learnt from the reading, teaching, talking, dreaming, writing, commenting about investing. So if you see some points from other authors, writers, commentators do not feel outraged. We both may have copied from the same place. One thing I can assure you – you will not find it in one place or in one sequence – because the LEARNING is mine…
Here we are:
1. The market will do a major pull back at LEAST once in a decade. That will be dramatic – 1993’s -40%, 2008,….that is a great time to be buying, not panicking. If you have entered the market in 2009 you have been lulled into believing that the markets cannot go down and there is no stomach churning 40% fall in the waiting. It is. 2019? 2022? 2024? we do not know, that is all.
2. You can keep saying ‘I will be greedy when others are fearful’ but also remember that the market can be ‘Irrational for much longer than you are solvent’. All games have to be played between these 2 sayings. Chances are when others are greedy we are likely to be more greedy and NOT fearful. Warren Buffett says brilliant things, can we live it?
3. I know all about bias. Seriously, however, I am also a victim of bias. This takes us to philosophy…..What is Maya? Maya is the ability to make sure that all the philosophy that you know does not work FOR YOU when it is for YOURSELF. Be ready for that.
4. There is virtually no accountability for pundits who come on media. Media includes blogs. Pundits include yours truly. If you benefit from my blog, more power to you. If you lose, more power to your broker. We can be wrong for long periods of time.
5. There is a huge, huge gap between a good company and a good investment – many people have said that, and you may have experienced that too.
6. Institutions take more time to recognize a slipping elephant. Currently there is a terribly over-rated company in the sensex. However despite the corruption in that company it has some brilliant assets which will dramatically improve its cash position – so it can hide longer!!
7. During uncertain times media experts are absolutely sure about the political, fiscal and monetary IMMEDIATE future. You can be sure they KNOW NOTHING about it. What you do with your money is more important than what the Rocket Man does with his rockets.b
8. Legendary investors are simple investors who understood compounding EARLY ON. Big talk does not mean big money, and big money may just mean a big n and not a great r. So if you understood compounding at age 37 vs your friend whose grandfather understood compounding at his age of 22, he is likely to be far richer. Just a womb lottery.
9. If you UNDERSTAND risk, you are Warren Buffet. Making an attempt to understand risk and keeping it out is far, far, far important than spotting the next Wipro or Microsoft. You do not need to.
10. To make money in the market, you need not understand its short term moves. Just like how to enjoy a good omlette you need not learn to lay an egg.
Go have fun…more will follow…hopefully soon…..
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