Most people who are looking for advice on the internet have no clue about the adviser. That is a disaster. The advise that I can give you if I know you is far, far superior to what I can tell you if I knew you.

Recently one person chased me for advice and reached my house. I did not know him from Adam, but agreed to meet him simply because he was persistent. I was aghast when I looked at his portfolio and looked at him. He was a simpleton with an amazing Rs. 43 crore net worth. However the NW was created by his dad by investing in properties which have dramatically appreciated, and the cash flow for the family is from the rent. I advised him to simplify his portfolio and put it in index funds. I know for sure that he would not have done it, nor will he do it!! I am fine with such people – they love complicated stuff EVEN IF THEY CANNOT understand how it works. This is like an autorickshaw driver suddenly being asked to drive a Merc.

Apart from the fact that he does not understand what he is doing, he was also clear that his parents and elder brother decided everything!

The biggest worry about investing advice is whether the person getting the advice has understood it in letter and spirit. More importantly, will the person know how to implement it. I know one prof in a leading institute who handed over his portfolio to a “wealth manager” (away from a simple IFA) and that wealth manager has destroyed the portfolio. Sure the IFA does not care to talk to him…but I have seen the damage. Not a big portfolio, but significant for the professor.

In equity investing (like parenting) there are no fixed rules which work. What worked in the 1980s in USA may have worked in the 1990s in India. However what worked in US in 2014 may not have worked in India in 2019. Trying to cut paste across generations and countries is easy AND STUPID. It just does not work that way!

We all seek help – mentors, investors, traders, bankers – literally anybody who has done anything in life. However, what I learnt in the 1980s may not work in 2019. It if does not work for me, how will it work for you?

I assumed that MNC management is better than Lala management. So my portfolio was full of mnc – and I have reaped the benefits of high PE and amazing growth of these companies. However, now you see aggressive Indian entrepreneurs like Sun Pharma – and these companies could upset some of the Mnc pharma companies. I have benefited by the PE expansion of Sun, and I am not complaining!

Look at Investment coaching as a cricket coaching. Assuming you are a very rich man and have a choice of whom to choose as a coach for your 17 year old son. Given a choice between Sunil Gavaskar, Srikanth, Sehwag and Virat Kohli – whom would you choose?

Take your pick.

 

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  1. correction
    from “The advise that I can give you if I know you is far, far superior to what I can tell you if I knew you.”
    to “The advise that I can give you if I know you is far, far superior to what I can tell you if I dont knew you.”

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