You have just met a promoter who is a brilliant communicator. He has an impressive office (whatever it means to you). He has a good looking team (what else did you understand any way), he tells you he will make cash soon. He has 2 of the most famous people you know on his board/advisory committee. He tells you cash will come in 2021. For sure.

So you invest in his company. Great Rs. 20L cheque given. Hopefully in 2029, it will come back as Rs. 20 crore, if not more. Great 100 bagger in 10 years.

You are a Namo supporter. He won in 2014, you invested in equity markets. Great, you put Rs. 20L hoping to get Rs. 15cr in 2024. He won again in 2019, so you put another Rs. 50L (hey if you like a promoter you should put in more money no?) hoping to get Rs. 50 crore (he was more impressive this time no?) in 2030.

What is the problem in both these cases? Optimism. Positive Energy. Positive thoughts.

Why did you invest? because there was euphoria all around. I am sure one day AFTER India wins a match more people buy and less people sell. Actually it could be a bad day to invest – even for the long run. On a pessimisstic day you will get a better price.

If you are a pure and simple investor who does not meet promoters, you have no clue how lucky you are.

So you are looking to invest..and when I decide to look at investment, I look to the chance that the company will be around for the next 20 years. I would be in an Index fund at that age, so I would have to cash out and put it in an annuity or in an index fund. So a 20 year time frame. So will Colgate, PnG, HuL, be around? I guess it is a simple guess, so that ITSELF makes it safe. You are not likely to lose your money to some scam, scandal, or because you took your eyes off the results for a few quarters. So this is your safe portfolio – however knowing when to buy these shares is tough, so buy say 20 HuL a month over 5 years. You can’t go too wrong. However this is not a class on portfolio construction – so learn portfolio construction before you start something exploratory. Remember ‘safe’ portfolios may not give you great returns, but the chances are they will protect you against inflation for sure. Especially if you consider the returns post EXPENSES and post tax.

What about companies like Facebook, Google, Amazon…will they be around in 2039? Chances are they will, but they could be doing something very different from what they are doing now. If you invest, you will need to be very alert. Like Mindtree – I was a very happy original shareholder, now I don’t like the current management, but I have not decided what to do with the share. In this group alertness is very important. If you are not going to be alert, and paying attention, this group is not for you. Do your MF – maybe indexing.

Companies with a lot of cash are unlikely to go bankrupt. Do not let your imagination fly nor your imagination to scare you. I made a lot of money in Bharti Airtel – obviously long ago, but now investing in Airtel or Idea or Vodafone is a higher risk. All of them are gasping for cash. Jio pricing is suffocating them..and we are all waiting to see who blinks first. This category means knowing the market, knowing telecom, being alert, and taking a call eitherways – if there is a 10% upmove or a 20% down move you may have to exit the position fully. Tough, therefore look for companies with lotsa cash EVEN IF THERE IS A SLOWDOWN in their product sales. One day Maruti cars will sell and Indigo will get pricing power. Takes a lot of guts, alertness, involvement…..choose these qualities or Indexing.

…more to come…soon I hope…