Most people who pick stocks would like to keep improving. It is tough if you do not know where you are, and where you want to go.

Reading books on behavioral finance is useful. BF is not just about how the world around you behaves. It is also about how YOU behave. Most of us believe we are rational. We are not.

I made one irrational move about 8 months ago. Well I am not sure about the time frame, but I bought the shares of an NBFC (an animal I think I know), run by a professional (my best bfsi investments are run by the owners), and I personally have no respect for this professional. He comes from the same shit pool from where many bankers rise.

My experience and gut told me NOT to buy. However, i succumbed to greed and am now in the red. I would kill myself if I lost money on an NBFC because I keep buying the same stuff which I have bought over many long years. The only new finance company that I have recently bought (and holding) is Equitas. Other than this my nbfc portfolio is about 20 years old. So it is not to say that with time I have got rational. My portfolio shows that I get swayed by greed, and I have irrational moves. And that is just one of the irrational moves in life. Not sure if there have been more.

Not selling commodity companies when the tide is turning against them is another irrational thing that  I have done. I sold a lot of sugar shares at a nice price – but then bought it back too early. Irrational. Well almost idiotic.

What all did I do to reduce my irrationality over the years (don’t ask me why is it not working!!). Actually it is working – I wish it worked better.

• I moved away from Fort/ Dalal street to a small unwanted Mumbai suburb
• I moved away from people who deal in shares on a daily basis
• I do not attend fund manager meets just because I am invited
• I choose podcasts carefully
• I choose fund managers carefully
• I prefer talking to a FM than listen to his ‘market oriented’ talk for the aam junta
• do not address crowds on topics like ‘stock picking skills’ and such stuff
• do not read analyst report till I see the annual report
• I talk to an analyst only after I have made up my mind on the management integrity

What more am I planning to do:

• create a zone at home where the phone/ laptop is not allowed
• create a reading space with strict reading timings
• read online is a difficult thing – the net is a big distraction, but online access is needed

What I am unable to do

• get rid of my short term trading portfolio (a huge but profitable distraction)
• I realize that trading (blind) is a big impediment to long term investing, but hey I am making money and enjoying it!!

more will follow…