I am humming this song from the Hindi movie “The Guide”…as I write. For all stock market and financial investors, happy days seem to be here again. Almost everything is rising. Even a bankrupt company like Kingfisher. I sometimes wonder when I see a 15 paise rise in stock price of KFA, who is buying?
Mr Modi’s dream run seems to be straight out of Demosthenes saying, “WHAT A MAN WISHES THAT ALSO HE WILL BELIEVE”. But stock market investors may suffer if they believe what they wish. I know of friends who bought Suzlon at very high prices, they still believe that it will see its old price. I pray for them. They might have been better off selling it and buying something better. Actually, a sell decision at a loss in stock markets = Admitting I am stupid/failure. How many men are man enough to admit it? And that is the reason we keep our losers and sell our winners.
In 2006, I bought some Asian Paints and I also bought some IVRCL Infrastructure. By 2009 Asian paints had doubled and IVRCL had halved. I was not so wise till then. I sold of 50% of my holdings of Asian Paints. But did not sell IVRCL, because that would mean my analysis was wrong and basically I was a chu@#$a. So I held on to it.
By 2011, I had unlearned my stock market behaviour and learning completely, and that is the time I sold off all my mistakes in one go, IVRCL included. I rejigged my portfolio as per the teachings of mahagurus— Charlie Munger, Buffett, Haagstorm, Kahneman, Taleb, etc, etc etc. And bought some quality stocks with moats.
It was a difficult decision, but that is what stock investing is about. It looks simple but is very difficult, emotionally. We never take rational decisions but emotional decisions.
Very few of us buy stocks about which we never hear or never see ads. Whereas, we get swayed by vivid imagery of happy families in Unitech and DLF and buy their stocks. We buy King Fisher and Jet Airways because of pretty airhostesses and not their revenues. We marry also in the same way, and then some of us regret… all biased decision making governed by emotions.
At present, give a little air to rational behaviour. Continue your SIPs. Invest small sums in value which may still be there, but by and large most good quality businesses have seen a run up in their values. Noida Toll Bridge my favourite for last three years, has suddenly been re-rated by the mob. The whole business was available at Rs360 crores in 2011. Suddenly, in 2014 the business is valued at Rs540 Crores. The operating profit and revenues have not changed much. What has then changed? Our emotions. Ever since Narendra Bhai Modi has done his “krupa” on all stock market investors. Like Nirmal Baba, Narendra Modi ki krupa hai BSE par…
And that leads me to aaj phir………
Well said sir, I would just like to add a few thoughts
1. It is easier said than done when it comes to governing the country with various and different problems as also our ‘work shirking’ and ‘Mere rule follow karne se kya farak padega’ and ‘ Sab chalta hai’ attitude. Mr Modi doesn’t have a magic wand which will make all ills of our country go away in a jiffy.
2. Retail investors will do well in such scenario of omnipresent hope and greed to stay away from equities as most of them have already been a run up in their prices. Definately, discipline of SIP is to be continued and if someone is planning to buy a few good sound businesses with moats, he may still invest. But generally, markets and equities are overvalued and finding value in such scenarios is going to be difficult.
3. I personally will continue to put 50% of allocation in PPFAS LTVF via SIP and balance 50% will NOT be invested in th emarket in present scenario and will be accumulated for that BLACK DAY of the market when Markets crash.
4. On a pers note, sir, I have packed my bags for Wellington and will be effective wef 04 Jun there. Intend to continue to interact with u more frequently once I am in better connectivity. Also, am eagerly waiting for the Asset Allocation plan so that I can learn a thing or two from them.
Anshul Gaur
Mea Culpa Anshul.
And Congrats for DSSC. Well Done. Will write your plan soon. Sorry.
1. Thank you sir, its all a result of my wife’s sacrifices and my parent’s ‘aashirwad’. I must admit that I have learned a lot through the preparation process, it has taught me the importance of Self Discipline, something which is central to success in any and every form.
2. Please sir, its your humility for you to have said sorry. Another lesson learned in humility for me. I am indebted to you. Your teachings to me go beyond the ambit of pers finance.
3. I intend to study and learn more in future so that I can debate and learn more with you.
Thank You sir…
Anshul