Frankly
there are no such stocks to offer. Such has been the caption in ads of brokers
who are taking advantage of the bull markets witnessed in last few months. Why
are you in a hurry to deploy cash when you have a lifetime to do it? Why are
you in a hurry to invest when you were doubting all these days? This is a
good time to start buying but not to burn out. What you start today should be a
marriage that lasts a lifetime. Just as you would invest and manage in a
relationship through its highs and lows, so also you need to persevere in
stocks.
One of
the most beautiful messages I heard recently was, the whole world is the sum
total of results of the actions of a few individuals who have realized and
actualized their full potential. We can count the people who have made a
difference around be in business or in social enterprise. Many of us may not be
able to achieve that in this lifetime, this is the harsh reality. But what we
can indeed do is to be aware of that fact and also be aware of those gifted individuals
and partner with them. That's to me what the stock market provides as an
opportunity. It is definitely not a platform to park your limited and time
bound surplus cash with the hope of making a killing in a few months. As Thomas
Phelps puts it, Fortunes are made by buying right and holding on. An
average investor would sell his stock once it appreciates by 30% and then he
looks for another idea. He does so to avoid the regret of losing his potential
gains, should the stock go down. The market requires a lifetime of dedication
and patience.
A stock
is bought for a future value that you can fairly predict today. The future is
may be 10 or 20 years from now, so you actually get it for a small percentage
of its final value at vesting. Honestly this is over simplifying investing, as
there are many variables during this period including emotions, cycles and
business changes that can happen over the long term. Hence it is paramount to
monitor them and make course corrections if required, but broadly that should
remain our main job as investors.
Recently I was meeting an investor retired from a PSU who was
asking me what ideas I was working on. He seemed fairly knowledgeable about the
markets and he was aligned to my philosophy of business like investing. We got
talking and then I asked the seemingly middle class person about his
holding. When he revealed the figure, I was pleasantly shocked and asked him
how he managed to do that, to which he replied ‘I never sold’. Most investors
ask me why they would invest if they can’t sell, or if they can’t book profits.
I go back to the basis of business like investing. If you were running a very
profitable and successful hosiery unit, would you sell it? How does it change
when you hold the stock? Hold to your stocks as long as their earnings are
increasing year after year. Anybody who does not believe in this philosophy is
looking at stock market as a gambling den or purely to keep himself busy.
Investing
is a boring profession. You are better at it if you have other occupations that
can keep you busy.
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