Some Investment Musings, Thought of sharing the same:
1. Diversification: Beyond a point, it is unnecessary. What point? Around 25/30 stocks is what ideally you should have. In case you have less, not a stress, but don’t keep accumulating things or companies which you don’t understand. It will lead to mediocre results eventually.
2. Patience: This is one virtue which is easier to give gyaan about, but difficult to follow. Wealth is made in waiting and not in action!!
3. Envy: It’s not greed that moves the world, but it’s envy. Last week, a friend told me about his staggering returns and I cursed myself that I have been an under performer. However, later sanity prevailed and realized that I would have never traded in the “bhangaar” stocks in which he had made tons of money!!
4. Faith: When chips are down, especially when your stock is under performing, or rather has fallen by a large percentage post your recommendation – That’s when it hurts most!! However, that’s when you should have the confidence to keep loading, provided your homework has been done properly.
5. Bet truckloads: Often, people just dip their toes even there is a good opportunity and their understanding of the business is good. I am myself guilty of this multiple times, however, trying to improve.
Simple question to be asked: Can you put 20% of your investible surplus in the company and still sleep well? Obviously, very difficult to execute in practice, but nevertheless, worth trying. Start with 5% at least!!
6. Listen and Execute: Listen to your financial advisor, provided he is absolutely aligned with you. If he himself invests in the stocks which he recommends, then you can be reasonably assured that it’s going to be ok mostly and eventually. Execution is the key of course!!
7. Cut out noise: Almost impossible to follow in a hyper-connected world, and more so when every stock is flying up. Everyone seems to be an expert!! However, it’s important to understand what not to buy and hence removal of noise, in terms of narratives and gargantuan media is extremely important.
Would love to get some more thoughts so that I can keep building on it.