This is Vikaas here, investment advisor and founder of www.jaagrav.com.
Today I am going to talk about one of the important lessons from Sherlock Holmes – Skin in the Game.
It was all-important. When a woman thinks that her house is one fire, her instinct is at once to rush to the thing which she values most. It is perfectly overpowering impulse, and I have more than once taken advantage of it. A married woman grabs at her baby; an unmarried one reaches for her jewel-box.
The above understanding of human behaviour by Sherlock Holmes is hugely important. After all human behaviour gets determined and shaped by incentives. Incentives, both consciously and unconsciously, play a huge role in determining the action of individuals and investors. This is where Nicholas Taleb in his seminal book, “Skin in the Game” brings about a very interesting point: Don’t tell me what you “think,” just tell me what’s in your portfolio.
The recent upswing in the market has brought about so many stock-market experts at the helm, wherein most of them have started to rattle about the next 5 – 10 hottest Pharma and Tech companies or Tech and/or Pharma sectoral funds to be invested in, which will become multi-baggers!! Some of these companies were not even heard of or were looked at in disdain just a couple of months back.
Often, it sounds amusing that most of them do not own a single stock which they preach. Reminds me of Madonna’s song, Papa, don’t preach!!
My two cents:
- Invest gradually. Gradual is the key word here. After all, no one can time the market.
- Don’t invest in sector-specific funds/stocks right now!! Usually ends up getting messy after a couple of quarters – almost a given!! Infra, Realty & Telecom during 2003 – 07 and IT Stocks during 1999 were the darlings till the gong struck 12 and the party crashed. However, if you believe you have the skills to ride the wave and know exactly when to flip over, surely go for it – at least your P&L will look great momentarily!!
Please note that these are my personal views. Request you to conduct your own independent research or consult your financial advisor before investing.
Hope you enjoyed listening to this!!
For more interesting topics, you may check out my website, www.jaagrav.com. If you want to reach out to me, you may email me at vikas@jaagrav.com
Thanks!