Hi,
This is Vikaas here, Investment Advisor and Founder of www.jaagrav.com. Today I am going to talk about some Investment musings, which has served me well in my investment journey over the years.
While talking to my investor friend, Abhijit and trying to answer his questions, I thought of sharing my thoughts to organize them a little better. Hopefully, I pass Victor Hugo’s test: “A man is not idle because he is absorbed in thought. There is visible labor and there is invisible labor.” Hope you enjoy listening to this:
One of the first thoughts which came to mind was:
# While everyone wants to go to heaven, no one wants to die. So, everyone proclaims to be a long-term investor, however each of them knows their YTD returns to the last decimal point.
However, while invested in gold, real estate of fixed deposits, no one really cares a damn mostly. They are considered safe forms of investing, wherein obviously the tenet of inflation is never calculated. Even with gold, one basic tenet which often gets missed out is that it does not procreate!! If something does not produce cash flows, the value gets only maintained or upped by how much is the other guy willing to pay!! (its only when the tide runs out that one realizes who has been swimming naked)
Don’t get me wrong, nothing wrong about knowing returns to the t, but I believe the moment you start to think about returns alone, the process as well as the objective usually takes a backseat sub-consciously as well as consciously, mostly. Better to stay focused on the process as well as long-term objectives, outcomes will be taken care of (mostly)!!
Other important thought which came about were:
# “Dost Fail Ho Jaye Toh Dukh Hota Hai … Lekin Dost First Aa Jaye Toh Zyada Dukh Hota Hai.” This is such an important lesson – something which happens with us all the time, in Investing too!! As Charlie Munger rightly said, its not greed which moves the world, but envy. Just because some friends or relatives are making more money than you, you start to hyper-ventilate!! If you have done your homework well, do not get perturbed by short-term gyrations. Someone will always be richer, smarter, faster, or better looking than you. That’s life!!
Another line of thought was:
# Thinking long-term eliminates a lot of unnecessary bullshit. The following from Jeff Bezos sums up the power of thinking long-term in such a meaningful way: “Everything you do needs to work on a three-year time horizon, then you are competing against a lot of people. But if you are willing to invest on a seven-year time horizon, you are now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavours that you could never otherwise pursue. At Amazon we like things to work in five”. While investing, think long-term. It eliminates a lot of unnecessary noise, anxiety, stress apart from brokerage costs. Yeah, however, the flip side is that you may not be able to brag about your investing, oops, trading swings in a party though!!
Another line of thought was:
# Market is a function of buying and selling. For every buyer, there is a seller and vice versa. It is the oscillation between greed and fear that drives the prices after all. Frankly, apart from your homework, gut, hunch and fair bit of luck, outcomes are beyond your control. So, if someone is selling or buying, why worry? You may be in an envious position after all, for they may need to continuously churn either to feel good and remain busy, no matter how unproductive it may be!!
Last but not the least,
# If you are investing in stocks and thinking about building partnerships with promoters, you need not think about daily quoted prices beyond a point. The only solace is that because of Mr. Market’s mood swings, you are in a better off position to shake hands with phenomenal businesses at appropriate prices. The more depressed Mr. Market’s moods are, better are your chances to partner with great businesses at advantageous prices. The inherent values could be way higher!! You have that advantage to leverage on, which often gets missed!!
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!