Hi,
This is Vikaas here, Investment Advisor and Founder of www.jaagrav.com. Today I am going to talk about how Positioning is more important than Predicting.
Predicting: We as individuals always want to predict about future and mostly feel good when the prediction turns out to be true “See, I told you so.” When it comes to investing, most of the junta is focused on predicting what is a company’s EPS going to be next quarter, predict its sales next month or a year from now on, predict stock’s price from a yearly perspective to as near as daily (intra-day) or hourly perspective.
While some folks can predict these accurately which makes them insanely popular and are treated as “God-like”. Their predictive capabilities look extremely optimal in that moment. Most times, however, the predictions do not turn out to be true. They miss their predictions by a huge margin. Obviously, the misses are not talked about, or rather brushed aside – it is the winners and winning predictions which are talked about vividly and which steal the limelight. (Who wants to talk about past sins predictions anyways?)
Most times, however, it is not prediction which wins over time, its Positioning. Positioning in terms of having the right investing process – selecting companies having pricing power, optimal or zero debt, ethical promoters, businesses, and industries having growth at reasonable valuations – is almost guaranteed to win!!
Obviously, Positioning may take time to play out, may be couple of months to years!! This would mean that you as an Investor may look very foolish in the short-term. After all, as Howard Marks had very succinctly put it “A hugely profitable investment that doesn’t begin with discomfort is usually an oxymoron.”
While the outcomes being generated by Predictors as compared to Positioners may be optimal in the short term, however, if you want to position successfully, you need to stop comparing your outcomes as a Positioner with a Predictor. Luck has its role in Investing and outcomes wherein luck plays a big part should be viewed differently. Frankly, easier said than done, especially when incentives/jobs/bonuses are all geared to generate short-term quick sprints!! Who remembers the names of marathoners, anyways??
Last bit of advice: In order that you Position yourself for Investing success, you need to have a strong stomach, long-term capital, little or no use of leverage, staunch reliance on your investing processes and value, and obviously be correct (ultimately)
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!