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Stories that get sold:
“If you bought Infy in March 2000 & held it till the CY2008, you would have made 0 returns”
Stories that no one tells us:
“If you had bought 1 share of Infy each month from March 2000 until Feb 2008, you would have ended up with a 13% XIRR”.
Read on!
“If you bought Infy in March 2000 & held it till the CY2008, you would have made 0 returns”
Stories that no one tells us:
“If you had bought 1 share of Infy each month from March 2000 until Feb 2008, you would have ended up with a 13% XIRR”.
Read on!
1/
Unpopular Opinion
“Individual investors, with long term horizons, shall not pay attention to valuations of stocks.”
That doesn’t mean valuation doesn’t matter. It does.
But with all the modern tools available, we suck at valuing businesses.
Unpopular Opinion
“Individual investors, with long term horizons, shall not pay attention to valuations of stocks.”
That doesn’t mean valuation doesn’t matter. It does.
But with all the modern tools available, we suck at valuing businesses.
2/
Instead, getting into a system of buying good and growing businesses on a regular basis will help you counter the valuation problem effectively.
Value indeed lies in the eye (read excel models) of the investor.
Instead, getting into a system of buying good and growing businesses on a regular basis will help you counter the valuation problem effectively.
Value indeed lies in the eye (read excel models) of the investor.
3/
Nobody knows the real value.
We can only guess.
And even the best of the best investors makes big horrible mistakes in valuation.
When we base our decision on it, we get tricked into selling winners early and holding on to losers.
Nobody knows the real value.
We can only guess.
And even the best of the best investors makes big horrible mistakes in valuation.
When we base our decision on it, we get tricked into selling winners early and holding on to losers.
4/
To enjoy the success of a 10x in your portfolio, you got to keep buying and holding your winners at a seemingly pricey valuation.
Look at the journey of many companies in the last 10 years: Eicher Motors, Bajaj Finance, many chemical companies, etc.
To enjoy the success of a 10x in your portfolio, you got to keep buying and holding your winners at a seemingly pricey valuation.
Look at the journey of many companies in the last 10 years: Eicher Motors, Bajaj Finance, many chemical companies, etc.
5/
There are several examples of stocks doing well despite being highly-priced, to begin with.
Ex: FMCG in13-14 was not cheap. It still went on to create a huge wealth in the next 4-5 years.
That was a past performance.
And you never know what the future holds for a sector.
There are several examples of stocks doing well despite being highly-priced, to begin with.
Ex: FMCG in13-14 was not cheap. It still went on to create a huge wealth in the next 4-5 years.
That was a past performance.
And you never know what the future holds for a sector.
6/
A very tiny % of people are good at managing debt. A better option for most is to avoid it altogether.
Similarly,
A very tiny % of people are good at mitigating reinvestment risks in the market. A better option is to avoid the question of reinvestment as much as possible.
A very tiny % of people are good at managing debt. A better option for most is to avoid it altogether.
Similarly,
A very tiny % of people are good at mitigating reinvestment risks in the market. A better option is to avoid the question of reinvestment as much as possible.
7/
In a portfolio of say 15-20 businesses, some would show average performance. A few will fail miserably. And if you have luck and skills on your side, you may get a couple of 10-20x.
You will have to replace the losers in your portfolio with new businesses.
In a portfolio of say 15-20 businesses, some would show average performance. A few will fail miserably. And if you have luck and skills on your side, you may get a couple of 10-20x.
You will have to replace the losers in your portfolio with new businesses.
8/
"You can't connect the dots looking forward; you can only connect them looking backwards.”- Steve Jobs
~A portfolio of 15-20 stocks
~Invest every month equally
~Worry about the business longevity, not valuation
~Willing to take a loss when things don’t go well
"You can't connect the dots looking forward; you can only connect them looking backwards.”- Steve Jobs
~A portfolio of 15-20 stocks
~Invest every month equally
~Worry about the business longevity, not valuation
~Willing to take a loss when things don’t go well
9/
After having done your due diligence and convinced about an investment idea, just before pulling the trigger to buy, it pays to ask this question:
Will it Survive to Thrive?
After having done your due diligence and convinced about an investment idea, just before pulling the trigger to buy, it pays to ask this question:
Will it Survive to Thrive?
10/
You may not be right all the time in answering that question. However, it will embed a condition that will force you to think long-term.
So far, we have covered the positives of this strategy. Now let’s look at the risks.
You may not be right all the time in answering that question. However, it will embed a condition that will force you to think long-term.
So far, we have covered the positives of this strategy. Now let’s look at the risks.
11/
At times like March 2020, 2012-2013, 2008, your portfolio returns will look atrocious.
The biggest mistake most of us do is panicking and selling the portfolio during those drawdowns.
And this is the biggest risk you have to mitigate as an investor.
At times like March 2020, 2012-2013, 2008, your portfolio returns will look atrocious.
The biggest mistake most of us do is panicking and selling the portfolio during those drawdowns.
And this is the biggest risk you have to mitigate as an investor.
12/
You are not going to do well if you buy high and sell low or try to become intelligent and time the market.
“It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”-CM
You are not going to do well if you buy high and sell low or try to become intelligent and time the market.
“It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”-CM
13/
If you are starting up your career, following these 3 steps are very crucial:
-Invest time & money in skill development. Job or business both works. Check what works for you
-Save aggressively & invest systematically
-Stay the course
If you are starting up your career, following these 3 steps are very crucial:
-Invest time & money in skill development. Job or business both works. Check what works for you
-Save aggressively & invest systematically
-Stay the course
14/
That sounds too simple to believe. Right?
But there are success stories.
They are the ones who took the pledge to stay put on the path of systematically investing through ups and downs and never stopped.
Examples discussed here: https://bit.ly/3wCfEWG
That sounds too simple to believe. Right?
But there are success stories.
They are the ones who took the pledge to stay put on the path of systematically investing through ups and downs and never stopped.
Examples discussed here: https://bit.ly/3wCfEWG
15/
We know this but fail to follow.
1. You know that junk food is bad but dieticians earn their living by telling you to avoid it.
2. You know that doing physical exercise is good but you hire a physical trainer to be more disciplined.
We know this but fail to follow.
1. You know that junk food is bad but dieticians earn their living by telling you to avoid it.
2. You know that doing physical exercise is good but you hire a physical trainer to be more disciplined.
16/
3. You know that eating well, sleeping well, low mental stress and physical exercise take care of 90% of your health problems, you still seek advice from doctors and psychologists to keep you in order.
3. You know that eating well, sleeping well, low mental stress and physical exercise take care of 90% of your health problems, you still seek advice from doctors and psychologists to keep you in order.
17/
Similarly, an investment advisory firm like SSS earns its fees by just making sure you are keeping up with your financial health and staying invested for the long term.
Similarly, an investment advisory firm like SSS earns its fees by just making sure you are keeping up with your financial health and staying invested for the long term.
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“How long you stay invested for will likely be the single most important factor determining how well you do at investing.”- @morganhousel
“How long you stay invested for will likely be the single most important factor determining how well you do at investing.”- @morganhousel
19/
We at SSS would just add another factor to it.
“How long you stay invested for and how regularly you keep investing in your lifetime are the two most important factors determining how well you do at investing.”
We at SSS would just add another factor to it.
“How long you stay invested for and how regularly you keep investing in your lifetime are the two most important factors determining how well you do at investing.”
20/
In the link below you will find more details on what we have discussed above.
https://bit.ly/3dIQDk6
If you enjoyed reading this and interested in knowing about our Stock SIP portfolio advisory services, please write to us at [email protected].
Thanks
In the link below you will find more details on what we have discussed above.
https://bit.ly/3dIQDk6
If you enjoyed reading this and interested in knowing about our Stock SIP portfolio advisory services, please write to us at [email protected].
Thanks
