An Athletic approach to stock market investing

Recently, while going through my set of business dailies, I found many experts commenting about the recent bull-run in the Indian equity markets. And I found a striking similarity between a bull-run and a Marathon. Both, Marathon and Bull-run can be broken down into three phases. I have jotted down a few points that I feel are analogous, read on:- (Bull run in italics) Marathon, Initial 14 kms: You have to be strong and confident to take up this challenge. You have to trust your ability and prepare mentally to finish the task at hand. Start slow, running slow is the key to enjoy and complete the marathon. Remember, the hare and the tortoise story? Don’t worry about the people who have passed you starting way too fast. These people will get eliminated anyways due to early fatigue. Don’t get obsessed with winning or thinking about your reputation. Bull-run Phase […]

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Infrastructure- Roads: Slippery road for Construction companies

Road Construction forms the most crucial part of the economy. As per the National Highways Authority of India, about 65% of freight and 80% passenger traffic is carried by the roads. The National Highways carry about 40% of total road traffic, though only about 2% of the road network is covered by these roads. Average growth of the number of vehicles has been around 10.16% per annum over recent years. At 0.66 km of highway per square kilometre of land the density of India’s highway network is higher than that of the United States (0.65) and far higher than that of China’s (0.16) or Brazil’s (0.20), however, the highways in India are narrow and congested with poor quality surface. All national highways are metalled, but very few are constructed of concrete, the most notable being the Mumbai-Pune Expressway and Yamuna Expressway. The major national highways include, the Golden Quadrilateral and North-South […]

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Would you like to be the ‘lucky idiot’ or the ‘skillful investor’?

‘You make your own luck’ – The popularity of this statement comes from the basic human urge to deny any existence of luck and thus have a feeling of ultimate control over one’s future. Yet I more than agree with Howard Marks, when he says in his recent memo that ‘even the hardest workers and the best decision makers among us will fail to succeed consistently without luck’ Randomness (or luck) plays a huge part in in our lives as it does in investing. Thus, while analysing an investment that you made in the past or analysing a successful strategy that worked in the past, it is essential to think about the role luck played in the end results. Whether the performance resulted from skill or simply being lucky? Have you ever invested without analysing the stock’s fundamentals and still ended up making lots of money; and felt good about […]

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Patient Opportunism…. Overcoming your action bias

‘Patience is a virtue’, more so in the world of investing! Patiently waiting for bargains to come your way, is often the best strategy an investor can follow. We are constantly dealing with different market conditions. It is important for us to realize the investment environment we are currently in and act accordingly. There may be times when greed and fear are balanced. At such times, everything will be fairly priced. And thus markets may not present great buying opportunities at bargain prices or selling at irrationally high prices. And at such times, doing nothing at all is the best option we have. However, this is easier said than done. Let me give you an oft mentioned example. In soccer penalty kicks, goalkeepers choose their action before they can clearly observe the kick direction. (The ball takes 0.2 seconds to reach the goal after it is kicked, giving the keeper […]

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Too good to be true!

In the fifth article of our Series on ‘The Most Important Thing’, we show you why if a certain investment is too good to be true, it probably is… Time and time again, the post-mortems of financial debacles include two classic phrases: “It was too good to be true” and “What were they thinking?” Why do we investors keep making such mistakes repeatedly? Because investing is an action undertaken by human beings, most of who are at the mercy of their psyches and emotions. According to Marks, there are four important emotions that govern our behaviour: Greed: The first emotion that serves to undermine investors’ efforts is the desire for money, especially as it transforms into greed. Most people invest to make money. There’s nothing wrong with trying to make money. Indeed, the desire for gain is one of the most important elements in the workings of the market and […]

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Category:Learn