Watching the grass grow
With the recent volatility people have been exposed to, many of them wonder if they made a wise decision to invest in Indian Equity markets. The story this year has been no different for Debt as well.
So what does an investor do in this case?
Should he buy more or sell and run, or should he just wait?
Some investors have already started to show signs of restlessness and are considering an exit from the market. Well that brings us back to 2013, when the markets were trading at 16 times P/E multiple but nobody was interested to buy.
So what does it take to be an investor?
I believe investment is like watching the grass grow or watching the paint dry. It requires patience, perseverance and belief in the economy.
Everyday i come across traders, who disguise themselves as investors. They want quick results and therefore enter the maze of information. They keep looking for some information, which can make quick bucks for them. The fundamentals of investing are either not known to these people or they just can’t follow them.
Some basic qualities which every investor should look at acquiring are:
- Check your fins before you swim: Every investor should first check his risk appetite and then invest accordingly. He should make an honest judgement about the economy and relate the same to his goals. For e.g. If you have a kid who is 7 years old and your risk profile suggests that you can take 60% exposure to equity, then the near term RBI monetary policy should be of less consequence to you.
- Know your boat before you know the river: It is very important to know your own limitations and you should avoid mixing adventure with strategy; in your portfolio. For e.g. buying stocks on tips of people who themselves don’t know why to buy it.
- Measure the fire before you know how well it can cook: It is good to know about the past returns of any investment, but it’s most important to first know the risk associated.
- Love the epic & hate the documentary: Investment is like watching an epic movie and trading is like creating a short documentary. So believe in the long term and stay focused.
An investor behaves and believes differently from a trader therefore you know more about Warren Buffett, John Templeton, etc.
Try listing 10 traders who did well in their long span of their careers…..you will find it difficult.