Investment nuggets captures some interesting investment lessons, following them would definitely help us become better investors. The nuggets are captured in sets of ten.
Below are some of my favorite investment nuggets. Some are mine and some are not.
Investment Nuggets: First Set
Be fearful when others are greedy and be greedy when others are fearful
Only risk what you are ready to loose – don’t invest the money that you might need for someone or something important such as your kid’s education, daughter’s marriage etc.
The best investment that you can make is, in YOU. So, read as many books as possible, and equip yourself with necessary knowledge to become an investor
A disciplined investor would enter markets when they are bottoming and exit when they are on top – but, that’s the toughest ting to do
Experts can be wrong too – Do your own research before investing
Speculating is not a good approach to building wealth
Failure is prerequisite to learning
Everyone is a millionaire on hindsight – so don’t crib for lost opportunities, its never late to start and there is always an opportunity
Patience and perseverance are the two most important virtues of investment
Start with small and equal amounts in max five companies, to test your hypothesis, at least for 3 years. Once you find your analysis and hypothesis is giving better returns than Index (Nifty / Sensex) , then you can increase your stake or apply the hypothesis to other potential winners.
I’ll elaborate each of the above nuggets and publish few more investment nuggets in my coming posts. Please feel free to contact me if you need more info on the above nuggets.
As of 1st Jan 2018, most of the stocks were having extremely high valuation that’s why I though it is Time to exit equity market and book profits.Many of us do research to identify which stock to buy and at what price.
Is it really time to exit equity market and book profits ?
When you know how to value a company, and what kind of return you are expecting from your investment, decide the buy price. If the current market price(CMP) is lesser than that price, you will go ahead and buy it. If the CMP is higher than the calculated buy price, be patient and wait for the correction.
The first bull market was from Sep 2001 which ended in Jan 2008(76 months) with biggest market crash of – 63%, which started in Oct 2008 post 2008 crash.
We are in the second largest bull market which started in Oct 2008 continuing till date (110 months), BSE Sensex has quadrupled gained with whooping 443.5% increase during this period.
It is almost always impossible to catch the bottom or top of the market, so the best thing to do is exit the market towards the top and enter the market towards the bottom of the market cycle.
The writing on the wall is clear; Inaction is our biggest enemy, it may cost us dearly. If your neighbor, who knows nothing about stocks, is suggesting you to buys a stock, its a sign that your should think about selling your investments and sit on cash to re-invest it once the market bottoms. Recently while I was in our pediatrician’s clinic, I heard his assistant suggesting the doctor to buy Infosys shares. I also stumbled upon an article mentioning that uber/Ola drivers are seen trading on their mobiles in their spare time. Next thing I did was, started selling my equity investments.