I wrote the following note to my subscribers in response to two questions which are frequently asked by new prospects
share your past performance
many stocks can I buy if I join your advisory today
note below, seeks to answer the second question
versus investment advice
you walk into a store or restaurant, you are handed the item or service as soon
as you make the payment. Any delay or refusal to offer the said service is
considered a breach of faith or fraud.
above standard mode of exchange breaks down when we come to investment advice.
The job of an investment advisor is to ensure that his or her clients make
decisions which helps them in the long run (in achieving their financial
goals). This can mean that the most sensible course of action often is do
nothing and wait for the right opportunity to invest.
is however not understood by the vast majority of investors who behave like a
customer in a restaurant. A typical investor likes to be handed a menu card of
stocks and would like to buy as many as possible even before the ink has dried
on the cheque (metaphorically speaking). This expectation works if you order a
pizza, but not when you are investing for the long run (5+ years).
investment industry panders to this behavior and even encourages it. As much as
one would like to blame the industry (and they have much to blame), the
investor community is equally responsible for it. Stock markets are seen as a
place to pat your ego (for recent high returns), indulge your gambling instinct
or just entertain yourself.
In all my years, I have found very few who look at
the stock market for what it really is – A
place to invest your capital for the long term to earn returns above the rate
of inflation and thus achieve your long term financial goals.
you are in for the long haul, it makes sense to invest your hard earned money
in the right company at the right price (price being very important). Often
this happens, when everyone is running for the exit.
is easy to talk, but not easy to do the same thing unless your own money is on
the line. My own funds, that of my partner kedar and our families is invested in
the same fashion. Nothing focusses you on the risk, when your own money is on
get turned off when I read about fund managers and analysts who recommend a
stock, but do not have skin in the game. It clearly means that they do not
believe in what they say.
made a conscious decision several years back that I will eat my own cooking and
as a result, any loss in the portfolio is borne equally by me. In addition to
this point, both me and kedar have made it a point to under-promise and
hopefully deliver more. As result, inspite of a 100%+ rise in 2014, we decided
to go low key as I knew that future results could be subdued for a period of
time. I did not want to attract subscribers based on recent performance and disappoint
them when I failed to meet their un-realistic expectations.
continue to follow the same approach today. We will get excited when the market
drops and go into hibernation when the market gets euphoric. The hibernation is
limited only to activity and not to the effort of finding new ideas. We
continue to build the pipeline, but the pizza will be served only when the time