Taking out money when market falls!
Reason:
~ It's difficult to get in once you get out
~ If you manage to get in you will be late and lose the rise in the market.
Don't exit when market falls, neither stop the SIPs.
Attended a clubhouse talk on:
"Common Investing mistakes" hosted by
Hena Mehta @hena1220 co-founder of Basis with
Aditi Kothari Vice Chairperson DSPMF &
Kalpen Parekh @KalpenParekh MD-CEO DSPMF
moderated by Dipika Jaikishan @dipikajaikishan
🧵 on key learnings:
@getbasis
@dspmf
Taking out money when market falls!
Reason:
~ It's difficult to get in once you get out
~ If you manage to get in you will be late and lose the rise in the market.
Don't exit when market falls, neither stop the SIPs.
Avoid being a bad investor; than worrying about being a good investor.
Not knowing why we are investing!
We often invest because:
~ Others are doing it
~ We see the particular asset class is popular
But we don't understand the asset class
Gold : Because of family culture or as a symbol of inter-generational wealth.
FD: Because it's safe
Equity : To double money quickly!
People invest in a booming asset class
They don't understand the drivers behind the boom.
When it falls badly they exit!
That is actually the time when we must invest.
Each asset class:
~ Has certain boundary conditions & rules
~ Requires certain time duration
~ Should be relevant to your goal
Equity: High returns; Lot of fluctuations; For long term
Debt: Low returns; Less fluctuations; For short term
Past returns don’t belong to you. Returns that you earn, are from the future.
Don’t invest seeing the huge returns of a particular stock or mutual fund.
Recency bias of past returns give comfort but makes us poor investors.
"You have never experienced a bear market."
Pandemic was not a bear market, it was just short term steep crash .
Don’t think the stocks will always go up.
Beware the current times of rapidly rising stock prices.
~ Don't invest in a single booming sectoral fund
~ Diversify
~ Don’t just be in equity, be in debt too
~ Understand your risk profile
~ Have good asset allocation
~ For international, choose only a broad-based fund
~ Learn from the mistakes of others
~ They don’t invest
~ They are often not interested
~ They give money to their father, brother or husband to invest
Remember:
Earning money doesn't mean you are financially independent!
~ Women are also inheriting wealth
~ They often outlive men
~ What if you separate from your partner?
As a Women:
~ Take the first step
~ Commit to learn & manage your own personal finances..
~ Effort to understand & study each asset class
~ The right temperament to ride the market cycles
~ The right attitude towards investing
~ Start knowing upfront that it will be volatile.
~ Don’t panic when the times are bad.
~ If the selected stocks & funds are good invest more.
~ Overtime you will get good money.
~ Returns inline with prevailing interest rate in the country
~ Don’t beat inflation hence harm your portfolio returns.
~ Optically safe, but eat away purchasing power
Debt allows to take out money, when market goes down.
In a market crash, transfer money from debt to equity & buy more.
If everything is in equity you can't invest more when market falls.
Both should be in portfolio.
Equity is the accelerator, while debt is like the break of car.
Equity is great on a long empty road, debt is needed in a crowded stretch.
Equity is like a sword in battle to attack inflation.
Debt is the shield in the battle to protect you.
Never!
Tips eventually lead to pits.
Check:
~ Incentive for the person giving the tips.
~ His track record
~ Are tips given both for buying & selling?
~ Are the tips only during a rising market?
There is no probability of tips being right!
No.
Why:
~ Something that suits the other person, won’t suit you.
~ Your risk profiles will not match
~ Your incomes won't match.
Instead:
~ Consult financial adviser
~ Educate yourself
~ Do risk profiling
~ Understand what's right for you
Only companies that survive for the long term give returns.
Thus look for companies that have long term competitive advantage, which will allow them to survive!
It's not required.
It will make you take unnecessary actions that are detrimental to long term returns!
Invest through SIPs in diversified fund.
Make sure portfolio is diversified and then forget about it.
"News is to the mind, what sugar is to the body!"
News:
~ Is a stimulus which comes to you every minute
~ Is excess info that's not relevant to investing
~ Triggers activity & Activity is harmful for portfolio
Instead:
Read interviews, research reports etc.
Don't churn you portfolio with every market rise & fall!
Know that you are in for the long term.
In the long term, your short term activity would be irrelevant!
Having a false illusion of skills, seeing the portfolio returns.
Bull market feeds the ego
The real test is in a prolonged bear market.
Never:
Flirt with the stock.
Instead:
Marry & settle with good companies!
2000 to 2010 american market gave zero returns.
For 40 years Japanese market gave no returns.
Don’t flirt with the stock, marry & settle with good companies.
Companies have cut cost
Have generated cash due the savings
Strong companies have become stronger after surviving covid.
~ Ask what are bad investing practices.
~ Try to avoid them
~ Focus on survival during bad phases
~ Diversify
~ Allocate assets wisely.
Re-tweet the first tweet in this thread. Link here 👇👇
https://t.co/Q7DNicomIp
Attended a clubhouse talk on:
— Finalysis (@Finalysis20) September 30, 2021
"Common Investing mistakes" hosted by
Hena Mehta @hena1220 co-founder of Basis with
Aditi Kothari Vice Chairperson DSPMF &
Kalpen Parekh @KalpenParekh MD-CEO DSPMF
moderated by Dipika Jaikishan @dipikajaikishan
\U0001f9f5 on key learnings:@getbasis@dspmf pic.twitter.com/toqqHVcOYJ
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Even after investing for 14 years, I uncover new insights every time I reread his letters.
Recently, I reread his letters from 1977 to 2020 for a third time.
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1. Moat is NEVER stagnant
A company's competitive position either grows stronger or weaker each day.
Widening the moat must always take precedence over short-term targets.
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Regardless of improvement, your competitors will quickly copy your advantage away.
Where returns on capital is dismal, reinvestment will only destroy value.
3. The flywheel effect
Buffett was preaching about the flywheel effect before it became cool.
Back then, newspapers were similar to today's platform businesses like Amazon, Meta, and App Store.
More readers beget more advertisers beget more readers.
4. Operating leverage
Companies with high fixed costs and low variable costs will see earnings rise faster than revenue.
However, it cuts both ways.
It becomes a disaster when revenue is declining.
Check out my article on how operating leverage works: https://t.co/Nv747oBAK0
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TLDR: Ties to Xi Jinping—or a Xi ally—are very helpful! (1/14)
https://t.co/kO2A0Efyq2
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Some could make the CCP's elite 25-person Politburo (2/14)
https://t.co/kO2A0Efyq2
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TLDR: Ties to Xi Jinping—or a Xi ally—are very helpful! (1/14)
https://t.co/kO2A0Efyq2
Seven politicians were promoted to ministerial-level positions in central Party agencies last year
All are likely to feature on the next Central Committee selected at the 2022 Party Congress
Some could make the CCP's elite 25-person Politburo (2/14)
https://t.co/kO2A0Efyq2
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Less likely for the Politburo but still important is Jiang Jinquan, new Director of the CCP Policy Research Office
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Other notable central Party promotions include Li Shulei and Liang Yanshun, who both assisted Xi when he led the Central Party School from 2007-2012
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— r a y a \U0001f319 (@lcvelylilith) February 20, 2020
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