A Bunch of Sinners Confess

 By Ramaswamy, Sudarshan, Tanvi

Investing is a fascinating game; people with degrees laced with A-Z play this game and yet it is not error-free. Well, nothing in life is error-free, but the sheer volume of fund managers underperforming is colossal. About 75-90% of the Fund Managers underperform the Index. The Investing Game, though simple, is complicated beyond comprehension, and that is where the maze is.

Fiscal Deficit, Rating Downgrade, and What is the outlook for the Market will be beyond the world’s land space. Forecasting is an addictive game too, Fed said Inflation is transitory, well what the heck? 10-year trades at 4.6 -4.7 %, and please do not underestimate the brilliant Ivy League education of most great economists.

This charlatan keeps on chugging as oxygen and water in the ocean, yet oxygen and water are needed for survival. Forecasting is definitely not needed. We have—from our dumb investments—learnt a lot and will be elucidating a few worthy considerations. These have shaped our Investing philosophy.

Trend


Catch the Trend that is perfectly fine, but as you do build up returns, go back to the point of Odds in the Industry; as new participants enter, and drive returns back to cost of capital, make sure you exit and make money.

Do not Ignore the No 2, 3 or 4.


The mental hack is to buy the no 1 player and keep holding. The 1 player is good, but keep the valuation handle very close; usually, the leader is well discovered, and the upside is limited, but most people ignore the No. 2 player and onwards, and that is an important aspect to look for, in beverages Celsius has delivered monstrous returns as compared to Coke and Pepsi. Celsius is a 40-bagger in the last 5 years. Think Safari Industry vs. VIP.

Hold Cash


This one is the worst sin of all; the world of finance is filled with such lovely advice that holding cash is useless; the theme of being fully invested has become contagious. A simple question to ponder.


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