Sunday, April 27, 2014

Is The market Risky Today?

This is the time, when the ones who had invested in equities and held on to it, feel vindicated. The past years have been tumultuous but I personally invested continually and today my feeling is not that of but vindicated, but that of assurance. Nothing as changed in the model since I began investing more than 2 decades ago. My first investment was in 1993 or so, in the Morgan Stanley mutual fund. This was the first time such an idea was marketed and I remember public frenzy to invest in it. It was supposed to be first come first serve, people stood in long que for hours together (heard people stood overnightJ), what followed was my first learning experience. 

There is not dearth of opportunities. It’s never an opportunity missed. Since then I have attended and read numerous behavioral investing classes and books. It’s taken a long time before my old faiths were broken and new ones instilled. Looking back, I really enjoyed losing money, the wealth of information that alone has taught me is  inexplicable.

Today I stand totally confident, that equity is one of the best opportunities in our generation, provided one has developed the right mindset or philosophy. To me the most important ingredient to be successful in investing, is to develop the right philosophy. There is no other financial sophistication required. The world just comes around.

There always exists a possibility of Market making a huge advance as much as it may go in for a significant unexpected collapse, making the returns in the range of its average. Where then do we get to lose huge money? It is very difficult, a task that can only be accomplished by the over thinking monkey mind. Learn to master it and success is our way.

Coming to more mundane stuff, I am currently taking an exposure in small company which is operating in a murky industry, where there are no scruples. I stumbled upon this company surprised by the way the promoters handled this business, so very different and refreshing from the heard. This is very small cap company, hence the reward risk ratio is not very encouraging and I am hoping to see some corrections. I am fairly bullish that this is going to be a multi-bagger with zero debt on its balance sheet. More on it soon.

The markets have run up very fast in Anticipation, a normal one to follow Despair. (Please see I am oblivious here about the reason.) Does it mean the market is riskier than what it was 6 months ago? The answer to me is NO. If you say it is risky, it always was and will always be.

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