One of the typical attributes of a young, impatient and a restless investor is to desperately look at new investing ideas when the existing ones look as promising as the rest. So the moment you meet someone the first question that comes to you is �Aur Naya Kya liya� (What did you buy new?). Isn�t that strange? Why do people want new things in life � always? So many families could have lived happily had people not looked for the new? Likewise so many investors could have stayed and become wealthy had they not tried identifying the new. Spare a thought for the guy who having bought Wipro in 1980 looked to exchange his stock for something new in 1981. A Rs 10,000 investment in the company would have grown to over Rs 350 crores had he just stayed with the old.
So does it mean that investors should do nothing and just sit back after an idea has been identified? Certainly not, all ideas need introspection and a constant monitoring vis-avis the new ones that come in every day. The only cost of investing is opportunity cost. So if Company A is doing well and someone whispers to you about the prospects of Company B then try comparing Company B with Company A before committing your money. If A is still better then B then buy A until you hi the 15% open offer limit!
Peter lynch says that the best stock to buy could be the one you already own.
Suppose you were running a restaurant, or a casino or a hotel, would you have looked at putting more money buying a new business each time your existing business threw back cash or would you have tried to consolidate your position in the business that provided maximum return for capital? Money has no emotion, given a free run it would flow to the spot that provides it maximum return but the emotions of the person in whose pocket the money resides allows it to do foolish things in the garb of looking at something new.
Many people look to buying something new to avoid the pitfalls of putting all eggs in one basket but one should remember that as long as the basket is strong and capable of holding the weight there is no harm in putting several eggs in one basket and if the basket is weak then even one egg can break the same. The idea is look for strong baskets not necessarily new ones.
There could be months where a smart astute and serious investor would not get new investing ideas in that case it would be prudent to analyse the existing stocks in the portfolio rather then hold cash and wait for new ideas. If a stock that he holds does not qualify as a buy then he has no business holding it in the first place.
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Excellent article by Basantji. That's why home cooked food by our mothers are taken for granted and people relish 5 Star food and why Sholay is still a 3000 bagger movie instead of watching new ones.
[QUOTE=csbhasin]
Sir, now, one thing I wish to know that if we go on adding more and more shares to our portfolio then when we should sell them so as to enjoy the fruit and compete our pending tasks.
[/QUOTE]
Though wipro,Infy stories are often recited again and again, but one must not forget that in 1981 it required guts to buy such company.
[QUOTE] some people enjoy by taking a walk on the beach [/QUOTE]
I do.
[QUOTE=basant]
So if Company A is doing well and someone whispers to you about the prospects of Company B then try comparing Company B with Company A before committing your money. If A is still better then B then buy A until you hi the 15% open offer limit!
[/QUOTE]
Interesting read. These are the words of a man who has immense conviction in his ideas, who is open to new ideas as well, but only if the new ones offer much more conviction
2 questions -
1. what does "If A is still better then B then buy A until you hi the 15% open offer limit!" mean?
2. Each idea comes with a risk reward. Probably why people look for new ideas is to try a different risk reward ratio?
[QUOTE=basant]
[QUOTE=kulman] [QUOTE] some people enjoy by taking a walk on the beach [/QUOTE]
I do.
[/QUOTE]
So if Company A is doing well and someone whispers to you about the prospects of Company B then try comparing Company B with Company A before committing your money. If A is still better then B then buy A until you hi the 15% open offer limit!
[/QUOTE]
Interesting read. These are the words of a man who has immense conviction in his ideas, who is open to new ideas as well, but only if the new ones offer much more conviction
2 questions -
1. what does "If A is still better then B then buy A until you hi the 15% open offer limit!" mean?
2. Each idea comes with a risk reward. Probably why people look for new ideas is to try a different risk reward ratio?
Posted on:4/19/2011 8:23:40 AMcsbhasin
Excellent article and intelligent guidance for the forum members.
It is seen that what ever we save that we invest some where and those have knowledge of investment in share definitely put more and more in shares only. They keep aside many other important pending task or go on postponing to put money in other necessities and prefer to put more and more money in share. [ If you do not agree then please guide what should be the philosophy of investment or life in this regard.]
Sir, now, one thing I wish to know that if we go on adding more and more shares to our portfolio then when we should sell them so as to enjoy the fruit and compete our pending tasks.
csb