3 Principles & 3 Practices to generate Superior Lifetime Returns : First and foremost principle is Faith – if you have “faith in the future” nothing else matters and if you don’t have “faith in the future” nothing else matter. You have to understand that there is difference between HOPE & FAITH. Hope is the state which promotes the desire of positive outcomes related to events and circumstances in one’s life or in the world at large. But we don’t have proofs for hope but faith is based on historical data and facts. So you have Hope from your kids and not Faith. Last week I shared some data to restore investor’s confidence but our media can shake confidence of anyone. Currently media is comparing current situation with 1991 crisis, and they may be right but in the same period our index has gone up by 16 times or CAGR of 13.5%. Warren Buffett said “The Stock Market is a highly effective mechanism for the transfer of wealth from the impatient to the patient.” Even who don’t lose faith easily lose patience based on current situation. Most of people focus more on breaking news than their goals. Even the long term investor will say, let me right now shift to debt till the things improve but he should remember, now he is taking responsibility and stress of being right TWICE – one at the time of exiting present investments & then to enter at the right time again. So now focus is shifting to “Timing the Market” – which is undoubtedly worst strategy for retail investor. Patience will help in not doing wrong things and Discipline will help in keep doing right things. Not far back, Indian investors learned benefits “Systematic Investment Plan” but now I realize that it was just because of herd mentality.
Posted on: Fri, 30 Aug 2013 11:16:47 +0000