One point is certain... you can't always win!
Even the best of the players or teams, don't have a 100% winning record. But what differentiates a "winner" from the "loser", is the higher probability — and consistency — of successes.
This happens when the focus is on "preparation", not merely on "playing".
This is true for our investments too.
No one... not even the best investors in the world... will "always" get their decisions right. They are bound to lose money in some of their investments.
But, despite these odd losses, they make (really) good money from their overall portfolio. This happens because they don't let their bad investments derail their commitment to proven investment strategies.
This, I believe, is the supreme investment lesson that we all must appreciate and apply.
Take the case of investing in shares.
Last many decades of stock market data provides an overwhelming evidence, that equities can create phenomenal wealth.
Yet, a phenomenal number of people lose money in stocks.
Reason? Wrong focus!
Most investors are looking for tips, expert recommendations and quick profits. There is no strategy, no plan, no discipline, no patience, nothing. In short, no preparation.
They just come in the morning, buy some stocks and hope to take back a fortune in the evening. This has NEVER worked in the past; and it will NEVER work in the future.
We are all dazzled by the fours, the sixes and the centuries scored by Sachin, Sehwag, Dravid, Dhoni, Virat and all. But, we hardly see their years of hard work, the rigorous discipline, intense daily practice and infinite patience that they have invested in their game.
It would be utter foolishness to believe that we will make money with our causal approach.
Banking on mutual funds (in case you don't have the right expertise); systematic investment; at least 5 to 7 years of time-frame; these are some of the proven strategies of investing in equity shares. If these are not followed with full commitment, I regret we will never make money in stocks.
Take the case of fixed deposits.
Numerous people among you have lost money even in the so-called "safe and secure" fixed deposits. Dubious companies, mismanaged co-operative banks, unscrupulous agents have all scammed away crores and crores of rupees, by luring people with "abnormally high" interest rates.
Despite being aware of these pitfalls, people repeatedly become unfortunate victims of such frauds.
Reason? Again, wrong focus!
There is simply no due diligence, no background check, no common sense. In short, no preparation before depositing the money.
I wonder how many people check the credit rating of a company before making the deposit.
Oops!
Wrong statement:
Most people don't even know what "credit rating" is.
Of course, a good credit rating doesn't necessarily mean that the said deposit is 100% safe. But it does considerably reduce the chances of making a "bad" deposit.
Take the case of insurance.
Lakhs of crores of people's money is locked up in utterly inferior and absolutely inflexible insurance policies.
No one has bothered to check whether these policies at least match the returns from other comparable products. No one has bothered to explore the viability and feasibility of such "outdated" products in current times.
In a nutshell, their phones may have become smarter, but their investments are still absolutely (absolutely) dumb.
Concluding: Among most investors, there is an utter lack of "preparation" before investing. If people want to do a good job of investing their money productively and profitably, this is where they have to turn their attention to.
No investment is perfect. However, good preparation will definitely enhance the winning percentage. And that is what, your aim SHOULD be.
Even the best of the players or teams, don't have a 100% winning record. But what differentiates a "winner" from the "loser", is the higher probability — and consistency — of successes.
This happens when the focus is on "preparation", not merely on "playing".
This is true for our investments too.
No one... not even the best investors in the world... will "always" get their decisions right. They are bound to lose money in some of their investments.
But, despite these odd losses, they make (really) good money from their overall portfolio. This happens because they don't let their bad investments derail their commitment to proven investment strategies.
This, I believe, is the supreme investment lesson that we all must appreciate and apply.
Take the case of investing in shares.
Last many decades of stock market data provides an overwhelming evidence, that equities can create phenomenal wealth.
Yet, a phenomenal number of people lose money in stocks.
Reason? Wrong focus!
Most investors are looking for tips, expert recommendations and quick profits. There is no strategy, no plan, no discipline, no patience, nothing. In short, no preparation.
They just come in the morning, buy some stocks and hope to take back a fortune in the evening. This has NEVER worked in the past; and it will NEVER work in the future.
We are all dazzled by the fours, the sixes and the centuries scored by Sachin, Sehwag, Dravid, Dhoni, Virat and all. But, we hardly see their years of hard work, the rigorous discipline, intense daily practice and infinite patience that they have invested in their game.
It would be utter foolishness to believe that we will make money with our causal approach.
Banking on mutual funds (in case you don't have the right expertise); systematic investment; at least 5 to 7 years of time-frame; these are some of the proven strategies of investing in equity shares. If these are not followed with full commitment, I regret we will never make money in stocks.
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| Don't focus on best investments. Best processes automatically give best results. |
Take the case of fixed deposits.
Numerous people among you have lost money even in the so-called "safe and secure" fixed deposits. Dubious companies, mismanaged co-operative banks, unscrupulous agents have all scammed away crores and crores of rupees, by luring people with "abnormally high" interest rates.
Despite being aware of these pitfalls, people repeatedly become unfortunate victims of such frauds.
Reason? Again, wrong focus!
There is simply no due diligence, no background check, no common sense. In short, no preparation before depositing the money.
I wonder how many people check the credit rating of a company before making the deposit.
Oops!
Wrong statement:
Most people don't even know what "credit rating" is.
Of course, a good credit rating doesn't necessarily mean that the said deposit is 100% safe. But it does considerably reduce the chances of making a "bad" deposit.
Take the case of insurance.
Lakhs of crores of people's money is locked up in utterly inferior and absolutely inflexible insurance policies.
No one has bothered to check whether these policies at least match the returns from other comparable products. No one has bothered to explore the viability and feasibility of such "outdated" products in current times.
In a nutshell, their phones may have become smarter, but their investments are still absolutely (absolutely) dumb.
Concluding: Among most investors, there is an utter lack of "preparation" before investing. If people want to do a good job of investing their money productively and profitably, this is where they have to turn their attention to.
No investment is perfect. However, good preparation will definitely enhance the winning percentage. And that is what, your aim SHOULD be.
