Do you know what you don’t know before you invest?

11 September 2018

Do you know what you don’t know before you invest?

Greetings from Hitesh! Ram was under impression that he will be designated as a would be KING in the morning, but he was asked to go to JUNGLE for 14 years!! If Lord RAM has this destiny than what about lesser mortals like us?

Knowing what you don’t know is the major advantage in the filed of investments. I am 100% sure for with my experience that it is difficult to know what MACRO FUTURE holds. You may go right for once or twice. The challenge is to go right consistently and that is not possible.

How Future is predicted in market?

1.  Most of the time, people predict a future that is lot like recent past.

2.  They’re not necessarily wrong as most of the time market moves in cycles and future also gets repeated as past.

3.  Based on these two points, it’s possible that forecasts will prove accurate most of the time. They’ll usually extrapolate recent experience and be right.

4.  The basic problem with these kinds of forecasts is they go correct and when they go correct (which most guys also predicts), you will get the average returns with the events happen.

5.  Occasionally, the future turns out to be very different from past.

6. At these times the accurate forecast will be of immense value. And this is what is not possible or what is not knowable on consistent basis.

But when you meet the NORMAL investors – they belong to I KNOW ALL status. They think knowledge of…

1.  Future direction of economics, interest rates, market and widely followed mainstream stocks is essential for investment success.

2.  They are “CONFIDENT” that it can be achieved.

3.  They know they can do it.

4.  They are aware that lots of other people are trying to do it too, but they figure either – everyone can be successful at the same time!! Or one a few can be, and they will be among them.

5.  They are comfortable investing based on their opinion regarding the future.

6.  They are glad to share their views with others, even though correct forecasts would be of such great value that no one would give them away free of cost.

7.  They rarely look back to assess their record as forecasters.

If you meet this kind of guys, you will find that they are CONFIDENT in whatever they talk.

What is the way out?

Buffett and investors like him are aware what they can’t know. So, they focus on company’s business model and they see their track record. Then they find out the intrinsic value of the shares and try to buy them at attractive price against value.

When they have bought shares at lesser prices compared to value, you are better placed to deal with the risk of MACRO events.

What NEXT?

It requires lot of HUMILITY and HONESTY to tell yourself that you don’t know, and you can’t know. Those who can do it, will find out the way to invest with these limitations and they will get their success.

Let your IGNORANCE BE THE GUIDING FORCE for your success.

Follow me on Twitter @hiteshmparikh or on WhatsApp – +91-9869425399.

Live With Passion…Invest With Passion. 

Hitesh Parikh.