11 Commandments of Investment Failures – time to look within.

Sunday, 04 February 2018

11 Commandments of Investment Failures – time to look within.

Greetings from Hitesh! We dealt with the blunders yesterday and today also we are doing the detailed analyses of the same. Recently I have come across an expert who is a neighbour of WARREN BUFFETT for 50 years, most respected and most sought-after guy for his business advise. He was also at the top of COCA COLA in his illustrated career. He is also on the BORAD of BERKSHIRE. His name is Mr.Donald Keough. He has written his most read and appreciated book – 10 Commandments of Business Failures. I have applied the same rules for INVESTMENT Failures. Just go through them and make your own assessment this weekend.

1.  Quit Taking Risk: - This is the easiest step to understand investment failure. Today many guys must be feeling they should have invested when SENSEX was at 9000 levels to 27000 levels. But they did not. The main reason was not that they did not have the money. They were NOT READY to take the RISK. They were looking for SURITY. Not taking RISK is also a RISK in life, business and investment. Just scan yourself with this factor first.

2.  Be Inflexible: - This is one of the most important factor for losses in share market. When the guy buys the share expecting it to go up and if the shares goes down, poor guy blames the MARKET for the same rather than changing his investment strategy. Remember MARKET is always RIGHT, but investors are often wrong. Being inflexible will take you for a ride. Many guys were holding RELIANCE since 2008. The share has come down from Rs.3000 to Rs.675 and even today also it is Rs.1800/- with bonus. Now, Market moved up by 4 times and Reliance is still at Rs.1800/-. What about your interest losses for 10 years, forget about your capital losses.  Now, if you are a BLIND Bhakta of DHIRUBHAI, Market does not care.

3.  Isolate Yourself: - This is a typical trait of a failed investor. Many time by stroke of a LUCK or right strategy at right time – investor makes good money in the first deal. Now, he believes that this is the Way to play in the market. He keeps on following the same. He assumes that he has got the SECRET of the market. He isolates from all other ideas and becomes blind to the market also.

From May 2017, I was telling market will come down. I gave the time also. But since most guys follows the MEDIA EXPERT and FUND MANAGERS opinions, they were not ready to listen to me. They think what they are doing is the right and see the RESULTS today.

4.  Assume Infallibility: - In a investment cycle, if investor makes good money, he assumes he is all set. Now, no new challenges can come to him. He is fail proof. When silver touched 65000-70000 per kg some years back, RAKESH was long and silver came down to 35000 per kg in short time. He lost heavily. But since he was humble, he booked losses fast and reinvented himself. Today he is again at the top.   

5.  Play the Game Close to Foul Line: - Many guys don’t want to invest in consultant fees. They want to REINVENT THE WHEEL themselves. Now, they do the investment buy TRIAL and ERROR Method. When they do trial and error, they don’t invest with conviction and then they will conclude that it is difficult to make money in STOCK MARKET.

Many guys will do DABBA trading to save on the STT and income tax. Many guys would do some esoteric things like Futures and Options or BITCOIN for fast returns. Last January, I had said BITCOIN will BLAST but I will not invest. See in the RECENT past FM declared that BITCOINS are not legal in India and many sellers are not able to deposit their bitcoin sales proceeds to their bank account as BANKS have blocked the EXCHANGES. What’s more investor are facing IT notices. Now, there are no RIGHT ways to do WRONG things.

6.  Don’t take time to Think: - Most investors have a simple investing technique. Ask for a TIP, Call the BROKER, buy a share, hold it and sell it when prices go up. The minimum time is invested in thinking about the company fundamentals, thinking about his own financial goals, thinking about the losses, in case they go wrong, thinking about its effects on his main business or job. In fact, they only get the time to think when they face the major loss or misses the major opportunity.

  

7.  Put All Your Faith In EXPERTS and OUTSIDE CONSULTANT: - Most guys follows this. I often hear many normal guys talk - So and so has said SENSEX will touch 1 lakh or so and so said this company will be 10X or 20X in a short time. Somehow, they have faith on these guys and they follow them blindly. The result is in front of you. Till DECEMBER end they were talking about teji and now not a single guy is coming on MEDIA with their NEW TAKE. If you have followed them, you are in a soup now.

8.  Love your Bureaucracy: - Many guys have obsession to do a thing in a particular way only. They are not ready to change their way. They always face the problems with their employees and near and dear. Now, when these guys come to the market, they assume they can dictate the market also. But market does not listen to anybody.

9.  Send Mix Messages: - In recent posts I have shared a beautiful examples of MORGAN STANLEY way of communications. One guy was talking about 1 lakh sensex in long term (without, specifying what is the meaning of long term), Other guy from the same company said he will invest in BRAZIL over India and third guy said he sees challenging time for Indian Market. One company, three different guys and three different communications. Same happens to NORMAL investor when he invests the money in stock market. His Father tells SHARE MARKET is not for us, he wife says DIAMOND is BEST and this guy wants to invest in share market. You know the results.

10.            Be AFRAID of the Future: - Those who missed 2009, were the guys who were afraid of the future. Those who invested post July 2017, were the same guys who were afraid that they will miss the opportunities of FUTURE. The bottom line was FEAR. FEAR leads to GREED and GREES leads to FEAR. This circle go on and normal investors remain in this cycle for a long term. They end up losing the major opportunities and money.

11.            Lose your PASSION for WORK and LIFE: - This is the JUICE which can keep you alive in all the situations. In India, we have been told after 60, life is over. Most guys go on retirement. They losses the PASSION for Work or life. Now, major source of success is this passion only. If you lose PASSION, you lose all. Many guys get the setbacks in personal life and they lose the interest to do new things. They are the sure shot target for failures. I love the JEFF BEZOS DAY 1 philosophy of to tackle this syndrome.

What NEXT?

All the above commandments are interlinked. The major foundation can be seen in the first factor only. You are not ready to take risk. The other 10 reasons are the extensions of the same in different words. Frankly, he has gone deeper into the reasons of not taking risk with the other 10 reasons.

However, all of them will help you SCAN yourself internally and if you think on them, I am sure you will find out secrets of your own failures.

Have a GREAT SUNDAY.

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

Live With Passion…Invest With Passion.

Hitesh Parikh.