How Unconventional Thinking Can Shape your Investment and Life Success?

Wednesday, 29 August 2018

How Unconventional Thinking Can Shape your Investment and Life Success?

Greetings from Hitesh! We always think in straight lines and like prince – princess stories we assume that our life will also be like them – they lived life happily ever after. In life and investment rarely, we see things happening as expected. Still when it comes to investments very few people are ready to think out of the box.

Let me deal with my first experience with UNCONVENTIONAL THINKING: -

Way back in 1994, I had spotted a company. It was my first pick, so I was very positive for the same (should I say BIASED?). I bought just 100 shares at Rs.27. In those days settlement cycle was for 15 days and the shares used to come in physical certificate. Many times, delivery was given even after a month also. Same thing happened with me. I got my shares after 45 days.  By that time share prices jumped to Rs.50. I could sell my shares without taking delivery.

So, I asked to my BOSS – who was retired fund manager of UTI – Had I bought 1000 shares I would have made Rs.23000 profit?

My boss looked at me and said– Yes. But what would have happened if the share prices have gone down? Every rupee fall would have taken your Rs.1000!!

This was my first lesson in unconventional thinking.

Let me share some of the DAY TO DAY dialogue of Conventional and Non-Conventional Thinking.

Conventional: - Company fundamentals are Good. Let us buy the company stock.

Non-conventional: - It’s a good company but everybody thinks it’s a great company and it is not. So, the stock is overrated and overpriced. Let us sell.

Conventional: - The outlook is for low growth and high inflation. Let us sell our stock.

Non-conventional: - Outlook is bad. But since everybody is selling in panic, let us buy.

Conventional: - Company’s earning will be negative. Let us sell.

Non-conventional: - Company’s earning will be negative but it may be lesser negative then CONCENSUS and the stock may give positive surprise. Let us buy.

Why smartest of the smart guy think – unconventional?

Today everybody is equipped with Smart Phone and GOOGLE. Since other investors may be smart, well informed and highly techno savvy, they find out an edge for themselves. They think something that other guys haven’t thought about it, see things the other guys haven’t seen or bring insights the other guys don’t possess.  They know it deep down that – being right is the necessary condition for becoming successful in investments but they must be RIGHTER than the fellow investors.

They know that conventional thinking is simplistic and superficial, and everybody can do the same. It’s more obvious kind of thinking. It’s more of an opinion kind of thing. Eg. If the earnings are going to be good, stock should move up!!

Unconventional thinking is a deep, complex and convoluted. They think about following…..

1.  What is the range of likely future outcomes?

2.  Which outcome is most likely to occur?

3.  How to prove that I am going on right direction?

4.  What is the consensus view and what is the probability, that it will happen?

5.  How does my expectation is different from the consensus?

Thinking about above possibilities need what Dr.DE BONO says – lateral thinking abilities. Very few can train them for this kind of thinking and those who can do are also not ready to take massive mental load in finding above answers. That’s why the big money goes to the people who are ready to think unconventional.

Middle class / normal guys celebrate marriage as it they are made in heaven and celebrated on earth. They spend good amount of money in the marriage. But TOP guys, apart from spending big money, they spend little more in hiring a TOP LAWYER to prepare – PRENUPTIAL AGREEMENT. They think for a possibility of DIVORCE also and they are prepared before the marriage takes place. This unconventional behaviour keeps them away from getting poorer in case the marriage doesn’t work out.

How the outcome gets influenced by your thinking?

Say you are thinking conventional way and you go right – you will get AVERAGE PROFIT and say you have gone wrong, you will get AVERAGE LOSS.

But if you are thinking unconventional – you will get above average profit and if you go wrong you will manage with little stop loss. So, you have lesser than average loss and more than average profit.

What Next?

Study your life events and see your thinking during that time. It will give you a food for thought for your NEXT thinking pattern.

I wish you all the best.

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

Live With Passion…Invest With Passion.

Hitesh Parikh.