Life, as investing requires one to keep doing something over and over again to gain mastery. It is, however, easier said than done. Everyone loves to be fit, or to own a ten bagger, nobody wants to wake up early or to hold a stock when it goes down 50% and does nothing for three years.
What I have learnt and imbibed in myself is to focus on the process. What serves me well in good times is what keeps me going during bad times too. It is simple to remember this but extremely difficult in practise. When you’re on a roll, you can do no wrong. All your stocks are moving upwards, your muscles burgeoning and budget in check. You feel great about yourself and the family and friends cheer aloud. This is the time to remain cautious and not let the guard down.
When the market inevitably turns and your biggest holding falls by over 50%, your friends who thank you profusely to have suggested it will begin to avoid and denounce you as just one lucky chap. When the time is bad, you realise how many of them were with your time and not with you. This is one essential check one must do for everyone, for the high flying stocks which were essentially junk but went up above in the sky or someone who was just praising the glory of your time.
The most important thing is to stay true to fundamentals. Personally, when I’m down, I make sure to hit the gym harder and more regularly, read more and better and to do everything with clockwork precision. I’ve a belief that what has brought me to this place will take me higher. How will it happen or when will it happen is destiny. I neither control nor cry over it. Exactly the same way, if the stock is fundamentally strong, has a good running business and ticks the boxes on all our checklists, underperformance with regard to the market is a time to buy and hold, not sell and run away.
Also, one must be wary of people who begin to doubt your intelligence and stock picking ability. You must remember that most people who never invest in a dime will criticize Rakesh Jhunjhunwala for not being a good investor. These are the same group who are going to sit before their TV or phone screens and watch the world move up and down and die when they’re old. They’re not the ones to be taken seriously but instead be avoided.
One must remember that most people in this world will grow up, make a living and babies, grow old and die without a trace. If you’re in the long haul, to make a name for yourself and grow healthy and wealthy, you must choose your friends carefully. I’ve received more Gyan on fitness from the ones who never went for a walk, on investing who can’t tell the difference between Nalco and Nelco and on books who have never read anything other than Chetan Bhagat. Just like buying a book and reading are two separate hobbies, joining a gym and working out regularly are separated by a mile, similarly having a demat account and being an investor are poles apart.
Most people who join the gym will quit by the end of the first month and will criticize the gym for being overcrowded. Most people who make a trade will never invest after the stock falls 20% and forever crib for the market was rigged. It is essential to remain focused on why you truly started this journey – of fitness, playing a sport or investing.
It doesn’t matter what you pick, nothing beats doing it over ten years and letting the magic of compounding unfold. There will be multiple ups and downs, bear markets, bad weather, Russia Ukraine but you must stay the course. The glory is not for the weak at heart. If you intend to have a ten crore portfolio, you cannot keep jumping in and out of the market and investing 50k when you must invest 10 lakhs.
It is famously said that great investing requires vision to dream, courage to buy and patience to hold. Of the three, patience is mostly rare. It doesn’t matter what the rate of compounding is, the deciding factor in the formula is the time period.
So when you next see your stock fall faster than the market, remember why you bought it, not what your neighbour says about it now.
Life is all about Compounding! 