Table of Contents
My dad is never happy with me
As fundamental investors we deal in three things + one limitation. This might be scary for a few!
Inside Community Newsletter # 4
No matter how much money I make him, he is never happy!
Yeah the same guy who, few years ago, wasn’t making any money despite doing everything his broker told him to.
Why isn’t he happy?
Two reasons.
First, because he thinks that I should sell my stocks more often!
Just a few days ago he asked me to sell stocks because the market is going up too fast.
I didn’t!
And then the market corrected…. 10k points!
You can’t image what he said to me over the phone and I have no intention sharing it here 🙂
- But why should I sell stocks? I still felt that core elements which is making the market go up is still in play:
- We have no intention of expanding the economy which means
- No major current account risk which means
- No major risk to the rupee dollar parity which means
- No major risk on the inflation side which means
- We don’t need to raise rates which means
- The companies have room to work on their business and keep making money plus they aren’t trading at exorbitant valuations which means
- I should hold!
Right?
Plus on the other hand I have no way of knowing:
- why are mutual funds selling (yeah redemption but why has the client redeemed)?
- is it cox he wants to realize the capital gains before the year end after which he will come back?
- when would the selling end?
- what would happen after the selling?
- will new inflows help market come back?
- will someone else decide to redeem?
Fundamental investing has no answer to these questions!
For a few of you this might be scary.
We believe in fundamental investing (or starting to) and it has no answer to these?
Yeah it doesn’t!
Fundamental Investing 101
As fundamental investors we deal in three things + one limitation:
- The earnings of the company (assuming the cashflow is close to earnings)
- The pace and length of growth in these earnings and
- The cost of money on which these earnings should be valued (valuation) and above all
- Limitation: We just get information about most of the companies just four times per year (result announcements)
So if there is a correction in the market due to any reason and I am solid on numbers and think that my stocks have more room, I have no option but to hold!
And doesn’t matter how good a teacher you think I am, I have failed again and again to explain this to my dad!
And the second reason?
The second reason he isn’t happy is because I always correct him when he says “ajj market gira di in logon ne / ajj market barha di in logon ne”
Ye loog kaun hain?
He thinks market k decisions bhi band kamroon me hote hain 😛
So now I can either make him happy by selling or keep making him money, I choose the later!
Am I bad kid? 🙂
