If anyone reading and getting influenced in case! I am realising I would do a disservice if they are not aware of important facts at least. My risk profile may not be ideal one, neither there is a guarantee it will work even. I believe in unconventional approach and imbalanced work life. Currently I am able to survive and don’t see a reason why I have to work again, but you never know. Anyway, these are not relevant to you. What is relevant is this:
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My exposure to liquid assets has been more than 90% always, since beginning of working days i.e. around beginning of year 2000. Today its almost 95%. Liquid assets I meant equity and if I do not have an investment choice parked in some cash and cash equivalent stuffs like liquid fund.
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Never ventured to any other asset class in life, I believe every asset class can outperform and deliver stellar returns if one understands them, practice them day and night. My preferred choice is equity. I don’t know even how to manage another asset class. I bought a small flat in Bangalore in 2007, someone said it’s going to be Manhattan in 5 years. After 10 years the price hasn’t gone anywhere, rental yield is pathetic, liquidity is terrible, now people says old property! Anything wrong with real estate? No, not at all. I never tried to understand how a real estate works in India, how it would even pay me off?
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Because my approach requires tight risk management it requires losses to be taken in numbers at least. And trust me booking loss is not easy for majority of guys. One of the biggest stumbling block of behavioural finance. I have moved from 90% equity holding to 90% cash holding swiftly which involved walking on your own corpse of broken beliefs.
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I fully understand by growing at 200% every year even I can’t be millionaire forget about billionaire. To do that you need to play on leverage, not margin but OTHER’S MONEY. But I am happy with what I am as it gives me freedom to do what I want.
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I had certain extreme swings in personal requirement. The one or two years when I asked my daughter to travel twice in Train I won’t forget the face. Me and my wife then worked hard to infuse certain traits. These steps are painful, not every one may be all right with this.
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I have to adjust my expectations for every year. For example, in this current market, I am mostly out of action except few trading here and there. And if you are full time it would be maddening to sit out of action more so when you have capital.
One thing what definitely worked for me is despite increase in portfolio my risk nosedived from 15% to today it’s negative 30-40% or even more. Even market wipes me out, I won’t give back anything. But the transition period required severed discipline, I faltered number of times due to bad behavioural finance.
Stay safe guys and develop an approach after you understand yourself. I wrote something called Know Yourself First in another post. Link below:
Knowing yourself doesn’t include confidence or beliefs. So, if someone says it’s not possible, don’t believe it at all; even don’t pay attention. It comes mostly from people who hasn’t done it!
Lets discuss more about position size, risk management some time.
Wishes and Luck