My mistakes with the stock market

Investing Strategies
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I think there is a psychological bias, based on fear when we lose, particularly a large capital. So to come out of it is not easy, and investors don’t worry even if they miss out on certain opportunities, this is all personal. Not all can get back on the pedal quickly after falling, as the loss even if happened on its own, and not due to lack of due diligence, still lingers in the mind. So not looking at certain businesses may not make any impact, if the focus is on some other businesses which are yielding good results. Lessons are relative and personal too. Something which seems pretty ordinary may seem like a big lesson to some.

We need all kinds of people in the market, if everyone believes GARP, BAAP styles, prices will not come down. If no one believes in asset allocation, everyone will invest in equities and prices will not come down. If there is no profit booking, there may not be fall. So there is place for all kind of people, scared, reckless, overcautious, believers, naysayers, all kinds.

Just thinking out loud.

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Yes, you are missing quite a big. Banks are not mandatory for your portfolio growth. Banks are highest levered stocks in stock market hence carry highest risk. One large NPA will sink the ship. GTB, All PSU, Yes, RBL, Indusind, Small finance banks, all are underperformer including Kotak and HDFC barring ICICI.

I hold Only one stock from NBFC space AB Capital, that too as return ratios are lucrative.

Until u are exposed to Mid small cap to more than 70-80% of your PF, you wouldn’t be able to make much in markets.

Nifty hasn’t gone anywhere in last 2 years, it was 18k in 21, 22 and 23. Still here only however lot of mid small caps have moved 4-5 times. Its a stock picker market.

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Again its all personal what return you expect, your stock portfolio will carry that kind of risk on both sides if tilted more on mid cap, small cap. Returns will be low but offer safety of capital if more large caps are there.

I am a risk taker and that has paid me of well. Only Tata Motors from large caps.

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Do you hold similar views about Chola Finance, Bajaj Finance as about banks? And what abt gold financiers, there seems to be no risk of NPAs?

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My Blunders. USE Headphones Please. - YouTube -

Learn from My BLUNDERS for FREE.It’s so funny to watch, when I connect the dots backwards.

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I am now 33 years age and my passion about investment started when I was in teenage and my father alloyed with some shares of Andhrabank at face value given by Andhra bank as we are bank customers then. It was sold at more than 10X after period of 10 years. I know that we can compound good amount of money in market, but don’t know how. I was keenly watching the markets from 2008
whenever I gets time but the biggest mistake I done is not investing in it because of two reasons 1) Don’t have good money 2) Don’t know the depth of the market that it creates lot of money compounding.
I seen market falling during COVID-19 but again I was waiting for absolute bottom with out doing sip during the crisis time.
I am now so proud because at least I understand my psychological behaviour and market behaviour. Time in market is important than timing the market.
My aim from now:

  1. Focus on money compounding for long term
  2. Be in the market until my body and mind can support and pass on that wealth to my children
  3. Don’t speculate in markets, always maintain hedge positions to derisk my portfolio which is in long. Don’t go beyond 5% in any stock in your portfolio.
  4. Allocate some portfolio to foreign markets as well to take advantage of investing when steep falls in those markets.

Would like to encourage me with your suggestions and also any more insights on point 4.
Thank you :grinning:

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My biggest mistake in stock market has been lack of discipline, focus and spending too much on other things rather than doing investment on regular basis.

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While diversification has it merits, between asset classes, or between geographies, there are other factors too, some mathematical, some personal.

Will you be taking the MF route by investing in international funds, or invest directly in stocks, say in US, via the platforms available? If by MF route, which geographies the funds are investing, across global markets where they are allowing funds from India, or again is this just US? What has been the performance of such funds over the course of a few years, not 1 or 2 years? What are the funds’ strategies in times of higher valuations, or are they invested in all times finding value picks?

If you want to take the direct route, you can search for the relevant threads here in VP, from opening an account to analyzing a foreign business.

What % of your PF you want to diversify, and what return are you expecting from such a PF, will that return be meaningful to you, or do you think you can very well get that return by yourself or through MF route by participating in Indian market alone?

Countries of bigger names, large economies, with democracy, institutions etc don’t go bust in generally, but there may exist times, where something happens and investors’ funds may get stuck and may take some time to retrieve. Not that this will happen here, but we will have more idea about what to do, relatively.

Just some thoughts. I have no investments in foreign geographies, although I did look at investing in US stocks, but after gathering some initial information, I felt like the whole thing is cumbersome, and is not worth the effort, for now, so dropped the idea.

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Many indian companies are international in nature. All IT firms have more than 90% revenue from international market. Companies like Infosys, TCS. Also companies like Divis Labs, Balkrishna Industries are export oriented. They provide enough diversification from geographical point of view.

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Yes, that is true, but that is the nature of such businesses, they go where they can provide their services, and IT companies look for clients from other geographies too.

But allocating a part of PF exclusive to one geography is diversification in its purest frm, because we will be participating in foreign companies that are located elsewhere that cater to their own, but some businesses again cater to other geographies as well, and if this revenue is substantial, then that may effect in the future.

There are merits in diversifying, but they come with caveats.

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How do you hedge your positions, for the companies which are not in Nifty Index.

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1, Don’t follow hot stock it’s may burning ur hands!
2,Avoid A listed company of GOVERNMENT (because end of the day it’s not their hard earned money).
3, if u believe in ur gaining business stock then average it(don’t average ur losses stock if u can’t understand that business).

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hedging I mentioned is for taking advantage of short term corrections or retracements while I stick to my long term portfolio. Ex: Hedgeing on Nifty helps incase sudden correction due to any unanticipated events.

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@all :sweat::sweat:Does experience matters in stock market

The founder was a veteran and his last words made me question everything.:cry::cry: what’s your thoughts on this

https://www.reuters.com/markets/asia/singapores-asia-genesis-closes-hedge-fund-after-losing-bets-china-japan-2024-01-23/

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Of course experience matters in stock market. This veteran has experience to know when to fold and cut losses short.

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Invest in HSI or NSDQ when they are 30% to 50% down instead of forcibly doing SIP in NIFTY. The benefit of international diversification can be staggering.

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This may seem counterintuitive to the topic of this thread, but I often question myself: Are we learning more than needed from our mistakes, or are we learning more than needed when we are right?

As Prof. Sanjay Bakshi says: Quality of Decision vs. Outcome:

Good Decision and Bad Outcome – Unlucky
Bad Decision and Good Outcome – Lucky (This may be dangerous for long-term investing.)

Two Examples:

Being in Cash: In one meeting, a friend was beating himself up for being just 20% in cash during August/September. His point was that he knew the market peak was coming, so he should have held more cash. He questioned why he restricted himself to 20% and not 40%.

Selling Nasdaq 100 MF Units: Three weeks ago, I sold my entire portfolio of Nasdaq 100, which was 15% of my total portfolio. This decision seems good for now. However, I fear whether I will be able to re-enter the world’s largest market at the right time.

In my view, both decisions seem like Bad Decision and Good Outcome in the short term. However, they may turn into long-term bad decisions if:

Case 1: My friend develops a habit of frequently staying in cash.

Case 2: I fail to re-enter the U.S. market at the right time (as a long-term investor, I am okay with a 12-13% return).

These are just examples, but the point is: Bear and bull market volatility in the short term teaches us wrong lessons, which may be harmful to long-term investing.

I remember reading about Sony in the book Made in Japan. At one time, Sony was not in the calculator business, even though it was considered a highly attractive industry. However, due to its appeal, many players entered the market of calculator manufacturing, turning it into a commodity business, ultimately leading to losses for most companies. At that time, people praised Akio Morita’s foresight in avoiding calculators’ business. However, Morita later admitted that because Sony never entered the calculator business, it missed out on leading the digital/computer industry. He reflected, “I wish we had made the mistake of entering the calculator business.”

Just my random thoughts.

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Such many short terms are what makes a long term. And even if some short term decisions seem incorrect after a while, if the investment graph is going up, it is fine. Like the Sony example you quoted, in a journey of years, making some mistakes is possible.

To give a trading example, irrespective of how long and rich a trader’s experience is, there will be losses. In any other profession, this will not happen. No mathematics teacher will make mistakes with 30 years of experience. But we make mistakes, because markets are dynamic, intricate, sometimes erratic. With the information we have, with the knowledge, experience we can depend upon, we may prove to be correct most of the times, or wrong sometimes.

And I believe, any experienced participant knows if he can enter again or not. Exiting early for whatever reason in real time does not mean, we cannot enter again. That was then. This is now.

Acting in accordance with market is not wrong, per se, unless we exit a position that is meant for real long term. So we can separate our holdings.

As far as Nasdaq is concerned, as it is a US index, where many financial crises have occurred, we cannot brush aside the possibility of another crisis brewing, along with the opposite fact that, their stocks have the power to go beyond our GDP.

Built a wall, thought it to be part of house, something happened, dismantled it, time passed, wall needed again, built again. It was a wall, not a pillar, definitely not the entire house.

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Please except my deepest gratitude to all senior investors who are taking time to share their mistakes and allow us to learn from those. This thread is of great value to all new members to this platform.

Reading these post make me Admit I have made many of those mistakes too and helps realign to become a better investor very early in my investment journey. I am now more focused on building a portfolio slowly then making quick money from market.

Thanks to the learning from esteem investors who have given decades of time to market and are happy to share the knowledge.

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There is a whole book on this topic " Thinking in Bets" by Duke Annie, its an interesting read

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