40 Bitter Truths I wish someone told me when I started my Investing Career:
1) The next time is never like the last time.
2) Saying "be greedy when others are fearful" is much easier than actually doing when the opportunity arises.
3) The market doesn't care how much you paid for a stock or what you think is a fair price.
4) In expert tennis 80% of the points are won,
while in amateur tennis, 80% are lost.
The same is true for investing: Beginners should focus on avoiding mistakes.
5) Being emotionally detached from your stocks will save you from a lot of blunders.
6) It is hard to time the markets. Predicting the short-term direction of the stock market is futile. The long-term returns from stocks are relatively predictable.
7) Small investors tend to be pessimistic and optimistic precisely at the wrong times.
8) During recessions, elections, and Federal Reserve policy meetings, a lot of people turn economists and become unshakably certain about things they know nothing about.
9) Several famous investors whom we call "legends" have barely beaten an index fund over their careers. In the stock market, huge wealth is not necessarily indicative of big returns.
10) The more comfortable an investment feels, the more likely you are to be crushed.
11) Instead of trading derivatives, intraday, or penny stocks, just light your money on fire.
12) The gap between a great company and a great investment can be miles apart.
13) Don’t worry if you don't understand a big bank's balance sheet. The people running it and their accountants don't know either.
14) There will be seven to 10 recessions over the next 100 years. Don't act surprised when they come.
15) The more someone is on TV, the less likely his or her predictions are to come true.
16) How much experience a money manager has doesn't tell you much. You can underperform the market for an entire career.
17) Professional investors have better information and faster computers than most people. You will never beat them in short-term trading. Don't even try.
18) The majority of market news is not only useless but also harmful to your financial health.
As Mark Twain says about truth: "A lie can travel halfway around the world while the truth is putting on its shoes."
19) Not a single person in the world can predict what the market will do in the short run. Thus, stop trying to Predict the NIFTY movement or believe in someone who claims to do the same.
20) Professional investing is one of the hardest careers to succeed at, but it has low barriers to entry and requires no credentials. That creates masses of "experts" who have no idea what they are doing.
21) Most IPOs will burn your money eventually. People with more information than you have, want to sell. Think about that.
22) When someone claims to get rich quick schemes based on charts, moving averages, head-and-shoulders patterns, or resistance levels, walk away.
23) The phrase "double-dip recession" was mentioned 10.8 million times in 2010 and 2011, according to Google. It never came. There were virtually no mentions of "financial collapse" in 2006 and 2007. It did come.
24) The low-cost index fund is one of the most useful financial inventions in history. Boring but beautiful.
25) The most boring companies -- toothpaste, food, bolts -- can make some of the best long-term investments. The most innovative, some of the worst.
26) Investments that offer little upside and big downside outnumber those with the opposite characteristics at least 10-to-1.
27) Marty Whitman says about information: "Rarely do more than three or four variables really count. Everything else is noise."
28) 30 years from now the NIFTY50 will look nothing like it does today. Companies die and new ones emerge.
29) The real interest rate on 20-year Treasuries is negative, and investors are plowing money into them. Fear can be a much stronger force than arithmetic.
30) Make a brain tattoo of the Buffett quote about progress: "First come the innovators, then come the imitators, then come the idiots."
31) The next recession is never like the last one.
32. The best investors in the world have more of an edge in psychology than in finance.
33. What markets do day to day is overwhelmingly driven by random chance. Attributing explanations to short-term moves or discussing them is like trying to explain lottery numbers.
34) If you have any kind of debt and you are thinking about investing in anything, please stop.
35) “In this business, if you’re respectable, you’re right 6 out of 10 times. You’re never going to be right 9 times out of 10.”
36) There is no accountability in the financial gurus who come on TV. People who have been wrong about everything for years still draw crowds.
37) Just High income will not make you wealthy, saving and spending responsibly will.
38) A 20% loss requires a 25% gain to get back to even, but a 50% loss requires a 100% gain & a 90% loss requires an astounding 900% gain, just to get back to even.
39) Most of what is taught about investing in school is theoretical nonsense. There are very few rich professors.
40) Thirty years ago, there was one hour of market TV per day. Today there are upwards of 18 hours. What changed isn't the volume of news, but the volume of nonsense.
-REGARDS-
Kirthee Bane
