Friday, June 25, 2010

Goden Rules

Dear Readers,

It is a time-honored theory and success mantra as the share market investment should be with a long term vision. Every one of us knows this hypothesis but very few percentage apply this tactic with an addiction. I am sure that short term/intra-day gaming will never make anyone prosperous or the final results will probably of negative, or in general, it will bring you back where you started. Today, I wish to quote few my favourite, Sir John Templeton’s 16 Rules of investing for readers. Don’t consider these lines as usual or as just interesting quotes, instead these are the essence of experience of an investor legend shorten in precious words.

1. If you begin with a prayer, you can think more clearly and make fewer mistakes.
2. Outperforming the market is a difficult task.

3. Invest !.. Don’t trade or speculate.

4. Buy value. Not market trends or the economic outlook.

5. When buying stocks, search for bargains among quality stocks.

6. Buy low. So simple in concept.. So difficult in execution.

7. There’s no free lunch. Never invest on sentiment. Never invest solely on a tip.

8. Do your homework or hire wise experts to help you.

9. Diversify – by company, by industry.

10. Invest for maximum total real return.

11. Learn from your mistakes.

12. Aggressively monitor your investments. Remember, no investment is forever.

13. An investor who has all the answers doesn’t even understand all the questions.

14. Remain flexible and open-minded about types of investment.

15. Don’t panic.

16. Don’t be fearful or negative too often.

Equity investment is one of the riskiest segments in the whole kind of investments and you must have self convinced on the risk factors before you enters. You should have measure your own financial/emotional levels before entering in such a playground. You have to be a mindset to take things in a cool way even the sensex touches again 8000 levels. But its only possible when your selected stocks are best in their respective businesses.

Few People who capable to move with the fast moving market trends can only make gains in the same day or in short term trading. The game is highly hazardous and not for the common man. Majority of us shifting to long term investment after suffered considerable burns from the intraday/short term deals. This shift is mostly not on the basis of improving strategies, but cause of limited options. My experience says, a person who has worthy experience in long term investment can perform better in the short term games. Or it is better you start with the patience game and gradually reducing the time frame from the experience you gained or the knowledge you acquired.

Happy investing & regards

Shabu Thachat


  1. Sir,
    Thanks for the article. If experts like you are with us then we will not loss confidence even if sensex touches 8000 again.

  2. True Shabu!!..long term investment only can give a ultimate success in this area.. basically we should be buying "businesses" rather than buying stocks and also key is every investor should be emotionally neutral, resisting both fear and greed.

    Best Regards

  3. Shabu Sir,

    Good Chapter for investors. And you kept on educating investors despite your busy schedule. You always try to educate ppl to come out of Noise

    and be calm with investment and we are fortunate to learn from you backed by immense experience.

    Every where on earth we have good/best books and good people to Help make good money, But still very few ppl make

    huge bucks.

    Its not just about books/lessons but its ONE's control over greed/not following heard, controlling ones Temptation against too fast too soon rise in

    price and catching it to make quick money. Such type of ones controlling characteristics comes by years of experience and not just by reading.

    Human Beings are lazy when it comes to investment. They need 1 stop shop to make money(of-course free(80%) or cheap(20%)). There are very

    less People who do Detail analysis before investing in stock.

    What i meant to say is that : "Every Body have Access to White Paper and Pen but very less People become Successful Artist".

    Napolean Hill the author if "Think and Grow Rich" once said, after lifetime studying some of the most successful men and women, that the ability

    to exert self-discipline on oneself is the key to Riches.

    The universal principles that do no change irrespective of the technology, geographical boundaries, circumstances, etc is the "The Law of FARM" :

    we cannot sow a seed 2day and reap 2moro. It takes certain time for the seed to grow in to tree, it has to go thru different seasons. Nature

    does not help us with INSTANT GRATIFICATION so does Stock Market

    When in doubt ppl shd stay away from the market because DELAY cost less than Losing the money.

    In the financial markets, the “majority is always wrong.” When the crowd is overly bearish
    this is the best time to be buying stocks, When the crowd is overly exuberant, this is the
    time to be selling stocks. The financial markets work in this ironic way because not everyone
    can win in the market

    10% of the people follow the emotional way : When yous friend tells you that
    this X stock is 10 bagger THEN irrational exuberance is formed dont buy and stay away.

    When your banker starts offering you credit facility against your shares to buy more
    shares dont jump on such deals : Stay Away.

    Here you do not require any intellectual effort or any physical effort, but for most
    people EMOTIONAL decipline is the MOST difficult.

    Decipline and Emotional Control is the way to Successful Investment.

    Happy Invesinting :)

  4. Dear James & Venkat,

    Thanks for encouraging comment and I always values your words of inspiration..


  5. Dear Mahesh,

    Thanks a lot for the detailed & analytical comment filled with knowledge, and for remembering previous posts ...




The blog is associated with information on Indian stock market and author’s investment view points on various emerging stocks/sectors. The contents discussed in this blog are purely my own personal opinion and in no case weigh it as any kind of recommendation for stock market investment. The sheer purpose of this blog is to educate the interested community on market related subjects based on my experience and I am, in no way, responsible for investment decisions based on the contents described in this blog.

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