Yesterday, I have seen the best movie and Oscar Winner of the year 2004 “Million Dollar Baby” again and the Best Supporting Actor Morgan Freeman explains the fundamentals of the boxing and which is closer to the markets too. In his words “Everything in boxing is backwards, sometimes best way to deliver a punch is step back”.
“Protect yourself at all the times” is the rule in the boxing and likewise
“Preserve your money at all the times” is the rule for investing game.
Whatever rules you formed for investing and filter through above rule gives you a very good frame work for long term investing. If you have greater time horizon then it is always safe to build defensive portfolio. There are far more ways to lose than to win in the market and what you don’t win can’t hurt you. Doing the right thing is really difficult. But not doing the wrong thing may be a bit easier, and a whole lot safer.
Some random tips for Investment success:
Usually a company or an investment theme decays little by little. You have ample time to get out, if you just start.
A good collection of smaller companies is usually more attractive than very big companies.
Catching a change is the most profitable of all investment strategies.
All good investors are contrarians.
An attractive level to buy first class growth stocks has been when PE ratio has been lower than the growth rate and they provide a comfortable yield. They rarely sell for less than twice the multiple of NIFTY.
If you stay with a collection of strongly growing enterprises year after year, you will in time become rich.
The investor should spend almost all the time on learning the facts of the company, not on the stock prices.