I was on ET Now yesterday to share my thoughts on investing in 2017 and 2018. While I managed to duck their questions on specific stocks, you can see the nervousness on my face even when I talk about a few old names.
Here is the video of the chat (click here if you are not able to watch the video below)
Here are some notes from my talk that I prepared just to make the task a bit easier for you –
1. Thoughts on 2017: We have seen most of everything run up in 2017, including cyclical stocks, those already starting 2017 with excessive valuations, shady promoters, dubious numbers etc. Volatility has been low, however. Risk taking raised its head again. And the biggest risk that 2017 has brought with itself is the sense that there is no risk on the horizon. With 20% gain on the Sensex and with many stocks multiplying more than 2x, it may seem like a great year for people who remained invested to enjoy these gains. But the flipside is that 2017 seems to have made investors complacent.
Overall, 2017 leaves us with a lot of tough questions, which makes me uncomfortable as we enter 2018.
There are just two risks in investing – one, the risk of losing money permanently, and two, the risk of missing opportunities. I think, if 2018 reflects what happened in 2017, we will be speeding further towards the first risk. Don’t forget investors have short memories, and 2008 is already almost 10 years behind us.
2. Thoughts on 2018: Howard Marks says that the investment business is full of people who got famous for being right once in a row. I don’t want to be one of those persons, and thus I won’t venture out predicting anything about the stock market in 2018, except that they will remain volatile. So, stock prices will continue to move up and down.
People will remain greedy and envious of others making money faster, or losing money slower. They will continue to want effortless money. And if the markets continue to rise, the sins of envy and the fear of missing out will be enhanced to a much greater degree. In short, nothing will change. And I will be proven right.
3. Themes I’m watching out for: It’s difficult to generalize, but I’m looking at –
4. Themes I’ll be avoiding: Some general stuff here –
5. Do’s and don’ts for investors: A few pointers worth taking note of –
6. Good business expensive or bad business cheap?
That’s simple! For me, it’s always about good quality business at reasonable valuations. If I’m not able to find them, I will keep searching instead of allocating money to bad businesses or managements just because those are available cheap. Cash provides options, so I would rather hold on to it when I don’t have a good use of it.
I have been hearing people now looking to chor (crooked) managements to benefit from the valuation arbitrage their companies provide. This reminds me of the game of Russian roulette where you have a gun with six chambers and just one bullet. Would you play the game if I offer you a few crore rupees? If you say no, you are smart because you will be rich on five occasions, but will become a statistic on the sixth – a statistic that the world won’t remember fondly.
Specific to investing with bad managements, I am reminded of Thomas Phelps who wrote in his book 100 to 1 in the Stock Market – “Remember that a man who will steal for you, will steal from you.” In short, I would avoid bad businesses and bad managements at any valuations.
7. Books: Three best books I read/re-read in 2017 –
Statutory Warning: Nothing that I’ve talked about in the video must be construed as an investment advice to buy or sell shares. Please make your own decision, as blindly acting on anyone else’s research and opinions can be injurious to your wealth. My analysis may be biased, and wrong. I have been wrong many times in the past. I am a registered Research Analyst as per SEBI (Research Analyst) Regulations, 2014 (Registration No. INH000000578).
https://www.safalniveshak.com/thoughts-on-investing-2017-2018/
Created by Tan KW | Jun 26, 2024
Created by Tan KW | May 05, 2024
Created by Tan KW | Apr 17, 2024
Created by Tan KW | Jan 30, 2024