Investing for ad infinitum

Personal finance
21

When you are investing, I guess it is better to call them as businesses, more so when you are investing a good amount. So to make return in any business we have to follow the business along with keeping an eye on the price, and if we want to make 20% returns, obviously our effort should increase, and we want to have a 20-25% return at the PF level, then the effort multiplies and everything that pertains to businesses and stocks come into picture, right from following Fed news to SIP inflows.

So it is not impossible, but difficult.

22

I was just giving some examples. Nothing to do with educational courses.
Okay. Let me try with something else.

Some 30 years back most of them from my city used to go to gulf countries. They would easily get jobs. It’s not the same now. There are people from other parts of Asia who are ready to work for lesser pay.
In few years even working in Canada or Some western country may not give the same money the way it does now.

23

Of course.

Only when something is distant and distinct, it has a flavor, once it becomes common knowledge it is not wild anymore. Same applies to a lot of things in life.

Although a few things remain the same, if not get strengthened, so there is this option.

24

I am holding IOC since 2003. I purchased 1000 shares for 25000/-. After five bonus issues, it is now 18000, at CMP , the value is 13,86,000. Add the dividends.
I hold 6 more such stocks, but I don’t want to make my portfolio public :slight_smile:

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25

Yes, you are right, but 20 years back, 1lakh for a stock was big money. For retail investors, 25-30-35 K was the standard. But I am hopeful, if India continues to grow at 7-8% up till 2040, I shall be having a portfolio of 5 cr+

26

Yes. Read this article to get a flavor of how it can skew the true picture.

And a person who curve fits is basically someone who after connecting a curve through historical ‘success points’ arrives at great outcome, but it is of not much relevance because the twisted curvy mess can only mean randomness and would almost always not work for future occurrences. Infact an approximate line would probably have a better chance of meeting closer to future points. Relevant for trading systems, and traders should be very wary of this happening.

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27

Correct. And you have 6 stocks of 25k. That’s 1.5lakhs. Multiplied with 100 is around 1.5 crores. Wowwwww. Really appreciate your patience. :+1:

28

I don’t know the price journey of IOC.

So what was your feeling when the price fell from the top or ATH, what did you feel when the price fell by say 30 or 40% or halved, despite such a fall you were in profit more than you had expected so you did not sell, or you knew that it will rise again because you have followed the business, or you wanted to take a chance and wait for it to go up again, or the stock being a PSU can be left for future generations, so no bother?

29

What’s there in just naming the stocks in public when you are disclosing your returns?

Anyways. It’s your choice.

30

All are not equally weighted. I don’t know why, I always have trust in petrol .

31

One big guy of stock market once said, if you get nervous when you find your investment has halved in value, the market is not your place.

32

I think Warren Buffett said that.

I am asking about your personal experience.

33

Now I have more reasons to hold my BPCL shares which I am holding for past 3 years. current 10 percent below my buy price. :grimacing::grimacing::grimacing:

34

As I have said in my opening post, I am invested in behemoth PSUs. Woh log dub giya, toh samjho India dub giya. SO why worry about such a situation? I have this conviction.

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35

That is his conviction, even his profession perhaps. What is yours.

He can afford holding such names apparently, can you afford.

These are personal, just like tax slabs :grin:

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36

The only PSU I hold is Bharat Electronics :slight_smile:

37

I still have bpcl, ongc and irctc. Will exit them too when I get good spike.

38

:pleading_face:

39

aha… What you are looking for is the holy grail of investing.

I assume your question is academic, so I will try to outline a theoretical possibility.

Be ready to take help of google baba, whenever needed.

Does the holy grail of investing exist? I do not know.
I am very sure that picking winner stocks and keeping them till infinity is not the path towards it.
esp as @VijayNair menitoned its Survivorship bias impacting stock selection.

Think over it.

The 33-year average tenure of companies on the S&P 500 in 1964 narrowed to 24 years by 2016 and is forecast to shrink to just 12 years by 2027

For Nifty 50/500 I couldn’t get the data but I am sure the trend will be similar.

What guarantee I can have that stock which I have picked will perform well in the foreseeable future. Even if i decide to exit, what criteria i can set to exit and what if just after I exit that stock once again pick up the momentum

So just picking up sure shot stocks maynot be investment forever startegy

Or is it?

There are mathematical models available, which try to solve the above problem.
Coffee Can investing theory represents one such model.
In a nutshell, one can pick up the top 10 or 20 stocks which fit in criteria and sleep over them for 10 years. A few will be dudes but the rest of them should give very good returns.
However I have not seen many who have patiatice to sleep over for 10 years, even if stock is underperforming year after year is a test of will power.

The way I look at investing for perpetuity

  1. Preserving wealth is more important instead of taking risks. Loss may not be recovered, whereas (in comparison ) low risk will help in future to bounce back. Effectively reduction in drawdown is important than maximising profit to avoid sequence of return risk .
  2. Need to survive across market cycles , Effectively need to consider asset classes beyond stock

Why it is so?

  1. What we have in the history of stocks is just 100 years of the US stock market. Which is not sufficient for drawing conclusions for forever investment.
    Also there are very good( and very ugly) reasons why the USA stock market has performed better than any other country. India Stock market history is even less.
  2. What if the Indian market crashes like Japan (although it will not) and never reaches its peak? For that matter the US market also has seen gruelling long bear phases. How do we know India may not see it.

Possibly it means for investment forever.

  1. For equity investment, instead of stock better rely on index
  2. Global exposure is essential
  3. Need to look asset class beyond Equity

Academia has suggested one philosophy for investment forever.
Modern Portfolio theory discusses Portfolio management

Quick introduction to Portfolio management is MIT 18.S096 Topics in Mathematics with Applications in Finance, Fall 2013

Cutting long story short, if we mix uncorrelated (or less correlated) asset classes, and do periodic rebalance. We can have an investment portfolio which works across market conditions . It will not give best results in any market condition at the same time it will “work” everytime.

Do we have examples of it?
oh yes!

  1. Harry Browne’s Permanent Portfolio
  2. Ray Dalio’s All Weather Portfolio
  3. Craig Israelse’s 7twelveportfolio

Is it the only way to achieve nirvana?
Well… there are multiple ways to skin a cat.
For a lazy person like me, investment forever means a multi asset, global portfolio with periodic rebalance.

It does not mean this is the only way.

Will it work? (stamp paper per likhaw du kya? :slight_smile: )
it is “supposed” to work across economic cycles, it can’t give better returns.
Also if tomorrow a comet hits earth or more rationally a dictatorial government puts restrictions, it’s not going to work.
Anyhow… anything else also may not work.

Do I believe in it?
Multi asset, periodic rebalance strategy requires (almost) zero prediction about future performance. Yes, as I stated earlier, I am a lazy person, and it suits me best. I follow my own variant of it.

oh god! I havnt answered your question! Simply because I do think its wishful thinking (for me).
How may active mutual fund managers performance is better than index? If majority of MF managers cant do it, I cant do it. Think over it,

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40

Give the money to Marcellus Investment Managers, they claim to give return of 20%.

Just watched his two hour long presentation just now, of course fast forwarded the same.

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