1/3 In the interest of #investors.
We need to assess our #risktolerance & find out our #lossaversion levels.
Risk tolerance means how much risk one is willing to take with their investments . Do you start selling out of panic the moment stocks fall or hold patiently ? +
2/3
Loss aversion means to be fearful of losses & holding to loser stocks in the hope that they shall fly someday. The delay we make in facing "losses" by simply postponing selling our junk/loser stocks. Ultimately we end up losing more money than before +
3/3 Equity is subject to market risks. True, that greater the risk , higher the return .But how much of a risk is one willing to take ?After a point capital protection becomes paramount.
Calculated bets (after knowing reality)make more sense than blind cloning of a portfolio.End.
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A book that must be read by all direct equity investors but will be appreciated & understood by a few, that too only after witnessing an entire cycle play out in markets.
Few of my takeaways from this 💎 by Howard Marks.
👇🏽
2/30
To consistently beat the market,
You either need a ton of luck or superior insight & awareness of psychology.
Because investing is at least as much of an art as it is a science, it is essential that one's investment approach be intuitive & adaptive always.
3/30
All investors can't beat the market, since collectively, they are the market.
Stellar returns majorly come from correct non consensus forecasts.
Here Second Level Thinking matters immensely.
And the number of people capable of it is tiny.
Weekends used to consist of watching episodes of Mahabharata , Ramayana,Mogli ,He Man and the likes.
We danced clumsily to the 90's Indi Pop songs & thought WWF was real.
We created so many memories with hardly any photos thanks to the 32 film roll. 😄
3/10
Small things like a top , marbles , a rubber ball , or even a piece of cake with some frosting ( there was no concept of black forest cake ) used to make us insanely happy.
We valued each & every possession of ours.
And somehow never craved for more ...
A brilliant no frills book that offers a framework for thinking about how to improve your decision making , along with a set of tools that help execute it.
A few of my takeaways from this gem !
2/18
There are only 2 things that determine HOW your life turns out : LUCK & QUALITY OF DECISION MAKING.
We have some control over only one of those two things.
When you make better quality decisions, you increase the chances of good things happening to you.
3/18
Our objective is to choose an option that gains most ground in achieving our goals.
Sometimes which entails the least risk.
Thereby we examine the quality of the beliefs informing the decision,the available options & try to envisage the future based on our choices.