Tuesday, September 22, 2020

Test of Conviction

Conviction. A very common term in the English language. A word with a very focussed meaning." Belief in your words and actions".

Important for the Investor. Important for the Government.

For an investor, the true test of conviction happens when the markets fall as they have over the past couple of days. If you back yourself and put your money and see it lose 10% or 20% in a week is a priceless lesson. Pun intended !!

What is the logic that makes people invest in a 100 PE stock? Other than the fact that someone else they know is doing so.

F Fear

O Of

M Missing

O Out

Hence, truly speaking do not buy a stock or any product for that matter where your belief systems are ringing an rrrrrrrrr.......alarummmmm.

Yet its a common enough phenomenon and I too am guilty of doing so on numerous occasions. Solution - I do not have one or better yet read Prof Daniel Kahnemann's "Thinking Fast and Slow".

Better yet. Understand the dynamics and try to train your mind to avoid the 'herd' and the panic. Yes you will miss out on many opportunities. The beauty of this market is that 20 days a month you can look for fresh ones.

Deepak Nitrite looks deserving of 1K+ price. I have clients who have held it from Rs 40 when I had not even heard the name. The valuations are deserved unlike a lot of names in the 'Chemicals" space that have run up simply because they have the word - chemical attached to their name.

A market correction on the DOW or NASDAG or NSE or BSE is a good indicator of the long stayers and those that were just there for the good times. Use the moment.

A lot of brouhaha over the Agriculture Reforms Bill. My problem with this Government is that the intent is there but there is no follow through and Six long years is quite a long time for experimentation. They also have a lot of advisors with impressive ivy league degrees but no real ground level experience. An Economic Advisor who is waiting for the death knell before coming out with a rescue plan.

Governments across the world are trying to help and stimulate the business community. The Indian government on the obverse is expecting the Corporate world to come to its rescue.

Will there be War with China ?

There might be a short sharp conflict because I am very surprised with Xi's China. their aggression and martial displays means that either the think tank has concluded that they are too important to the world commerce that Europe and maybe a post Trump America will play along as they did with Hitler's Germany or. And it is a big or,, Xi Xinping is in far far greater trouble internally than is known and he will go to any extent if if it's starting a war - to cling on to power.

After all the BJP government did drop a bomb on Pakistan just before elections in 2018 and that swung a lot of votes even though there has been no material difference on the number of terrorists that are sent in by Pakistan.

 Like in or not we are living in autocratic times, see USA or Philipines, South America etc . Most people have given up thinking for themselves or we would not give weightage to a temple over the state of the economy or the tragic death of a filmstar over the thousands of migrants trudging through dusty roads of India, hungry with small children.

Maybe democracy is dumb. Whatever be the case, the markets will continue to offer value in select pockets. Do not believe that loudmouth on TV or that celeb analyst in the pink sheets. Do your own thinking.

Trust me. It works!