“If you go Greedy when markets are at peaks and; fear when markets are at bottom, you never make money in stock market.”
My early years of adventure with stock market was when I repeatedly saw headlines in all the daily news papers and news channels that SENSEX making new peak every day nearing 21K.
I went on to be crazy and put my hard earned salary into the market. Initially I was lucky and I made decent returns. I became more greedy and pulled all my saving and the fixed deposit money into equity market. This is when Sensex was near 21k. I was ignoring the suggestion by fund managers warning about high peaks and suspicion.
It was unprecedented move in my life; for the first time I heard of word called ‘recession’. Sensex was falling like world trade center on 9/11, on every fall I was hoping and praying that market will recover. But I was too late by that time; my net worth was down by almost 45%.
This is when I was very much frustrated and pulled all my money out of stock market and started to read more books on investments. This fall pushed me to know how to face challenges and opened doors for learning more about investment world.
I was very much impressed by the legendary investor Warren Buffett approach on how and when to buy a stock. ‘Reach Dad and Poor Dad’ by Robert Kiyosaki taught me how to manage money to be wealthy in one’s life.
Warren Buffett’s approach of buying stocks
Buy company stocks that can do well for ever
Buy at the low intrinsic or fair book value.
Keep things simple.
Robert Kiyosaki’s approach to be wealthy
Collect assets reduce liabilities.
Cash flow.
Then I was very keen to know about Options which are called as weapons of mass destruction of one's financial system.
My experience taught me: Options are very attractive to make money when there is strong Bull Run or strong Bear fall. Never get into options when markets are directionless or no clear moves.
My ‘Gold’en experience was quite good, when I researched about investing in gold I felt disappointed by knowing how much I missed. I always hold at least 10% of my investment in gold. You can always buy gold or silver or palladium when those are at low and keep forever. No recession will impact gold, in fact they reward during recession*. Never forget agriculture commodities, aren’t we experiencing rise in day today food items?
At certain times people go crazy about one asset and start blowing bubble. For every bubble, there is always a needle somewhere. And when they meet, all of us learn some very old lessons. So be fearful at highs and greedy at lows to be successful in investing world.
Happy Investing!!
