As we draw towards the close of 2011, it is a good time to reflect on the year that has gone by, which has not been the best one for equity investors. For people like me, the years I have put into equity research has taught me that that there will be smooth phases accompanied by equally rough patches. That said, what needs to be understood is that is important for us to be flexible when it comes to investing and continuously look for good opportunities. In reality, a difficult phase is the time to lay the foundation that will ensure we make the best of a better period that sooner or later will call on us.
As I sit and pen this note, I cannot help but wonder why investors end up doing the wrong things if the winning formula in the stock market is remarkably easy to comprehend. In reality, it is the result of factors like buying products from sales teams, investments done in a lump sum manner and decisions that are sadly taken without looking for the devil in the fine print. All of this works as long as the going is fine. Once that ends, one realizes the salesman was not a specialist or it was a particular point that should have been read with a little more care. This is when the problems start to get larger.
The investor is in a tough spot and he just looks for instant solutions when there are none. Decision making here is done in haste and he is invariably off the mark. Once the losses start to creep in, the mindset of being risk-averse sets in and money just finds its way to avenues which is never where it was meant to be. All it required of the investor was to identify ways to win. Not such a difficult thing to do after all. The fact is we at ithought did and we came up with what we call the ithought way.
I am keen on keeping this communication channel going and sincerely look forward to hearing from you. Do mail your thoughts and ideas and let us figure out ways to make our investments as productive as possible.
Happy investing during 2012!
Founder and Chief ideator.