The Palimpsest of Sawbones Surio

Pessimism of the Intellect, Optimism of the Will

Response to TIPblog’s post “Long Term Investing”

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TIP Guy recently posted an article titled “What does Long Term Investing Mean?“.  Quite well written, as always. My takeaway from the post/comments:

  1. The fundamental definition of investing was teased out, by juxtaposing it with trading.
  2. Instant gratification Vs. Delayed gratification. Getting Rich slowly. And benefits of the same.
  3. Not so positive influence of media that encourages feeding frenzies, resulting in losses to masses.
  4. As an aside, some stock tips were also traded, but strictly on off-the-cuff basis.

So, while the post itself and comments around it was quite insightful, I was quite bemused that in despite the proliferation of so many finance portals, there was actually a need to point out the various insights that the post does. Time for a small side note.

One of Bill Gates’ famous observations with Thomas Friedman goes like this.

In China, if you are one-in-a-million, then remember that there are 1300 people just like you.

Therefore, I tread carefully and humbly when it comes to the Indians and the Chinese. After all, does that aphorism not hold true for us also? We are 1 billion people as well, No? Therefore, even after accounting for the not so bright ones, I always go with the assumption that the other person is as smart as I am, if not more :-).

End of side note. Therefore, I was quite convinced that the post is surely redundant. Then the comments came and hit me full broadside! So, I went ahead and shared my thoughts/surprise on the matter, quite literally on-the-fly.  Seems like my writing style wasn’t entirely clear to people. So, I’ve decided to expand it into a post with rationale laid out clearly, FWIW. HTH 🙂

1. Concurring with the TIP Guy’s (TG) approach:

Well, well… what do you know, I actually hold a position in Praj [Hooray….feels good :-D ] for quite a while now. I remember the lengthy discussion over nights with the missus about that industry, its growth potential, the future/projected earnings from present trends, and lastly collecting a lot of news articles on the company before deciding on the amount to put in ;-]. And all this was before Google Finance, so there were no ready-made market index curve with A, B, C, D and E indexed on various points…. So effectively the comment and your post made me jog down memory lane… I also had VST tillers tractors at the same time and in a moment of madness, sold this stock when the price dipped one too many one day. Today it is trading at 200% over my last sell price and I kick myself to this day. I am thinking of re-entering a position with VST. What do you think?

2. Voicing my observations on how the retail investor never had it so good in his favour:

Your post also made me realise how liberating it is actually, to be a retail investor as on date. Although, there is no end to the amount of stock portals in the market, Let us take the most common ones for this particular comment.
1. Rediff Money provides for each stock, exhaustive list of various fund houses that presently hold a stake in the stock. Straight away, this could form an important yet rapid indicator if the certain stock is trading on hype or substance (for those who want a quick overview at the most).
2. Google finance presents a stock price curve whose every ’single’ contour is indexed with press releases about the stock. One can easily look at the market reaction to certain news items and learn on the essentials to concentrate upon (A little time-consuming, but highly educative).
3. Yahoo! finance provides historical EOD data in easy to use ASCII CSV format for 2-4 years for FREE. With a basic Excel literacy one could easily gather average stock price, price movement if any, just to name a few (This EOD data is a TA person’s wet dream, I can tell ya!). And this would also help in deciding if it is better to enter or wait a while.

3. Summarising from the observations made in “2” above, about why I had “Greater Expectations” from the general public:

I will restrict myself to these points only, and one can see that it is not necessary to subscribe or spend any extra money for “inside” information. All this information can be got for free [assuming office internet surfing at lunch-time ;-)], and so one [read as “I” :-?] would expect that your post ought to be redundant if not obsolete.

4. Dawn of realisation and some final comments:

However, after reading some subsequent comments and responses I decided to speak to some colleagues over the points raised (I am normally a ‘quiet investor’). It was unnerving that nearly 100% decide on a stock from TV channel reccomendations… 😯 OMG! The horror! Trades are executed based on ‘tips’ from friends with no regards to the fundamentals. After a few minutes of this conversation, I actually felt depressed.

So it is true: Common sense is not so common and the “very obvious”, does indeed needs to be fleshed out into an insightful blog post for the benefit of readers stumbling to your blog! The expression, “A Mad World, My Masters” [-Thomas Middleton] immediately springs to mind.

Ho hum, etc.

I hope the points I wished to make are clearer now? As always, gentle reader, I eagerly solicit your comments on the post. 🙂

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Written by Surio

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