One thing I got right - Bitcoins

I learnt that my post on Bitcoins attracted the maximum views. What further astonished me was the view were the highest when Bitcoin was at its peak. I guess anxious investors were seeking confirmation of their bias and mistake in investing in Bitcoin (at the peak) 

Missing the Bitcoin boom and bust was the biggest learning of the year. I am happy I got it right although it may have been just luck by chance. 

My learning from this episode has been more on ‘controlling my emotions’ and urge to make a ‘quick buck’. Investing is a long term process and the feeling that you can multiply you wealth manyfold in a year is a sign of immaturity. 

Lastly, inaction is also an action. It’s good to sit tight and control one’s emotions!!! 

Investing is a mind game  but control your heartbeats!!!

Asset Class

It’s been an ugly year for all asset classes and cash has emerged as the best asset to hold. Cash is King sums up 2018!!!

However during the year the assets have been volatile. This is reflected by the movement across FAANG, Oil, EMs, US bonds and currencies. And frankly no one can predict the future and hence it’s wasteful to spend time and effort crystal ball gazing. 

‘No one knows’ is the mantra one must believe in. I bet even the astrologers would have got things wrong. 

Having said that the better approach to investing is to assess the current environment and investment climate to understand where we currently stand. This has been an idea I have learnt from Howard Marks and seems to work well in all walks of life. I encourage you to read his memos where he succinctly explains his thought process and approach. 

Preparation is better than Prediction!!!

Reflections for 2018

2018 has been a year of learnings. Investors have learnt the most on banking and financial services sector. The PNB - Nirav Modi scam and the asset liability liquidity crunch in the NBFC sector were the highlights of the year.

The year for an investor teaches us to be vigilant about happenings (good, bad, ugly) in the market, sector and companies invested. Good turns to bad to ugly very quickly and without constant portfolio monitoring one cannot sleep peacefully. Obviously even with such review unfortunate events would happen which would force us to take tough decisions. Cutting losses and redeploying capital is much better than running one’s investment operations on the hope of better performance. 

Few things we can do to manage our portfolio:

1. Limit individual holdings to max 5-7% of portfolio value and not shying away from selling / adding to rebalance. 

2. Reviewing ones under performers to assess if a) have you got in at the right price b) has the fundamentals of the business changed impacting valuations. If you got either price or valuations wrong good to cash out. 

3. My all time favourites. Increase aggression by buying more into your winners.

Happy Investing for 2019!!!