By Baniya Beast,
Yesterday I was messaging to the people who have guided me personally and professionally. It was Guru Purnima and blessings from them matter.
I wouldn’t do justice if I forget the Guru whom I paid hefty Dakshina – Markets!
I’ve been part of public equities for a little over 14 years. Initially started with reckless trading and then drifted towards investing.
King of Good Times
There has been lot of stocks which performed for me in the bull phase. Almost all were microcaps. Some of the stocks I invested and got supernormal returns are Valiant Organics, Dynemic Products, Seya Industries and others. Everything I touched turned out to be gold.
Then came the arrogance. It started with sloppiness in research, quality of due diligence and sole focus was on growth.
Unaware of it but the clock was ticking.
The current 17 months lull in microcaps has seen erosion of profits (not principal) in the portfolio. The gains made in the bull phase got me covered.
But the point is I lost money from the peak. Portfolio drawdown is above 30% from the peak. I feel disappointed with myself because I wished to prove Buffett’s quote –
Only when the tide goes out you’ll discover who’s been swimming naked.
Gyan Ki Praapti
The capital invested is low in your early career and that is the advantage I have on my side. It has given me rich experience of focusing on balance sheet, quality of business, Promoter integrity (still learning). The list of wisdom gained is bit too long.
This happens because when the stock you’re betting on continuously bleeds/stagnates, you start researching more. You’ll dig more than you could imagine. You’re hungry to unearth all the quality and quantitative information. Your thought process and direction matures.
Then there are certain short-hand axioms I found. Say for example this –
Every business has a ’90 percent rule’ i.e. that one factor which holds the key to success. Figure that out and its trend and your buy/sell decision is ready.
These lessons cannot be learned from books but only by risking your capital. Because when you’re losing money, the nights you’ll spend assessing risks to business doesn’t come from just tracking it.
So bear markets are good. They make you sharper. They test your conviction. They educate you on stock-picking.
This post was originally published by author Baniya Beast.