Ravichand on his blog writes about how winners bet selectively. The Question that investor face – Do you chase many mediocre opportunities in the market and bet frequently or search for a few great opportunities and bet selectively?<\/p>\n\n\n\n
In the absence of a crisis, great investing ideas\/opportunities are very rare and you generally get one or two of them in a year. Many good ideas can only be a poor substitute for a single great idea. Yet we want some \u201caction\u201d in the market every single day and many times we end up placing bets on even moderately good ideas. Why?<\/p>\n\n\n\n
The possible reasons:<\/strong> Need for \u201caction\u201d or seen doing something; No one is sure when the next great opportunity will come and\/or how big it will be; Professional fund management compulsions; Sitting on Cash on the sidelines without swinging your bat is nerve-wracking; Not many have the luxury to sit all day long \u201creading\u201d (working)<\/p>\n\n\n\n Quoting Buffett is a clich\u00e9 but many times it\u2019s the most appropriate. If you think that you would need a large number of investing bets because you have a big corpus then spare a minute to have a look at Warren Buffets investments in marketable securities. Around 87% of his USD 173 billion worth investments at the end of 2018 were concentrated in just 15 securities. By betting selectively on a few great ideas, Buffett has made a fortune.<\/p>\n\n\n\n The research study also highlighted this fact that investing\nonly on our high conviction ideas and consciously avoiding mediocre lower\nconviction ideas will do wonders to our portfolio returns<\/strong> and our\ninvesting career.<\/p>\n\n\n\n 5 C\u2019s\nof selective betting<\/strong><\/p>\n\n\n\n Competence: The skill required to find great ideas. <\/strong>You cannot become a great Pastry chef if you don\u2019t know how to bake. Similarly, if you are going to bet selectively on great ideas then you should first be competent enough to identify one.<\/p>\n\n\n\n Cash: Adequate Funds to back the\ngreat ideas <\/strong>What\nis the use of a great idea if it cannot be backed by adequate funds. Allocate\ntoo little and you cannot really feel the impact. Allocate too much and your\nportfolio can get wiped off. Always back great ideas with materially\nsignificant allocation which is neither too little or too much<\/p>\n\n\n\n Conviction: High confidence in\nyour idea <\/strong>When\nyou bet, place your stakes on an idea on which you have the highest conviction.\nThe one which you believe has the best chance of success backed by research,\ndata and thought. Betting selectively in great ideas only requires a bundle of\nconfidence. Confidence is needed in your investing process, in your investing\nstrategy and most importantly in \u2013 YOURSELF<\/p>\n\n\n\n Courage: Courage in times of crisis. <\/strong>Great opportunities come usually when there is a crisis or what you say as \u201cwhen there is blood on the street\u201d. There could be great opportunities when outstanding companies are going through a temporary problem. Courage to back up your great ideas during a crisis is priceless.<\/p>\n\n\n\n Character: Ability to say \u201cNo\u201d <\/strong>Last but certainly the most\nimportant \u201cC\u201d is your \u201ccharacter\u201d \u2013 your basic nature, trait and mental\nmake-up. Similarly, for an investor, the ability to say \u201cNo\u201d is a tremendous\nadvantage. When your friends and colleagues are caught in the market frenzy,\nmaintaining a Zen level of calmness and not biting at every cookie thrown at\nyou requires a great temperament. Sitting on cash without hitting the buy requires\ncharacter.<\/p>\n","protected":false},"excerpt":{"rendered":" Ravichand on his blog writes about how winners bet selectively. The Question that investor face – Do you chase many mediocre opportunities in the market and bet frequently or search for a few great opportunities and bet selectively? In the absence of a crisis, great investing ideas\/opportunities are very rare and you generally get one […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[74],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/458"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=458"}],"version-history":[{"count":2,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/458\/revisions"}],"predecessor-version":[{"id":460,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/458\/revisions\/460"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=458"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=458"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=458"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}