“What the market teaches you is humility. That you can take nothing for granted, and that value is a figment of your imagination. Investing decisions, therefore, are ticking time bombs. Of course, we all make mistakes, and that’s just fine. But we would be stupid not to admit when we are wrong. Humility is the first thing the market teaches you – you either learn it by yourself, or the market would anyway teach you”
On Teachers’ Day, members of the incredible Capitalmind Premium community share their most significant learnings from the markets. Novice or Experienced veteran, Investor, or Trader, you will find some fantastic food for thought here.
What is Capitalmind Premium slack?
A community of Capitalmind Premium subscribers on slack with channels by interest areas around investing, personal finance, and a few non-investing channels where members discuss almost everything under the sun
We asked them what some of the biggest lessons the market has taught them are
Rehan Lateefi, who works at Deluxe Media, has been investing in direct equity for over 12 years:
- Start with financial goals. If you don’t know what you want, stock markets are an expensive way to find out.
- Equity returns are not FD style with higher CAGR! Equity returns are lumpy. There will be years when you won’t be making any money or not even beating FD returns. And then a bull run starts and you more than make it up. Important not to get disheartened and throw in the towel.
- Failure (in investing) is not meeting your financial goals. Not beating the market or your friends or peers is not failure. Don’t forget this fact.
- Financial markets are full of charlatans and cheats. Verify and only then trust any advisor or intermediary.
- Try to find a circle of like-minded friends or journeymen for this long journey. There will be moments when you will need support and moments when you will have to provide support.
Nitin Sharma, works for a Semiconductor company, he talks about the rules of the game
- Usain bolt is sexy but Mo Farah is equally good and successful. Know yourself first, trade accordingly. Don’t chase a strategy that doesn’t suit your personality.
- Risk se ishq nahin. Leverage, Risk, Stress are all good for you in small proportion. Always look for the next horizontal support/resistance and write your trade plan for what you will do there. Helps maintain calm during the panic. Keep stop loss on a position below 1% (0.5% preferred) of account size. Don’t fight with the market, be humble take the loss, or reverse position.
- Asset allocation(debt) is Rahul Dravid of your team, it may frustrate you during T20 but will be big assets on tricky pitches in overcast conditions. Always keep the powder dry they say.
- Don’t try surgery at home, go to the Doctor instead. Always maintain Core and Satellite. Let Core portfolio be managed by experts(MFs, ETF, CM portfolio) and keep satellite for fun/learning. Start with 10% Satellite only. Increase based on performance.
- Don’t forget to smell the flowers. Investment is for achieving goals not to beat fund managers. Keep your focus on goals, don’t overestimate the returns when planning.
Madhavan Sridharan, who works with an FMCG company, talks about the science and art of trading:
- My exposure to Ichimoku and Point & Figures based analysis changed my understanding, approach, and methodology to a different planet.
- “Trust the Charts” has been the mantra and always stood strong. These learnings helped me understand the 80% science part and the 20% art which is discipline and handling emotions through trading psychology is currently being pursued.
- Success stories leading to increased profits can all be attributed to the 80% science part from the two technical analysis methods while any loss is only due to lack of graduation of any sorts in the 20% portion of trading psychology.
Bhowmik Shah, Co-Founder, and CTO at CyberNX (Information and Cyber Security), keeps it crisp:
- Planning is very important (Asset allocation, how long will you stay invested, what are your goals)
- Be brutal when trimming bad performers. I stuck around for a long time with poor stocks even though they were in losses. Exited them with much grief.
Shraddhesh Doshi, a CA and F&A delivery lead, says:
- Markets made me humble. Making money is more important than satisfying Ego.
- Herd psychology or sentiment is a factor more important than the fundamentals
- Accounts and Economists are mostly conservative ( skeptical about the future) and Optimistic investors make the most out of bull runs.
Yogesh Namjoshi, a Chartered Accountant who works as Finance Manager, writes:
- Don’t try to jump off a winning horse while it is running. More often than you will get hurt.
- Ego is a bad thing. In the market, more ego means lesser wealth. I became CA in 2006 and I thought I had better knowledge of how to make money in the market, After all, I studied capital markets during CA Course. Started taking some “bets”. Got success (by luck) in the first few and then faced the reality check. Learned the lesson the hard way.
- There are 1000 strategies in the market to make money. Don’t keep hopping across strategies.
- If you don’t understand listen to take help of an advisor you are comfortable with. Do your homework though as borrowed conviction seldom works!
- Setting up goals is extremely important, to begin with. Without goals, we just keep wandering here and there and end up nowhere. Asset allocation is key. Cash is also a position. I learned this after joining CM.
Vikrant Khanna, a full-time equity trader, and investor, brings out the philosophical side of things
- I became an active-active market participant in 2017, before that I was a passive-active participant. The passive-active refers to buying stocks on tips and hearsay, active-active means buying based on my own learnings, based on my own conviction and idiosyncrasies.
- To summarize my learning from the past 4 years, Market has taught me that everything is internal to me. Nothing can be gained and achieved by pointing at something external to me. I believe the presence of something higher than us is also internal to us, nothing can be gained by running around searching for it in the outside world
Saurabh Prabhu, who works in Property and Casualty Insurance space, shares
- (The KISS principle) Keep it Simple Stupid: Unless I’m willing to dedicate a whole lot of time and energy into studying the markets, corporate action, sentiments, valuation, etc. the chance of me beating the indices, in the long run, is a coin toss. I’ve kept 5% of my net worth aside to “gamble” in the market (including crypto and meme stocks) entirely for FOMO and small talk purposes. The rest is in CM portfolios, mutual funds, ETFs, debt, and a few smallcases.
- Planning is key: A detailed financial plan spreadsheet that accounts for salary, taxation, retirement goals, regular expenses, special expenses (vacations, car, etc.), etc. greatly helps to keep emotions out of investing. Simulate each year and plan to retire with a big fat corpus taking uncertainty into consideration.
- Cut the noise: If you are my age, you will hear many friends and colleagues boast about their day-trading and crypto wins. While I’m happy for them, I also understand how much luck plays part in any investment decision. Diversification, SIP, asset allocation, etc. are far more important than picking and timing stocks. Even if I don’t outperform my friends in the long run, I’ll still have come up on top because I slept better and did more of the things I enjoy.
Balakrishnan, a Market enthusiast, keeps it real simple:
- Staying invested and having conviction, as in not getting swayed by doomsayers, are amongst the top lessons markets have taught me. But the top rank goes to the lesson it taught me to do my homework thoroughly, much more than what I would on picking a stock before I choose my portfolio advisor or choose whom I listen to and act upon.
Santhosh CN, a Cyber Security professional, writes:
- For a retail investor like me looking for a medium to long-term investment, what works best is – simplicity, consistency, and temperament (some level of nirvana in volatile market conditions – doesn’t matter up or down). Most importantly, no matter how much I think I know, I should just follow professional advice when it comes to investment!
Pranjay, who works as a Data Engineer, shares his learnings in the form of a story:
- I come from a family that imagines doom and gloom when they think of the stock market. Share market was “bina mehnat kamaya paisa, vo ek din mehnat ka paisa bhi le jayega.”
- This was until October 2019. I don’t really remember what made me take investment seriously. So I decided to start. I am an engineer, I study things before I start working on them. That is what I did. The first thing I realized was inflation. I kinda always knew it was a thing but never knew why things get expensive. I was like, salary goes up so prices go up. How wrong was I.
- My first investment was in N100, cause USA, USA! It was early 2020, then the rona (crying) happened. Markets tanked. Gaya mera paisa (Bye Bye Money), I thought, should’ve listened to my parents. Started watching market news. Some expert promised a swoosh recovery. I was like there is no way, how can markets bounce back when all the economy is closed.
- Zerodha taught me fundamental analysis and fundamentals were not good. But the market did a swoosh recovery, I was baffled. I thought I knew how it all worked. I know better now. It’s not just fundamentals. There is emotion involved. Probably more important than fundamentals. In markets, price is not equal to value.
- I am still learning. Capitalmind community has been awesome. My goal is still the same, beat inflation (and then some).
Vipul Mehra, talks more about humility
- Humility. However long my experience, however deep and complete I think my understanding of a situation is, the market never fails to surprise me and in doing so, teaches me, again and again, that understanding is always incomplete, that there is always more to learn. When you lose money, learn and move on. When you make money, remind yourself that it is not because you know all of “it”.
Santhosh Zacharias, who works in the power utility sector in the Middle East, says,
- Position sizing, you may be holding a 10x stock but it’ll not add to your returns if your position is small.
- Stocks are not life partners, say goodbye when it’s time to part (courtesy Yes Bank)
- How diverse viewpoints of large groups of people are exchanged and resolved harmoniously in the market. There’s always a buyer and seller for the right price.
Lokesh Saluja, a Senior Data Scientist based out of Toronto, thanks the community:
- For me – Markets more than Fundamentals are herd psychology (Technicals) which I learnt from this community and best put in words by Arun‘s “Donkeys can fly” quirk. This is evident from Madhav’s and Nitin’s posts too.
- I learn every day from the Capitamind community and hope it only gets more vibrant with each passing day.
Niket Agarwal, a practicing Chartered Accountant, shares his broad experience:
- Greed is Good but too much greed will make you cry.
- Murphy’s Law was written after experiencing Stock Markets.
- Don’t go for a Trade you don’t understand enough.
- Listen to an Advisor- A Seasoned one but don’t blindly follow! Do your homework.
- If you think understanding Stock Markets is Rocket Science and you don’t have enough time to learn, skip Point 4 and meet Team CM.
A big thank you to the Capitalmind premium community.
As for the Capitalmind Team, you can read how the market taught us and perhaps humbled us many a times here, here, and here.
We’re sure you too have a story to tell. Do tweet to us at Capitalmind_in and we’ll be happy to learn and share it with the larger community!
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