Value investing is now the In thing. Warren Buffet is all over the news. His famed letters and extracts therefrom are flying around in the Web as well as on Whatsapp. And every third guy on the Street is now an acolyte. Howard Marks, the other guru of value investing was in town last week and grabbed quite a bit of headlines, press and TV bytes. All the followers lapped it up and the media was happy to provide plenty of coverage. After all, it was a good thing for them- the icons are great speakers and the followers are hungry for their words. Add in the faithful’s comments in plenty and this gives rise another round of ‘X made 500 cr from an initial investment of 5 cr’ type of articles.
All these create an image that value investing is the thing to do. It is the way to find the multibaggers of the future. In fact, it is now progressively being considered that Value investing is the only way to find multi baggers! So everyone is now looking at the list of stocks and engaging in ‘If only…’ and there are plenty of examples out there to cry about. Why stocks, even the Nifty has been a multi bagger right? It was 800 and went on to 8000 in about 10-12 years! And this happened in the trading career of most of those who are currently active in the market! So enough reason to cry? Enough reason to stop doing everything that you were doing so far and turn a new leaf and become a value investor? Seems like that is what is happening.
For getting Value investing right it is necessary to start early in life. What about those who are already past the ideal age? Well, how about trying some Value trading? I coined that as a new concept and actually presented this in my most recent webinar Profitable Trading. In fact, that entire webinar was all about how to trade the long term. There is money to be made in every form of trading but personal failures account for lack of success amongst many. What I have attempted in this webinar is to take principles of investing and adapt/convert them into a trading environment with adequate rules and guidelines. I have structured it as Trend Trading, Fundamental Trading and Deep Value Trading. I think this is a departure from the norm of trading webinars most of which concentrate on day trading or very short term trading. While that is a way of playing the market, I believe that it is also time to start looking at creating methods and approaches in trading that will help us take advantage of the bigger and longer trends in the market.
One of the favourite quotes of market gurus is to be aware of Time in the market rather than Timing the market. I have written at length on the latter subject (market timing). What Time in the market does is to allow the market trends to repair the mistakes that we make as investors. But as traders focused on the shorter time frame, this advantage is lost. Since personal errors are at the core of lack of success, it stands to reason that whatever helps to reduce those errors or mitigate their effect has to be adopted. One of the ways is to raise your level of skill. The second thing to do is to become less emotional about the outcomes. (This is another big reason for failures in the market).
A good method that one has practiced well will take care of both these requirements. The design and practice will increase the skill and make the trader less emotional and more process driven. Since there is a specific approach designed, it will give rise to other good habits as being analytical, being patient and ultimately more confident of what you are doing!
Hopefully, that will also become a way of market trading and get as fancied as value investing is becoming now! Those interested in this concept can check out the recording of this webinar available on our website.