Wealth can not be created through borrowed Ideas

I have heard many times that wealth can not be created through Borrowed Ideas. As far as I think we have four options for investing in market.Become expert through own knowledge and then invest directly.If you don't have desire or time for this Invest through mutual funds SIP specialy in case of small and mid caps .In mutual fund you have full transparency of stock selection and performance.Third option is to invest in Sensex and NIFTY stocks in same weightage minus stocks of metals ,commodities,airlines,utilitiies, PSU,mining ,real estate stocks if any of them happens to be in Nifty or Sensex.Fourth but not least for many , is to invest through advisory services .But I don't have experience of that.. These are my views for discussion and dont recommend or suggest which is better option out of four or any other option left.What is opinion and experince of my other friends .But this form should not become indirect play of biased posting of interested parties, for and against some advisory service providers.

 

In my opinion, as a person grows as an investor and provided his capital grows, he would opt for different options at different stages of his/her investing career.

A retail investor who is not knowledgeable of rules of the game (market) and how to be successful, will start with mutual fund (either actively managed or passively managed like index funds). Option 2 and 3. Low cost index funds are better for option 3 - tracking benchmark based investing.

Once he gains some knowledge but still not confident of analysing stocks or yet to develop his circle of competence, he would take help of stock advisors while doing direct equity investing. Here he understands his emotions and temperament, learning from mistakes, develop areas of expertise. This is option 4. Unless a person acts independently and owns full responsibility for his actions in stock market (not blindly following advisors but take them as advice's and develop own instincts), he may fall back to option 2/3 or quit stock market one day.

Person having developed exposure and expertise and life long learning can one day attempt option 1 - going on his own, becoming full time investor. But this population is low. Only those with right mentality to resurrect after failures and humbly accept losses as tuition fees for new learning can have long successful life in this mode.

 

Stock market is a sum total of human emotions and like humans, it displays different emotions (fear, greed, joy, euphoric, sad, sombre and so on) at different times - Mr.Market of Ben Graham. One has to understand his own emotions and that of Mr.Market to play this game successfully. It is a continuous learning process and even great investors are humbled by the market that they learn something new. Don't miss those learning and remain put in the market during ups and downs, market gives more to such person than what it takes. Be patientful.

Above is all theory. As yogi Berra said, "in theory there is no difference between theory and practice. In practice, there is".

Dont bother about the nitty gritties of what option is correct. Nothing is perfect. Just explore and experience the market, not for money making but for the fun of learning. Money comes on its own.

 

Superb logic. Very good thinking.

 

Very well written Kharb. People are always on the hunt for the next multibagger. People erode their capital in this hunt especially when these have already gone up 3-6 times. Don't fall into the trap. Validate every decision with us

 

I second Livermore's thoughts, adding my to it:
investing in stock market is just like learning to play a new instrument. It basically follows the same steps:
First, you get inspired to pick it up by watching someone..
Second, you would get frustrated to the point of giving up when you are unable to play as you would like, clouds of self doubts and disbelieve will be all over,
Third, when despite step two you continue to persist that's when true learning takes place
Fourth, soon you become good at it and your passion and interest takes a big leap forward
Fifth, as keep on, keeping on in the journey people around start noticing and graduate to the level of a mentor..
But the trick is to move on to step 3, most people get knocked out in step 2. So wealth creation is also a process if we are prepared to go long. !