It is very easy to tell the difference between a novice investor and an experienced investor. While the novice investor struts about and boasts about how his stock picks have given mega gains, the experienced investor keeps a low profile and never brags about his success.
In fact, all great investors have the endearing quality of humility in them. Warren Buffett, the World’s greatest investor with a net worth of $61B, leads from the front with his cheerful, friendly-uncle-next-door demeanour. Our own investing greats like Rakesh Jhunjhunwala, Radhakishan Damani, Ramesh Damani etc are great examples of humility and simplicity.
Durgesh Shah, an academician with Flame University, pointed out that this trait of humility is what is responsible for the great success achieved by these legends.
“You better be humble or you will be humiliated soon” Durgesh Shah said. “Just like a tree which is laden with fruits bows down, so also a successful investor is he who realizes how little he knows and how much there is to learn”.
Durgesh Shah explained that apart from humility, every investor must have three traits, namely, temperament, knowledge and experience.
Out of these three traits, ‘temperament’ is the most important and ‘experience’ comes second, he said. Surprisingly, he added that ‘knowledge’ is not necessary and is ‘overrated”.
To prove his point, Durgesh Shah cited the example of the time when Rakesh Jhunjhunwala purchased a massive truckload of HPCL stock. At that time, all the leading analysts and fund managers were bearish about the sector and the stock. Though Rakesh Jhunjhunwala did not have the same in-depth knowledge about HPCL or of the refinery sector as that of the army of analysts and fund manager who tracked it day and night, he had the “courage and temperament” to realize that the bearish trend would end some day and the company would give manifold returns. It is this “courage and temperament” which enabled Rakesh Jhunjhunwala to make billions from stocks while everyone else around him is still counting pennies, Durgesh Shah said with obvious admiration in his voice.
The essence of Durgesh Shah’s advice is that novice investors like you and me should not feel discouraged at the fact that we lack the knowledge and experience about stocks and the market. Instead, we should be inspired by Rakesh Jhunjhunwala and the other investing legends and develop the “temperament” and “courage” to be contrarian and buy stocks when they are out of favour and to hold them for long periods of time.
If we can learn this, we will be on the road to become successful investors!