Great Insights...
My mistakes (and hopefully learnings) run into many. Mentioning a few below:
- Not having an investment philosophy - Given the fact that an investment philosophy is always Work in Progress and evolves with time, this is an ongoing evolution for me. In my first year of investing I was a trigger happy kid with a loaded gun (money to invest and not sure how to go about deploying it). As a result my initial investments did not have an underlying theme or philosophy. The only thing which i had in the back of my mind was to invest in low pe companies with high dividend yield. As a result i ended up investing in many psu companies (NMDC, ONGC, Oil India)...
Over a last few years, my style has changed as has been the kind of companies i look to invest in. I am guessing this will change further as i become more mature as an investor.
Not researching enough about the company + A desire to quickly put money in a new found company - Aaargh! Will i ever master this...I havent suffered too big a notion loss in my investments so far, but that has more to do with random luck than anything else. I am never satisfied with the amount of research i do on a particular company and i definitely need to invest more time on this. One of the challenges i have faced is on companies which are microcaps (and hence not too much of public info available),especially those which are on the B2B side where brand visibility is hard to determine.
Portfolio construction - Oh boy is this important. And this as the case with #1 and #2, this too is Work in Progress for me. What started out as a random sprinkling of cash in disparate companies, has evolved into a more focused approach for me (but still miles to go). I do consider portfolio allocation segmentation (by market cap, by industry segments). But more insights into this would be greatly helpful.
When to sell - Dont know when to so far. Have not churned my portfolio a lot and i still dont know the answer to this. Whenever my portfolio has become skewed or overly heavy on a few companies i have tried to rebalance the same through fresh investments in the other companies.
If i am not adding to my current positions and also not selling then am i convinced about the company i own? - WIP again for me.
Price Anchoring bias - Big time problem, especially when it comes to averaging up.
Valuation methods - Again WIP. My investing journey started with a desire to have passive income (and hence my leanings towards Dividend paying companies initially). Hence i did some experimentation with Dividend Distribution valuation methods. Subsequently i discovered valuations based on Book Value (Assuming the company were to go bust what would investors get). I still dont know the best way to do valuations.
More to come later. Can keep going on....
