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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Nuggets for 19th August

Posted by Muthu on August 19, 2017

I want to keep sharing with you once or twice a month some of my recent tweets. As I always say, the words are mine but the ideas are what I’ve been learning from many investment masters. Since I don’t know what caption to give I’ve decided to name it this way (Nuggets for 19th August and so on).

1)Excess liquidity doesn’t hurt. Try to have minimum one year of expenses in bank. Peace of mind cannot be measured in returns.

2) We blame the markets for our losses. In many instances, it is our behaviour and not the markets which is the root cause.

3) If investing becomes a competition, envy would be the outcome. We need to do what suits our character and enjoy the process.

4) Can you hold a stock whose price has not moved for years, though business is continuing to grow? If yes, you’re a long term investor.

5) In my own holdings, I’ve seen stock price going nowhere for couple of years and suddenly tripling over a year.

6) If your stock price does not move for 3 years and suddenly doubles in 4th year, still you’ve made a CAGR of 18%.

7) We call ourselves long term investors but still keep looking for regular price performance, leading to disappointment & derailment of course.

8) Investing success = 10% knowledge + 90% behaviour

9) Investing success = 10% action + 90% inaction

10) Not all of us are capable of starting & running a business. Thanks to stock market; what a wonderful opportunity we’ve to own good businesses.

11) My blogs and tweets are greatly shaping my behaviour and help me evolve as a better investor. I’m happy if it in some way helps you as well.

12) Periodical corrections or even bear markets are good. It keeps us balanced and knocks some sense to us.

13) But for volatility, everyone would be an equity investor. Who wouldn’t want a smooth 15% annual return?

14) Unlike other asset classes, stock markets purge excesses more frequently, which is what makes it healthy.

15) Trading: Focus on price performance

Investing: Focus on business performance

16) Except for few occasions, where a news or event is the trigger; most of the time market rise or fall for no reason. That’s the way it is.

17) Markets are up around 70% of the time (in years) and down during the remaining 30%. We need to stay during this 30% to enjoy the 70%.

18) Don’t chase because of recent outperformance and don’t ditch because of recent underperformance. Remember chaser is always a loser.

19) Things fall on their own weight. As the saying goes, from the summit all roads lead downwards. Accept no claim of removal of cycles.

20) There are no rules which market has to obey. It can run ahead or fall behind earnings. But long term growth is always equal to earnings growth.

21) First indicator of investment success: your willingness to hold for long term.

22) First indicator of financial independence: Delayed gratification; foregoing some of today’s pleasures for a better tomorrow.

23) Financial independence should be based on our needs not on what our neighbours have.

24) Risk is not short term volatility but long term erosion of capital. While equity is volatile, bonds can erode your wealth.

25) Be it real estate or stocks, our wealth is what someone else is willing to pay. Our net worth is always subject to transient market forces.

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