Passion is really an overused word. But there is only one real test. Will you do it even if there are no tangible incentives? If the answer is ‘Yes’, then in all probability it is a ‘Passion’.
Teaching is my Passion and it took the form of ‘Stoic School of Investing and Finance’.
Stoic School has just one motive. To bring the best ideas of Investing, Productivity and Life Wisdom in a lucid way which makes it easy for you to understand and appreciate the nuances involved. Being a practitioner, I generally have the tendency to avoid unnecessary and ‘theoretical only’ constructs and you might see that in the content.
Rather than using the term Value Investing, Growth Investing etc., I general tend to segregate investing in two ways. On a very broad top level, there are only two belief systems in the market.
The first one is of the view that market is inefficient and the second one is that the market is efficient.
The proponent of the first belief system are the individuals who believe that market doesn’t capture all the necessary information into the price and the market prices are governed by greed and fear and hence with proper investigation, one can buy stocks whose price are cheaper than the “intrinsic value” of the stock and hence can profit from this endeavor. This belief is what drives the “Fundamental” Investors.
The belief is in the inefficiency of the market. Within the fundamental investors though, there is a wide variety of philosophies that usually differs on the frequency and the magnitude of the inefficiencies.
I have already covered few sessions on some crucial ingredients on fundamental investing. The links are given below.
Trading / Speculation
The second school of thought is the one who propagates the belief of ‘Bhaav Bhagwan Che’ or ‘Price is God’. This is often referred to as ‘Technical Analysis’. This school of thought essentially believes that markets are efficient and whatever information is available is already incorporated in the Price, so whatever strategies for entries and exits into stocks, are designed on the basis of study of Price movements. Another school of thought here is that the variables are too many in Fundamental analysis to study and make a reasonable picture about company’s future.
Even though I belong to the first school of thought, there is no reason to ignore the second. Infact, a good deal of my learning of Risk management is influenced by very prominent traders. There are some legendary traders, speculators who have enormous to teach us and we will learn from them too. After all, as I have mentioned in the motto of this website, “The only right way is ‘Yours’”
Your entry, selling and Risk Management depends a lot on what philosophy makes more sense to you and what eventually you will zero down to. There are lot of ways to mix and match strategies according to your risk appetite, level of understanding and personality type. In my training sessions with Fund managers and Investors, I am always surprised at the variations a lot of these investors have developed and there always seemed to be one common denominator.
“They figured out who they are and not the “Best Strategy” but the “Best Strategy for them”