Investment mantras are not morning chants where you recite them with your eyes closed and your legs crossed. “They believe they are at the foundation of your investment and portfolio management strategy as a whole,” the PMS fund manager, who runs the first global, wrote in a book published by Penguin.
Here is the list:
1. Let’s be home, not gamblers
Do you want to win in the long term? He then stops becoming a chip-throwing guy in Vegas and starts to become a casino. “Home” wins by stacking odds over and over again in favor of that favor, rather than a big bet. That’s not luck. That’s the expected value. And if you’re playing with just a handful of stocks, you’re not investing – you’re rolling the dice. “When you’re making a very small number of bets, that is, you’re essentially banking a bank for luck. That means you have a diverse portfolio inherently.
2. Protects down markets. Participate in the UP market
Here is the quiet genius of compound interest: avoid destruction. As Mehra says, the real alpha survives every crash, not every one of them, not every one of them. Once it’s 50% down, you need 100% bounce to break.
“The boring mantra of diversification across the sector, suspension losses, hedging, asset allocation, etc. are what saves you when the market crashes and helps you outperform your portfolio over a period of time,” reads the book.
3. Play for singles, not singles
Just like cricket, if you try to hit a six with every ball, you’re often crying with tears as it’s most likely that you’ll be out of the game before you know it, and it can go down just as easily as a lot of stock of tears went up.
Mehra highlights in the book that if you are not the center of the party’s appeal and aim to maximize your returns over a period of time, boredom may be a good fit for portfolio management.
4. Play everything. Don’t believe anything
The conviction is overrated. Flexibility is underestimated. Mera’s rules? I fall in love with your family, not with your stock. Buy based on data. We sell based on data. “Even the most stable companies experience underestimating long-term performance in their stocks in the market,” ACE fund manager points out.
5. It’s not bullish. I’m not bearish. Please get tired of it
Are you a bull or a bear? The wrong question. Become a rabbit – ready for quick, agile and pivot. Mehra’s mascot is not the majestic lion at first in Global. It’s a humble rabbit who runs at 360 degrees and runs before others flinch. In investment, rigidity is death. I ask the cardiac surgeon.
6. Large trades are like buses. There’s always one
When the theme has been working well for a while and it appears on your radar and wants to climb this bus that has already left the bus stop, the book says it will not just fall to the ground when chasing and trying to climb a fast car.
“Investing in something you’ve already done well over a period of time will usually only result in the unperformance of what you’ve purchased. This is data. This is the same as why you should avoid thematic funds,” Mehra argues.
7. No storage. Datafile only
The human mind longs for stories. Meanwhile, the market laughs at them. Mehra’s seventh commandment is brutal: kill the story. Stick to numbers.
“Being disciplined in sticking to data and objective facts means we have to let go of the temptation to tell a compelling story – the price we pay for predictable outperformance over a period of time,” she says.
8. Rigid Killing – Arteries and Investments
Just as arteries need to be supple to prevent heart attacks, portfolios need to breathe and evolve. Otherwise they will be flatlined with your wealth. Mehra says that stiffness doesn’t work in the market as investment is a game of probability.
9. Avoid big losses
This is the final gospel, and definitely everything else is at stake. Investment is a game of losers and shines through not losing. If you can protect on the downside, the market will give you plenty of room to gain.
