“Yogesh, if you want to be rich and make money in any investment, sell when markets rise and the masses rush to buy. When the masses talk about gloom and doom and sell in a panic, you shall buy. I have created my wealth by following this simple, but yet difficult to follow principle in life.”
This is what a very wealthy Gujarati investor and stock broker told me several years ago in his office when I had asked him “What is one thing I need to know to create wealth with my investments?” I was very new to investing and always was eager to learn more from people who were already successful. I didn’t have a lot of money all I had was a burning desire to learn. I still have a burning desire to always learn more, and I hope this desire always stays with me.
Even today every once in a way I pay a visit to his office to learn more about investing and get his advice. Unfortunately most people tend to take the advice of salespeople, journalists, doctors, academicians, engineers and relatives when it comes to investing instead of taking it from people who are already successful at investing.
No wonder millions of people actually believe what is being stated across the media about how the global economy is recovering and how stock markets have hit a high. They are once again rushing to buy, without really looking at the real world state around them.
First of all look at employment, and you will see how more and more people are being unemployed. I know someone heading a major IT company in India, and he told me how they are laying off lakhs of people and are filling up benches just with freshers. These lower costs, lead to temporary hike in profits. A real estate developer confessed to me, that real estate is in terrible shape and there are barely any sales. Since professionals in IT are losing jobs, many of them have defaulted on loans across the country.
He told me how artificially raising prices and spreading news in the mass media about a revival in real estate are just business tricks. Most people do not invest time into interacting with people who will reveal the truth and simply believe whatever is being said and written. Read the results declared by most real estate players, and you will see how miserable the state is.
The past year has been excellent in terms of returns for anyone who has invested in value. Few of my close friends have had returns in excess of 450-500% and at this time most of them have exited and taken large parts of their profits from the table. Unfortunately once again a lot of new sheep are flocking to the markets in hopes of making a quick buck. We all know what happens to such sheep who believe in following the herd blindly.
Things are much worse in USA and I am sure all those who read Happionaire's Cash The Crash will know what I am talking about. I won’t be surprised if a few major financial institutions collapse there and things spiral downwards. As all this happens, I see a major opportunity for India to rise and shine. I am optimistic about India’s future growth for sure, but as the say Sachin Tendulkar is a great player and you might pay Rs. 20 crores for him to have him join your IPL team, but would he be worth Rs. 2000 crores? Never look at price but always see the value offered. There are still companies that offer value, but most people will ignore them and rush for the ‘hot picks’ sold by salesmen. Hot picks usually end up burning people financially!
At times like now I remember what was said to me several years ago - “Yogesh, if you want to be rich and make money in any investment, sell when markets rise and the masses rush to buy. When the masses talk about gloom and doom and sell in a panic, you shall buy. I have created my wealth by following this simple, but yet difficult to follow principle in life.”
The above principle is very simple in theory, but very difficult for most people to practice in the real world. As Happionaires we are all known to follow the simple path.
Have a wonderful weekend ahead!
Keep smiling and stay focused!
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