Tuesday, April 12, 2011

Don't Be A Stingy Investor

On 23rd February 2011 for the first time we had shared a value research report with fellow Happionaires, after 2009, on a particular company that has immense future potential and the prices are down temporarily due to certain problems in Libya. (Invest In Oranges When Pests Attack) Now this company might have gone up 10% since then - but does that mean we should stop investing in it?

When it comes to investing there is a small story which I will share. It will help us learn a lot about situations like above.

Once there was a man who lived in a small village, he wanted to buy a small piece of farmland to grow some vegetables and fruits on. He first started looking and a wise village elder, showed him a small piece of land that the seller wanted to sell for 100 gold coins.

This man, liked the land, but like all of us wanted a better deal, so he started negotiating - he wanted it for 90 gold coins. Finally after a lot of negotiations, seeing he was a genuine buyer, the owner agreed to sell the land for 90 gold coins. Now instead of buying the land for 90, this man decided to negotiate even more and started saying that he now wants to buy the land for 80 gold coins because he feels the soil is not all that good. In the end the seller and buyer couldn't reach and agreement and he was unable to buy the land.

The owner for a fact knew that in the long run this land would have given him very good yield and appreciation - yet he was being stingy. After a year, he still didn't have any land and after a year the price was 120 gold coins. Now once again - should he buy or not? If he wants farmland and that is pretty much the market rate - and he knows he can make good returns, should he lose out on time?

How many time the same thing has happened with so many people around us - irrespective of whether it is investing in stocks, real estate or commodities? People think that they will get it cheaper - by 5 or 10% only, without thinking about the long term. We all have a tendency to be this way, but as a Happionaire investor I have learnt that it never helps to be a stingy investory. We might think we are saving 5 or 10% but in the long run, we miss out on the growth. If we know an investment has the potential to reward us 100 -200% - what difference does 10-15% make here and there?

I would be interested in knowing experiences of fellow Happionaires too - when it comes to being stingy investors. We have all been this way at some point of our lives, but thankfully we learn. Don't look only at the monetary cost, but also the opportunity cost in terms of time. As they say today is the first day of the rest of your wonderful life - so do what you have always desired to do, rather than worrying about what might or might not happen.

Have been busy with a lot of interesting stuff. Can't share it all yet - but will share soon. The world of investing keeps getting more and more exciting.

Keep your eyes on silver and gold prices, and if you still haven't invested - it still isn't late. Lots of internal battles going on between international funds, banks and people holding physical gold and silver.

Happy investing!

Yogesh Chabria


Narain said...

This is very true Yogesh ji and has happened with me in the past I had seen a property for Rs. 56 lakhs and didn't buy it - today that same property is worth Rs. 2 crores. I have learnt and realized - that if there is a need and you can afford better to invest.

Have already invested in gold, but why silver?


Mahesh said...

This is a real fact and I have noticed many people in life and business lose the best opportunities just because they are 'stingy'. While Sindhi's have a perception of being stingy, I have seen that in business they really are not stingy but very smart. Have invesed in the compnay shared and am very convinced about its growth. Please humble request Yogesh ji to share more and also loved your show on TV. Do you have some link for it also? Would love to watch it again learn from you.

Anita said...

Am not much of an investor ...........but loved watching you on Tv and learning from your simple views and am already enjoying what you call the happionaire experience. Will read the report and see how i can start investing....

Gaurav said...

Mahesh - found the link for Chabria ji's show


Ravi P said...

It is true Yogesh ji. Thanks for enlightening us. Couple of points that I want to highlight:

1. We all know it is a scarce resource. I may be wrong here but from what I know we'll see it reducing day by day by day. It is simple demand and supply, can you think of demand decreasing in future? I see it increasing & what do you think about supply? I see it decreasing. Plus the resource is something that gets redemptions from government because global economy relies on it.

2. I saw Rakesh Jhunjhunwala describing he buys even more if a share price increases. You may doubt his approach so does the presenter of show to which he replied - "Who knows the tipping point? I don't - do you?" :) So who knows where the growth story ends, be optimistic and enjoy the ride.

Hope we all are on same page here!

Anonymous said...

Hey - I am really delighted to discover this. Good job!

Naresh Pisharody said...

I have personally made good returns in Gold over last 2 years. Infact it has been a hedge of sought as i saw my stocks go down, gold helped balance. I am not sure if it will continue to grow at these rates, however I may suggest it should be viewed as a hedging tool

Amar said...

very good article, personally faced this situation lot of times Missed Axis bank @ 275, indusindbank, yes bank and lot of other gud stocks in crash period but made god profits in GOLD.

Yogesh ji can you please suggest if we can buy silver in Mcx Futures and hold for next 2 years i am sure Silver will rock... silver ground availability is -90% from year 1950 and usage is atleast 100 times more then gold. comparing this Silver is still under valued but another 10 years silver will beat GOLD.

Please suggest your views


Unknown said...

Very true about investing in Gold & Silver.

Should we invest in gold silver over coomodities exchange or phisical

Anonymous said...

love it.

praveen said...

yours blog is auseful one sir.