“Though you may be last to discover your follies, be always first to correct them.”
In Life it is so easy to talk about your accomplishments, talk about things that have got you the results you had desired but what remains hidden are the mountains of mistakes made in reaching the final destination. They say “Don’t let the truth get in the way of a good story” Lol.. More often than not that’s what most of the success books are all about.
They filter out the difficult part in one line and the story of success is what people see. It had been a rude awakening to the freaking truth of life that, it is okay to make mistakes, what is essential is learning out of it. Hmm.. But why suddenly all this love and writing about making mistakes, A few days before I read Howard Marks Memo titled “It’s All a Big Mistake” and that made my grey cells wanting to write about it.
Mistakes!! When I first learnt about investing I believed there was a magic formula which if applied could tell you a value of buy or sell (I am sorry I know this sounds outright pathetic and you have taken me for a fool from now) but yeah those were times of 2007-08. Another of my freaking genius deductions was any company which sells for about half of its Book Value was a screaming bargain (Arghhhh.. now you want to disown knowing me or having read my blog) Hell, I even acted on my convictions and bought this company “Great Eastern Shipping Company Limited” India’s largest private shipping company.
With Net Profit margins hovering around 40%+, lot of cash in the balance sheet and trading at less than book value (Poof!) no analysis of capital expenditures nothing..I got into this value trap not realizing shipping is a cyclical business. To be honest I was rank one amateur who was going to get a kick on his backside.!
I purchased GESHIP at around Rs. 321 then again some at Rs. 307 knowing it had gone till Rs. 500 levels and it’s just a matter of time. (Embarrassment) What happened next was what always happens, bubble bursts, higher profits led to more competition, global turmoil, margins squeeze and stock tanks. I sold out at Rs. 248 in Feb 2011 thinking I should book my losses rather than the eternal hope for the stock to regain. The stock is currently at Rs. 246 as of today.
I started to understand my fallacy of falling into these valuation heuristics without doing my homework, I made a loss. I made a mistake. But my dear friends, that day I learnt my lessons the hard way, but learnt it thoroughly. There is no secret formula. Its only about hard work and lots of reading to get an insight into the company and only after analyzing all the variables and understanding how things work should you invest.!
It is true in your darkest times you will be willing to dig the deepest. Making Mistakes in relations can be painful and you feel horrible! A phase June-August 2011, when times were difficult personally is when I really started to learn things afresh and made myself busy and I read furiously all the time about companies, investment books (I had a heaps of them) and then started to make progress, understand businesses and then I was set on the right path but all this saga did require me making those mistakes.
Friends,we all learn from mistakes, now we either sit and make all mistakes ourselves at the cost of our money, agony and learn from them or learn from others mistakes through reading or in any other way.!
“Smart people learn from their mistakes. But the real sharp ones learn from the mistakes of others.”
We always have choices, and choices always lead to consequences.. Past few months have been like Enlightenment for me, My summer Project of Analyzing companies has thrown open this world which I read so much about, but in reality knew so little. I would write about my project report in detail pretty soon, it will be another long boring post. Lol.
“When you find your path, you must not be afraid. You need to have sufficient courage to make mistakes. Disappointment, defeat, and despair are the tools God uses to show us the way.”Rohan Pinto Batch of 2011-13 Reblogged from beatingthemarkets.wordpress.com