Joys Of Compounding: The Passionate Pursuit of Lifelong Learning

by Gautam Baid

I know what these emotions (figure 31.4) feel like, because I committed many atrocities in my initial investing years: 1. Trying to make some “quick money” by taking a loan from the broker to buy shares in a “hot” initial public offering (IPO), with the sole objective of “flipping” it on listing day. 2. Taking margin exposure in a stock by paying interest to the broker, with the sole objective of selling the stock at a small but “quick profit” immediately after its expected (by me) strong results, scheduled for release the next day or next week. 3. Buying a stock solely based on a multibagger recommendation from a widely followed blog, intending to sell it after a small but quick rise. 4. Buying a stock in the secondary market in the hope of making a quick profit driven solely by valuation rerating ahead of the near-term, highly anticipated IPO of a leading company from the same sector. 5. Getting lured into buying a rapidly rising small-cap stock in a hot sector out of greed and the fear of missing out, and bypassing the necessary initial research work, like studying its annual reports, past track record, financials, and management quality. 6. Buying a company’s stock based on vivid stories about a glamorous and highly publicized joint venture or partnership with a global giant in its industry, without bothering to look at the economics of the arrangement. In the hands of a good storyteller, almost every stock looks like a winner. (To safeguard yourself, always assume you...