Flying Asset Class

What’s an asset?

Ever thought about it?

If not, you need to, if you want to fly asset class.

An asset is something that generates income for you. Even while u r not looking. That’s my understanding.

So is your house an asset?

No! Unless it’s generating a rental. Otherwise it’s generating expenses, and is thus a liability.

Sound investing generates assets.

Over time, the accumulative income of all your assets allows you to fly asset class, i.e. gives you financial independence. Even while u r not looking.

That’s the whole idea.

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A Strong Case for Equity (Part 2)

Scams bother us. We panic, and then start cashing out of our Equities.

Can we stop and reflect?

There was some Jeep scam in ’57. Then Bofors. Fodder. Harshad Mehta scam in the ’90s. Dot cum bust. This century has been chockerblock with scams.

Let’s see how some holdings have performed over all these years. Reliance, ABB, Infosys, Wipro…these companies were microcaps at some stage in their lives. The long-term holders of these shares have raked it in big-time. Wipro has been a 300,000+ bagger over the last 31 years. The other three companies have been 1000+baggers. That’s BIG.

Some of today’s microcaps will make it as big or bigger over the very long term. They will be tomorrow’s blue-chips.

All of us want to set something aside for our kids. It’s human nature. So why can’t we think of holding equity for the very long-term, especially for our children?

What makes equity so special? Behind every scrip is human capital, which, if not involved in Scamonomics, fights inflation through innovation. The power to fight inflation is not inherent in other asset classes.

So let’s think seriously about very long-term equity holding.

What remains is the criteria for stock selection. That’s a deep topic, and we’ll delve into it some other day…

Gravity

Markets correct.

That’s what markets do.

Why do we cry when something does what it’s supposed to do?

And, more importantly, why did we buy at an expensive valuation in the first place?

Are we traders?

If yes, fine, traders are meant to buy at expensive valuations, coz they like to sell at even more expensive valuations.

If we are not traders, then it is not fine.

If we are not traders, then most of us fall in the category “Investors”.

Investors are not meant to buy at expensive valuations.

So let’s not cry over the effect of something we were not meant to do in the first place.