Arjun Badola

How not to make good investment decisions

In this short article I will be sharing with you some tips on how NOT to make good investment decisions.

Never write down your original Thesis

Whenever you decide to invest in a stock never write down your thesis for making that investment decision.

Writing it down will force your mind to to clear your thought and make you realize of some hidden biases. For example: Buying the stock just because some well known investor bought.

“There is nothing like writing to force you to think and get your thoughts straight.” - Warren Buffett

You don’t want to write it down. As writing it down means you could revisit it later, which could force you to stick to a good idea.

Never read Books

Books are a way to learn from the “eminent dead” and past experiences of others.

If you keep on learning through books there is high probability that you would avoid making some mistakes which other people have made. Therefore, leading to better investment decisions!

We don’t want that!

Avoid multidisciplinary Approach

Even if you decide to read, never read books from different subjects. Always stick to one side of the argument and never be open minded to your opposition.

Reading books from other disciplinaries would lead to expansion of your thinking, which means you will be able to see patterns or things which others won’t.

Taking concept from other disciplinaries and then applying it to investing will not help you to NOT make good investment decisions

Example:

Red Queen Theory is a concept from biology which states that the organisms constantly adapt as per their environment to survive.

Similarly there are some industries which need a lot of cash just to stay in the business. (Airline, GoPro)

Companies in such industries make capital expenditure thinking that they would get an edge over their competitors but soon they face the Red Queen effect. Every competitor now has made that expenditure and now it has become the industry standard.

Get in love with Noise

Start watching business channels, follow exactly what they say, if someone says that you should sell your stock: DO IT!

Joining the herd is very important to NOT make good investment decisions.

By following the crowd you will make the returns which the crowd makes. Simple.

There is no need to be contrarian or learn about the businesses you are invested in.

We have news channels for that. They will do it.

If you want to take it further, join telegram groups and start investing your hard earned money based on the tips shared.

Track the stock price not the Business

You are investing in the stock market and without the adrenaline rush of that, there is no fun.

So, to get that rush you must track your stock prices from every second to second.

Let those emotions take control of you and don’t fear to make impulsive decisions.

Don’t you dare look at the performance of your business, that really doesn’t matter.

Focus on why you started: To NOT make good investment decisions!