Comment on Lessons from trading on Yes Bank

Benjamin Graham commented on 23 Aug 2019, 05:35 PM

This is my first and last comment here, I want to share with other users some valuable lessons I have learnt through decades of experience and reading numerous blogs and books on the stock market along with the study of popular stock market crashes.

Through more than a decade of dealing with stocks if I have learnt anything is that capital preservation is the most important thing in this game viz more than making large sums of money it is more important that you don’t lose so much money that it makes you question your ability in the game. This calls for a balanced dealing between Equity and Debt. The percentage of my Networth that is balanced between dealing in equity and debt is always changing and it depends on how the overall market is doing (bullish or bearish). I have pledged to never allocate more than 3/4 of my cash in Equity in any scenario and not less than 1/4 either. This constant and rigorous shift allows me to adjust my holding and keeps me disciplined. I have devised a formula which decides what portion of my wealth stays in Equity and what stays in Debt. This formula hasn’t changed in over a decade and this keeps me disciplined and yields constant returns in various market scenarios marked by greed and fear. I suggest you too devise a strategy or formula and stick to it no matter what. That’s it, the trick to the game.
Also, while buying a stock you should always earmark and prepare in your mind the losses that you can afford to take, it is a contract you make with yourself. Oh, and always diversify as Kamath said about the 1% trading capital rule. Stay strong. Jai Hind.

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