Five investment thoughts for this Christmas

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The last week of the year is always special around the world. The Christmas celebrations commemorating the birth of Jesus Christ is always a cause of celebration around the world. Christmas is also about hope because just a week after Christmas heralds the New Year. A new year is normally a time to look forward to a better future with eternal hope springing in the heart.

This time we take a detour from our normal Christmas write-ups. We have collected five interesting quotes from the Bible to reminisce on Christmas and applied it as practical investment lessons.

No one can serve two masters; for either he will hate the one and love the other, or else he will be loyal to the one and despise the other… (Matthew)

This is true of almost every walk of life. Undivided loyalty to your profession, family and purpose is a must. But this quote from the Bible has a much larger implication for investors and for investment strategy.

What are the two masters in investment. It depends on what you choose to make as your core purpose. Should you focus on returns? Should you focus on risk? Should you focus on the process? Should focus be on the outcome? These are tough questions but there are some important lessons for investors.

The Bible equates chasing money to being loyal to Mammon. That may not be entirely true in the world of investing, but it has an important implication. It is difficult to make profits in investing purely by chasing high returns. That is something, the best of investors would tell you and this is true across the world. Then what should investors focus on?

Focus on the process. Get your stock selection, stock evaluation and stock monitoring process right. Once you get the process right and fine tune it, then returns will automatically follow. Moral of the story; if you want to be a good investor, never chase returns. Perfect your investing process and returns will follow.

Every branch in me that does not bear fruit, He takes away; and every branch that bears fruit, He prunes it so that it may bear more fruit. (John)

This is again another way of saying that people must water the seeds and eliminate the weeds. That is the best way to ensure that your crops are safe and your land remains fertile. But what does that imply for investing?

As an investor you create a portfolio over time; sometimes by default but largely by design. Many stocks may become out of date over time and many may outperform. How should you approach such situations?

You must take away the branches that do not bear fruit. That means you eliminate the assets in your portfolio that do not generate adequate returns or are not in sync with your investment objective. Then you prune branches so they bear more fruits. What does this mean?

This refers to your return generating and performing portfolio. You need to take profits, keep adding on dips etc. The essence of the story is that your focus must be on what is working in your favour. No point in watering the weeds.

And whoever exalts himself will be humbled, and he who humbles himself will be exalted …. (Matthew)

This is equally applicable to the trader and the investor and shows why it is important to be humble when trading in the market. Like it or not, the market has proven time and again that it is smarter than most investors. It is only the overconfident and brash investors who constantly try to outsmart the markets.

What do the prudent investors do? They focus on heeding the signals from the market and working accordingly. They modify their strategy and trade or invest based on the market signals. The humble submission here is that the market knows something more than you. As an investor also, you need to be humble to be exalted.

Let your Yes mean Yes, and your No mean No… (Matthew)

The message here is more about personal integrity and about standing by your word. However, this is also about conviction and the self-faith that the individual has. A person with conviction thinks before giving an answer but stands by that answer. Their Yes actually means a Yes.

Investing in turbulent market is all about integrity and conviction. It is hard to think of a successful investor without integrity. It is also hard to imagine a successful investor without adequate conviction. The conviction must also be grounded. However, once the conviction is formed, the investor must be willing to stand up to it. That is the key to long term success in investing.

Seek and you will find; knock and the door will be opened to you. For the one who seeks finds; and to the one who knocks, the door will be opened… (Matthew)

This has fairly strong implications for investors. At the outset, it is about initiative and it is about the willingness to explore new frontiers. That is the essence of being a good investor. Good investors are always exploring new ideas, they never are worried about learning from all possible sources and they are willing to take risks.

Whether it be an investing idea or a trading strategy, it is never available easy. There has to be an effort to figure it out. However, once you show the willingness to explore and learn, the opportunities will simply multiply.

Year 2021 was a year of hope and revival for most people around the world. It is hoped that Year 2022 will build on that optimism and positive feeling.

Here is wishing you a Merry Christmas and a Happy New Year ahead.