Seasoned investors are great believers in the power of circumspection. It is the rare ability to be guarded, prudent, careful, vigilant and wary exactly at the time when one needs to be. It is not often that one comes across such investors. Mostly, they are hidden behind the veil of privacy, shyness and quietitude. They don’t even want to be seen in the hum and noise of the stock markets. Yet, they are the most significant investors in our markets making big-ticket purchases cautiously. The ones whom we see advertising their purchases and performances often ride on the ideas of these seasoned investors. For them, the power of circumspection is not a great bother. The immediacy of returns is all that they are interested in. Often, when markets display exuberance, the investors you see are not the investors you must follow. The trends that are popular are not the ones that will succeed. This is where the power of circumspection greatly helps. One learns to sift through unpopular parts of the markets. Areas where nobody is willing to even look.
The seasoned investors are there quietly picking their precious stones while nobody is looking. Meanwhile, the noisy lot is raising the pitch in a few overcrowded stocks and drawing the follower-buyers in. This is no proven recipe for investment success. But, it is amply clear that the risks of being an aggressive follower of momentum-buying is near its peak. It just takes a small blip somewhere to bust the momentum party. And, there is another very important factor to be borne in mind, past history suggests the promoters of companies always bust the momentum game by getting into their act and raising fresh capital. This takes the wind out of the sails for aggressive investors and their followers. Advertising one’s investments and their performance has limited utility. Power of circumspection will always outwit such behaviour in the long run. Investing now should be diligent, prudent, wary and guarded. The choices should speak up and stand tall when the winds get rough. The weather could easily get rough anytime now!.
“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”- Warren Buffett