Post Mortem

Based on my last post, I thought I'd do a post mortem of sorts... what happened?

 1. My inexperience in seeing the forest - I kept seeing the trees. Funnily, I thought I could see the forest and that these trees will figure out how to thrive through the storm.

The storm was more ferocious than thought; and the trees were weaker than thought.

 

2.Heavy capex implies heavier luck - A Deepak Nitrite executed wonderfully and lucked out.

My company executed well and got poor luck.

My other company executed wonderfully and navigated the bad luck very well

 

3. Conservative sounding confident management fooled me

I believed they knew how to steer - they didnt.

I believed they were monitoring risks - yes; but it exceeded their expectations

My big winners never promised much; guided for less and grew profits manifold. 

 

4. My low PE strategy with respectable ROEs tends to work

This is something that I am comfortable with; and the last 10 years hasnt seen a serious de-rating of heavily valued companies; hoping for schadenfreude

 

 

All in all - it looks like I need to be a lot more conservative.

When I started, promoters fooling me was a bigger issue - turns out; promoters fooling themselves is also a big issue.

A lot more conservative... ?

Goals

My best old investment seems to have done 16% compounding for 10 years and it remains terribly undervalued. It was a sizeable investment and hence, the metric matters. 

Smaller investments have done better and worse than this.

 And yet, where I stand now is on the shoulders of all those losers and winners and not just this one investment.

 My current learnings are taking me to an appreciation for businesses that dont need incremental capital as they grow; and I know now that there are all kinds of creatures that win at the game...

One of my more recent investments (and the result is shocking as I have just calculated it in this last minute) has done north of 40% compounding in the last 5 years; and this too seems undervalued to me. But more scarily, it looks peak-ily poised because that might be the nature of the business.

Of course, I leave out the 100% and 97% drops I have had in the past, and the 8 year 2x I have had... which have brought me to a respectable rate of wealth growth.

But these musings get me back to why I am playing this game...

Independence has been achieved. The safety cushion has been established. But the way here is the way forward; to feel the stones and keep walking along.

I need to remind myself that I'm here not to win.

I am here to play, and I will play this game on my terms. 

That, oddly, even a 10% CAGR is enough :|

That I better learn from the muddy puddles and broken stones from the past.

That my ego wants me to win, while my system 2 wants me to have fun.

And the risks I am cognisant of are those of health, family, politics, luck, society, war and natural disasters.

It's my fortune that I have to worry about little else.