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The Equitymaster Research Digest

From the Uttar Pradesh Elections to Trading - A Strategy That Works
Mar 15, 2017

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Sweeping the elections in India's largest state after decades was no mean feat for the BJP. Political analysts attributed it to a 'five-layer cake strategy', which party devised specifically to address the challenges in the state. The strategy was hardly foolproof, but there's no denying the unprecedented results.

For a strategy to work, it needs to maximise the upside and minimise the risk. Charlie Munger once explained the strategy of a pilot...

  • Like any good algebraist, the pilot is made to think sometimes in a forward fashion and sometimes in reverse; and so he learns when to concentrate mostly on what he wants to happen and also when to concentrate mostly on avoiding what he does not want to happen.

Munger is a big believer in using investing strategies that take into account the individual's behavioural pattern and psychology...

  • How do you learn to be a great investor? First of all, you have to understand your own nature. Each person has to play the game given his own marginal utility considerations and in a way that takes into account his own psychology. If losses are going to make you miserable and some losses are inevitable - you might be wise to utilise a very conservative pattern of investment and savings all your life. So you have to adapt your strategy to your own nature and your own talents. I don't think there's a one size fits all investment strategy that I can give you.
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