The Monk(ey) who didn't sell his Ferrari - or his stocks

It’s turning out to be a very good year (touch wood!) for our two Monkey portfolios. After enduring a losing streak for a couple of months, both Monkeys leapt on top of their rivals - the brokers and the benchmark indices - for the trading week ending 13 January.

In the trading week that ended on Friday, Monkey 1 achieved something even more spectacular - he completely erased his portfolio losses and now boasts a marginal gain of 0.08 percent ( see table ). Monkey 2, also, reduced his past losses considerably ( see table) . The brokers’ portfolio is also not doing too badly, although it still trades below its original investment value ( see table ).

For those of you joining in late, Monkey 1’s portfolio contains 10 randomly-selected stocks from the BSE 100 , while Monkey 2’s portfolio contains 10 random-selected picks from the BSE 500 . The brokers’ portfolio contains 10 long-term stocks selected by 10 brokerages.

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As promised, Firstpost managed to get an exclusive interview with the usually reclusive Monkeys (M1 and M2). For the first time ever, they agreed to a joint interview. Here are edited excerpts:

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FP: First off, why did the two of you decide to hold a joint interview?

M1: The truth is, the two of us (M1 and M2) have been a bit estranged over the past few years. Now, we’ve realised that we both have complementary strengths - and we work better as a team. M2 likes to invest in small-cap stocks, I like large and medium-caps. We might make different returns individually, but together, we have all corners of the stock market covered. That’s a great advantage right there. Besides, we’re family…

M2 (looking adoringly at his older brother): Yes, we are from the same species, after all. It makes sense, doesn’t it? I wish your country’s most famous business family, the Ambanis, would do the same. Just imagine the combined strength of those two brothers – incredible! They’d rock the stock markets!

FP: So what do you think will happen to the India story in 2012?

M1 (grins): I’m not a forecaster, but I think India still has the potential to become an economic powerhouse. Things look bad right now, but I have no doubt the future of this country is still bright. So many other parts of the world, like the US and Europe, are in far worse shape. India is a better investment bet for the long term.

M2: Like my portfolio, which I’m happy to report, is gradually reducing its losses, I’m confident that Indian stocks will also reduce their losses. Indian stocks lost 25 percent in 2011. But as a Firstpost story recently noted, the Sensex is set for a ride to 60,000. Not in 2012 perhaps, but eventually. So humans, just have more faith.

FP: A bit late perhaps, but what would be your New Year advice for investors?

M1: The best thing investors can do in 2012 is to stop listening to experts on what direction interest rates, the economy and the stock market are headed. It’s nonsense! The truth is, nobody can predict any of these things.

Just focus on what is actually happening to the companies in which you’ve invested and you’ll do allright.

M2: I second that! I’ve seen my portfolio’s value shrink in recent months and got quite a few brickbats for that. So many humans think I’m doomed to fail in the markets. But, humans, especially on Dalal Street, learn nothing and forget everything.

There’s so much gloom going around at the moment about the economy. But the time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell. (Looks at M1) Didn’t someone famous say that?

M1 (laughs): Yes, you!….and John Templeton (a famous fund manager).

FP: Finally, could you tell us your favourite investment quote?

M1: I’m now a fan of quite a few investing gurus, so plenty of quotes come to mind! But if I had to pick a favourite, it would have to be one from Peter Lynch: “The key to making money in the markets is not to get scared out of them.”

M2 (nods): I’ve had so many monkeys urging me to sell stocks because of my recent bad form. But I don’t think that’s how it works.

If you own a Ferrari, you should ride it, not curse the bad roads. I’m not the type of Monk to sell his Ferrari or his stocks. I buy, I hold, I make money.

If you invest in good companies, you should hold them for awhile, not sell at the first sign of market panic. In this regard, my favourite quote is from Warren Buffett: “If you can’t hold a stock for 10 years, don’t think about holding it for even 10 minutes.”

And of course, like my brother always says, eat more bananas! They are excellent for the brain and make you think better.