Considering how we borrowed our investment philosophy from an old chinese idiom related to fishing, we realised we weren’t only borrowing an idiom from them but also a very very important virtue common to fishermen and investors alike- PATIENCE !
While investing inherently requires patience, in our philosophy our patience is usually tested more frequently. However in comparison with fishermen, while a fishermen could get more fishes owing to patience in our case our fish could bloat up and continue bloating while we reel it in.
Lets understand why !
Purely because we venture out to troubled waters a lot of value creation for us depends on when the broad markets discovers value in them or for as long as fundamentals catch up with the momentum only to propel it even further.
When fishing a stock based on fundamentals we tend to look for a positive inflection point viz.- a point from where the company will not be on the same trajectory as it were- the problem is while this strategy has value because not to many people acknowledge the existence of it and this creates a lack of demand which creates opportunities for us.
We could have bought a stock with great fundamentals and a strong growth trajectory but unless there are more buyers wishing to buy it expensive with over optimistic growth expectations from the same company.
And since, we only sell out either when
A- our stocks are expensive
B- get crowded by over-optimistic investors
C- We find something with a much much more rewarding upside.
We often find ourselves very similar to the fisherman in the picture above.