What is investor Shankar Sharma's investment metric? What does he focus on as an individual or as a firm when he decides on where to invest his money? What is the most reliable metric to look at when making investments?
Shankar Sharma, Vice Chairman and Joint Managing Director of First Global says that his learning over 30 years of doing this is only that you will get hurt in markets if you are rigid in your thinking and in your processes. Having no philosophy is much better than having one. Over a few years, we started to find that what is announced, what is professed, doesn't necessarily work out that way. Or what has worked in the markets in the last 6 months, 12 months, 3 years, doesn't mean to keep working.
He also says that as human beings that we don't like losses and if you look at behavioural investing $1 of profit or rupee of profit does not give you as much pleasure as a rupee of loss gives you pain. If you understand this one simple thing about human behaviour, a lot of investing changes from there, wherein you tend to therefore, not become overly concentrated in terms of just a handful of stocks, or you don't become concentrated in your thinking that I don't think there is any danger to a particular trend. Loss aversion is very central to the belief system and our philosophy.
Watch BOOM's Govindraj Ethiraj interview investor Shankar Sharma on his investment mantras and how he avoids thinking in silos at every cost.