Greed and the Market

I have done series of random posts on this topic; it always questions the investor’s behavioral aspect.  The term blog“Greed” may not be a better word for the society but as Gordon Gekko said “The point is, ladies and gentleman, that greed, for lack of a better word, is good.

Sharing you a classic example of an institutional investor – NatWest markets bought shares of HDFC Bank in 1995 for Rs.40 crores.

Few years down the line, in 1999, they sold the same for Rs.400 crores. Money multiplied by 10 times in 5 years

NatWest might have patted themselves on their back for such a wise decision. It’s a rarity to make 10X money in 5 years.

Instead of selling the same in 1999, had NatWest kept those shares, the value of the same early this year (27th January 2015) is Rs.21, 480 crores.

Money multiplied by 537 times over 20 years.

Had NatWest been long-term greedy, they would be sitting on billions of dollars today. Think about how many hundreds of crore they would get every year as dividend.

One year dividend may cover their 1999 selling price.

Concluding by the thoughts of Warren Buffet – Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.”

Well the above was just a case of institutional investor – How many of us do this very often 😉

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