Becoming an investor is easy. Have thousands of millions of bucks and then find a place to invest in. Without diligence however, you might lose a fortune while investing. Therefore investing carelessly, without proper knowledge isn’t investing but trying your luck in lottery. You might find a multi-bagger but that’s not something you can repeat nor you can find logical steps to achieve in future. 

 

Something similar happened to me. I took advise of a fellow investor and bought shares of Aarvee Denims which is a Jeans manufacturer in Ahmedabad. This company earned 100% more profits than previous year ( 2015 v/s 2016 ) and therefore it received good response from investors and everyone was bullish seeing growth of 10% in 2 days. 

 

On the day of Diwali, it jumped 10% again and therefore it was a time for blast for everyone.

 

But ever since then, the shares started declining 20% and stayed there fore about 4 months until an accident happened and employees got hospitalised. A month after another tragedy happened and soon pollution board sealed the company and therefore business operations in the major plant were shut down. 

 

Their brand image, assets, production / manufacturing, everything suffered. Due to which the share prices sunk to 70% of the 52 high level which is dangerous for every investor of that organisation.

 

I suffered the loss of 60% in that transaction and it was first time to face such profound loss but now I have a story to share that never again I would repeat this kind of ignorance and I promise to be an active investor and will know INs and OUTs of the company I invest in. 

 

 

 

Had I been aware, have been following social media - specific to that company, I would have known that this particular company was in news for all wrong reasons but I continued to be an ignorant investor who just invests and sleeps for a while to take up to see his portfolio reducing to ashes. So whenever you see people claiming how wealth is growth over the times passively or those you tells you the magic of compounding returns, just ignore them blindly. Ignorance and passiveness is never fancy and is sign of laziness. Be informed about your investments, study them deeply. That's exactly what I am going to do from now. 

 

So on the Independence day of India, I swear to get independence from ignorance and ignorant state of mind - while buying shares. I won't touch shares of the company which don't fall in my circle of competance and I will be perpetually working on going deeper into it and expanding the size of competance.

 

I will also spend significant time in devouring the annual reports of the companies I will track to understand the values / vision of the promoters as they alone have the power to make or break the company.