Investing is for all seasons

Dipen Sheth

The punchline for a popular career site says, ‘Never settle’. If there was a decent one-liner for stock market investing, it would probably be ‘Never retire’. Isn’t this ironic for an activity that promises to (among other things) elevate you to a financial orbit where you can retire without worrying about money?

I’d think not. Investing is as much a passion and hobby as it is a career or profession. The afficionados eat, live, sleep and breathe investing mantras. They can spend endless hours going through balance sheets and annual reports of companies. They can spend half-a-day arguing with others of their ilk about what makes one investment a better bet than another. People like Warren Buffett ‘tap dance to work’, so why should they ever leave what makes play look like a galley slave’s job?

Here are the five reasons why stock market investing is an activity for ‘all seasons of life’, particularly after one has retired:

1. Investing is not necessarily a full-time occupation. I’m serious about this. Forget what anchors on business channels pretend to do. You don’t really have to follow every single tick on the markets to survive, or even to make decent money in stocks. A quick dayend (or morning) look at the economic and corporate news will suffice. Those who ‘watch’ the markets like people watch races are doing exactly what the races are all about: gambling. They are not investing.
2. You can live anywhere and invest in stocks. Ask any of the mid-cap millionaires from Rajkot, Siliguri, Pudukkotai or Saharanpur. Most of them have never been to Mumbai or even seen pictures of the BSE. All they have is a halfdecent broker, a demat account, a cool head and, you guessed it, dollops of investing felicity. With integrated online accounts from banks like ICICI, you don’t even have to draw delivery cheques for stock purchases, fill in delivery instructions or deposit slips for the shares you sell. All you need is a reasonably fast Internet connection and you can take care of all the activities after trading with a click of the mouse.
3. The physical effort required to be a world-class investment analyst is much less than it used to be. There was a time when it was essential to have at least one face-to-face meeting with a management because there was only so much you could figure out from the mass media, or a plant visit was needed because you felt like checking out what was being made, and how. Today’s in-your-face, hyperbolic and repetitive corporate communication across TV, press, annual reports, conference calls, corporate videos or presentations and Websites ensures that you actually want to cut through the noise and get to the point. You can do this from the comfort of your home, or old-age home, if you please.
4. The fourth reason seems a tad counterintuitive. Investing keeps you on the edge. Now, why on earth would you want to remain edgy in your old age? Isn’t it the time to forget your worries and enjoy the mellow sunshine of the evening of your life? Not really. My doctor tells me that mental atrophy is probably the biggest threat that old people face as they withdraw from an active business and social life. Most of us are not capable of handling a progressively lower level of social interaction and mental challenges when we retire. At least not without a steady deterioration of critical thinking and memory skills. Yes, I’m talking about Alzheimer’s and related illnesses. My family doctor advised my dad to play Sudoku and crosswords to keep his grey cells alert. I don’t think he’d object to stocks.
5. The final reason is that investing will probably add to your wealth and give you renewed confidence to face the worries and failures of old age. It will earn you admiration and respect, not only from your peers but also from younger people, who would otherwise look at you and some of your choices as though you were from a different planet. And if you don’t do well in investing and lose some money, it will teach you some good lessons that you ought to have learnt earlier in life.

Caveat
If the stock market can keep you alert and earn you respect, it can also give you endless tension, sleepless nights and a damaged heart. So here are my statutory warnings. Asset allocation is important. Be careful to keep your stock market exposure ‘low’, preferably under a quarter of your overall wealth. Do not leverage, invest rationally and (although this sounds silly) invest for the long term. Because that’s the only way that investing has ever worked.

Dipen Sheth is Vice-President, Institutional Equities, BRICS Securities.