The Bull Market is Playing with Your Head

livemint.com:

World Cup, the cost of a base ticket to the finals, in the black market, was about Rs10,000 (actual price Rs1,500). A day before the finals it peaked at Rs35,000. If you had bought a ticket at the start of the World Cup, well, you had limited expectations on who would play the finals, much less who would win it.

But if you bought it a day prior, well, you bet on a perfect outcome – i.e., an India win. Or rather, you just could not afford to miss seeing India win the world cup in person - FOMO! Unfortunately, as it turned out, even though India played brilliantly all through the tournament, on the final day, we fell short. That hurt.

In varying proportions, if you see it from a different prism. If you are a perma bull today, you are like the person buying a ticket at a huge premium in the black market today. The only way you will get to recover your money is if the outcome is perfect.

Any deviation and you are going to be disappointed. On the flip side, if you are a Buffett-type investor, the person who bought way ahead of anticipation, well, even though the final result fell short, you would have got far more value for your investment. India reached the finals! This may not be a perfect analogy, or maybe it is, but it plays out all the time in our lives.

If we can get a grip on this, we would already be better investors right now. Before I conclude, here are some ways to think about the huge India opportunity, and how to tap into it the Buffett way: First, remember you are buying a business, and not a stock. So, when investing, be sure to select the business carefully.

It needs to be solid and needs to have staying power over the long term. Second, never overpay for a business. There’s a fair price, and that’s all you