Most of us are very poor planners. We plan, but do not execute.

How do we solve this? by planning again. And failing again.

I met an entrepreneur who wanted to raise about Rs. 30 crores for a project. I looked at the project papers, excel sheets, etc. and came away impressed. Then I did something that he did not expect me to do. I spoke to his banker (he had a very small banking facility, but I still met the banker. There I saw some of his past promise vs. performance. It was appalling to say the least. Sure he had got lucky a couple of times, but hey that was luck, was it not. There was no pattern of client acquisition, service and letting clients go (what I call the Brahma, Vishnu, Mahesh of business). In one project he had achieved (believe me please) LESS THAN ONE PERCENT of what turnover he had projected. That project was still on.

What is there in this for you?

Let us see why this happens:

– Overconfidence: we are all overconfident of our equity picks and of our fund picks. Our own track record maybe pathetic, but that does not deter us from picking the next winner again.

– For many people the goals that they have are completely unrealistic. They would kill me if I tell them so, so the best thing is to pretend that the goals will be achieved, and wait for time to tell them that the goals are unrealistic.

– Most of us are hoping for a high ‘r’ so that we can achieve our goals, without realizing that the amount invested and for a long period are far, far more important than the ‘r’ which anyway we cannot control.

– We want to have a nice work-life balance, a BMW (at least), a 5 bhk, and retire at 30. Statistically impossible unless you are born with these things anyway.

– Assuming you achieve all this by 40, even then in a poor country like India, statistically speaking, you are noise.

– Sadly even as a banker poring over clients numbers on a monthly basis there is a limitation about what we know about a company.

– Only when an executive of the company files a paternity suit or a harassment suit do you realize what a sleazy head of HR the so called listed company had.

– We pretend we know much more than we actually do.

– ‘I do not understand’ are the 4 most precious words in Investing. Terribly under rated words.

– I know of CEOs who have no clue of their forthcoming quarterly results. Sucks.

– With experience I have learnt to love the bumbling guy with low confidence level to a confident sounding jerk. Immaterial of whether he is a CEO or an analyst. Overconfidence sucks.