Why don’t investors just copy the stock portfolios of rich people and profit from that?
- There are always smarter people.
- Rich people or high net worth investors' portfolios are available in the public domain also.
Blindly copying them is not a great idea but some people do that. Manish Parabai, is a big famous wealthy investor who confessed that he copy some ideas from others successfully.
Obviously, there are some issues like,
(1) HNI can't buy low float opportunities and
(2) their risk profile is different from most of the people. Generally, they take aggressive bets.
(3) If HNI takes a stake in a big company, because of the big size of the company, the stake naturally becomes negligible in terms of percentage and those will not be disclosed in public. So, in public, we get only the mid and small-size company names that have naturally high risk.
(4) The contact and access to information, research team, the experience they have is immense. We get that information when most of the lower valuation is gone.
(5) If tomorrow, price falls due to some unforeseen reason, they will be out much faster than us, what will happen in that situation?
So, it will be a better idea to validate your conviction and research by their stake or initiate own reasrch by taking the first hint from them. Own due diligence has no alternative, own conviction is the real conviction.
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