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Owner's Manual

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Artists are visionaries, they have the ability to narrate a story and envision the same through a visual image. More importantly, the beauty of their work lies in its interpretation — it may mean different things to others, but there is a common theme to what they do — a good artist, is a great storyteller.

Entrepreneurs, while being driven by their passion for execution require a very similar skill, a great narration for their story. As an entrepreneur, one needs to have the ability to see what may be in store for the future, and take their team towards the same, through a unified narration of the story — cos not everyone will get it — and it’s their responsibility to ensure that it happens. True visionaries are those who envision a future with their product or service, which fills a gap and have the ability to see what may be in store vs how things are today. In this journey, you will find people of two kinds: con artists and artists. Both have a very similar nature, and they are extremely good at what they do — they narrate a very good story.

Investing is hard, in fact, it’s extremely hard. While data and number crunching is the easy part of investing, as it’s commoditized today, the hard part is understanding the entrepreneur, his story and filtering the true artist. The good part of investing, is you do not need to always get it right — as long as you continue to make investments and size them appropriately. In fact, some of the world’s best investors, have a strike rate of 30%, or even lower (strike rate being the odds of their investment not going sour), but have continued to compound wealth in excess of 20%+. You may wonder how that is mathematically even possible. The answer is they allow their winners to ride, and accrue the benefit of time — people are accustomed to doing it in real estate, where prices are not available in front of screens, but in public markets, it requires a constant urge to fight a very basic human instinct — excitement.

Studying history has made me understand that excitement is a very basic need of human nature. We love the excitement in any form as it gives an adrenaline rush — for someone who is interested in the science behind the same, there are many scientific articles written about dopamine release and its effects. It’s during such exciting times that humans like to put on their trading mindset and deviate from where they started. To give an objective view of trading would mean to acknowledge that, there is nothing implicitly wrong with it, but investing and trading require two different mental adjustments and there are very few people who can switch between the two in a seamless way.

The beauty of investing and doing it well requires one to put on a multi-disciplinary hat and evolve himself during his/her entire career. It’s only today, that I realize how artists too have traits that investors should want to cultivate. It ensures that their understanding of entrepreneurs and the psychology that drives them makes them partner with the right promoter.

I am the founder of Itus Capital, an independent asset management firm managing money in the Indian equity markets.