Equity Investing: A Leap Of Faith, Belief And Trust

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Equity Investing: A Leap Of Faith, Belief And Trust
Amit Bivalkar MD and CEO, Sapient Wealth
OLM Desk - 03 January 2022

Amit Bivalkar, MD and CEO, Sapient Wealth

I often get asked about my decision to collaborate with other advisors, and what prompted me to do so. This (and any other such business move outside of your comfort zone) is not merely a transactional decision. It is one of the principles and how I see my business running hereon. It involves the intersection of the belief systems of more than one party, which can bring about a lot of change and uncertainty. However, when you know deep down that this change is what you stand for and are willing to work through the issues that come with it, that is when you know you’re taking the right call. Moves like these are not propelled only by passion and impulse. They are guided by faith, belief, and trust. What is the difference, you ask? Well, understanding this is as important in guiding your journey in the business as it is basic.

Laymen can seldom differentiate between faith, belief, and trust. But actually, there is a difference, which is: faith is in God, belief is in yourself and trust is in someone else.  

We all know that Nokia refused Android and Yahoo had refused Google. The lessons learnt from these cases are:

  • Embrace change
  • If you refuse to change with time, you will perish.

Nokia believed in themselves and did not trust others hence did not change and finally perished.

Belief And Trust

Belief and trust look very similar but are two different things in reality. To comprehend, let us look at the following story.

Shark And Fish (Belief): A marine biologist once placed a shark into a large holding tank and put some tiny fish into the tank. As anyone could guess, the shark instantaneously attacked all the fish. The biologist then placed a strong glass divider in the tank and repeated the experiment. This time the fish were placed on one side of the divider and the shark on the other. As expected, the shark again tried to attack and slammed hard on the glass divider, and went back. After a few attempts, the shark eventually gave up. The biologist then removed the glass divider and to his surprise, the shark didn’t attack the fish, as the shark subconsciously believed that there is a glass divider in between. The tiny fish swam wherever they wanted without any harm.

A Man With A Balancing Stick (Trust): A man started to walk on a rope tied between two tall towers at several hundred feet above the ground. He was slowly walking with a balancing stick in his hands and carrying his son on his shoulders. Everyone in the audience were tense and holding their breath while watching him. The man slowly crossed the second tower safely. Everyone was overjoyed and started greeting him by shaking his hands and taking selfies with him. Overwhelmed, the man asked, “Should I walk back to the first tower? What do you think about it?” Everyone said, “Yes, we are ready to bet on you.” Then the man replied, “Does anyone want to sit on my shoulder? I will take you to the first tower.” There was pin-drop silence in the audience as everyone stared at him with a stoic look.  

What we can comprehend from this story is that to believe in someone is one thing and to trust someone is a different ballgame altogether. With trust, there is additional commitment, i.e., we need to totally surrender ourselves when we trust someone and this is something that is missing from an investor’s end towards equities. As investors, we believe that equities will do well over the long term but we are unwilling to trust the market for that.

To conclude let’s build an analogy with two real-life observations:

  • Mr. Sanders founded KFC at the age of 65.
  • Mr. Jack Ma, who couldn’t get a job at KFC, went on to build Alibaba.

Lessons learnt are

a) Age is just a number.

b) Only those who keep trying to succeed. After all, excuses don’t build empires.

Long-term investing is not a 9.15 am to 3.30 pm journey; instead, it is a 9-, 15- or 30-years’ journey.

DISCLAIMER : Views expressed are the author’s own

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