The case where I lost half my worth due to detour from my ideal path of buffet-munger way.

I always tried to learn from the very best in investment business Mr buffet and Munger.

I have tried to understand and follow all their method while investing. Even though I tried to follow it I took a detour and it cost me half of my investment.

Rules I broke :

Always  invest long term.

Always buy good business at fair price than fair business at wonderful price.

Don't listen to guru's

And I did break all the above rules.

I happen to follow the modern warren buffet or Shameless clone of warren buffet as he himself advertises.

Following where Mr Pabrai's idea of choosing stocks in a youtube video

These where tips from him I followed to pick the stock

1.Business that Idiots can run

2. Great Management and Great Business is the way to go.

3. Low Risk - High uncertainty business that are always wrongly priced by markets

- Look for stocks with PE less than 3 (More than 3 would be dead stocks or would not move much) - This was the point that killed me.

4. Bankruptcies etc.

5. Upside to a downside - Like in case of banks in dotcom bubble

 Based on above advises I started looking for companies in my detour and I ended up selecting a company by looking at its face value, no of share holders, PE as per point 3 and good management.

In few months of holding the stocks I understood this was my berkshire hathway stock :

I got point 3 wrong as PE kept on decreasing with each quarter as price of business fell as management  where greedy and using public money for personnel investment. CEO even got arrested for cheating.

I inspected the business proposition and it was as if the manager had took all the public money to acquire business and start groceries stores in tier 3 cities without any prospect of advantage over bigger players.

This will surely run on steams and finally ruin the shareholder money someday from now if the management remains the same.

Only way out of it is a software business they have registered back in Nov 2021 but has not yet even started. I do not think it will be a high profit margin business for them either since there are so many competing at that level across the globe.

Based on the above I am quite sure they would ruin the rest of the money with them if I give more time to them to absorb the heat they are facing at the moment.

So I took my losses and promised myself I will never deviate from buffet-munger philosophy : Time is the friend of good business while enemy of the other and I  shall never take a detour from buffet-munger roadway.