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Poke the Box: Be Water, My Friend

Let’s Start with Safal Niveshak
Just in case you missed any of this on Safal Niveshak over the last few days…

  • Rs 25 lac is good enough saving for an Indian middle class family over a period of 5-6 years. But how about an “extra” Rs 25 lac? Here’s how you can achieve it.
  • People find it difficult to confess their mistakes in the open. Not the Safal Niveshak tribesmen! Read a big bunch of confessions from readers who have lost a lot of money in stocks they now think were big mistakes (good revelation in hindsight :-)). By the way, if you haven’t confessed yet, what are you waiting for?
Mental Model of the Week: Envy

“It is not greed that drives the world, but envy,” said Warren Buffett many years ago.

Recently, Farhan and Raju validated this in the movie 3 Idiots


We often evaluate our own situation by comparing what we have with what others have.

The rigours of modern life – and the social necessity of keeping up with the Joneses – makes this weakness even more pronounced.

Here is an excerpt from Dan Ariely’s “Predictably Irrational” that I’m sure you would relate with your own life (like I could)…

A few years ago, for instance, I met with one of the top executives of one of the big investment companies. Over the course of our conversation he mentioned that one of his employees had recently come to him to complain about his salary.

“How long have you been with the firm?” the executive asked the young man.

“Three years. I came straight from college,” was the answer.

“And when you joined us, how much did you expect to be making in three years?”

“I was hoping to be making about a hundred thousand.”

The executive eyed him curiously.

“And now you are making almost three hundred thousand, so how can you possibly complain?” he asked.

“Well,” the young man stammered, “it’s just that a couple of the guys at the desks next to me, they’re not any better than I am, and they are making three hundred ten.”

The executive shook his head.

You see, envy is a tricky emotion. It exists on the edges of our consciousness. We don’t like to admit that we envy someone, especially if that someone is someone we don’t like or to whom we feel superior.

Subsequently, we’re as likely to deny we’re in the grip of envy not only to others but to ourselves. And that’s when it becomes a deadly sin, even as far as investing is concerned.

Like, look at this friend of mine who sold off his HUL shares a few months back at Rs 450, and then bought them again recently at Rs 700.

“Why?” I asked him in a sense of intrigue and disgust.

“Because I didn’t wanted to miss out on gains like others have made recently,” he revealed.

This reminded me of the story of Newton and his tryst with the stock of South Sea Company in 1720…


I find a lot of such Newtons around me…and often in the mirror! 🙂

Financial historian Charles Kindleberger wrote in “Manias, Panics, and Crashes” – “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich.”

It was for good reason, after all, that the Ten Commandments admonished – “Neither shall you desire your neighbor’s house nor field, or male or female slave, or donkey or anything that belongs to your neighbor.”

Now, how do you get over your envy?

You can’t…simply because human nature makes us compare ourselves with others all the time. That’s the way our brains have been wired.

But you can still try. How?

  • Never envy your neighbour and never be owned by pride.
  • Remind yourself this each day – “I will not run a rat race because even if I win, I will still be a rat.”
  • Don’t try to mimic what those around you are doing. They may have a totally different purpose in life.
  • If someone else is getting richer faster than you by, for example, investing in risky stocks, so what? Someone will always be getting richer faster than you. This is not a tragedy. (Indian CEOs eyeing the “Forbes Richest” list need to read this!)

Finally, remember what Charlie Munger said – “Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?”

Stimulate Your Mind
Here’s some amazing content I read during the week gone by…

  • When is the last time you thought about how you think? Here’s a nice little post from Farnam Street on the five elements of effective thinking.
  • Here’s another reason I read a lot, and why even you should.
  • Stress kills, and big time! Here are three effective ways to free yourself from your addiction to stress.
  • The Economist recently posed this question to a few of today’s leading writers – “What was the greatest speech ever?” The result will surely make you proud.
Poke of the Week – Be Water, My Friend

“A wise man adapts himself to circumstances as water shapes itself to the vessel that contains it.” – Anonymous

The thing that separates us humans from other animals is that we constantly change into new forms, new avatars. We are sad, we are happy, we are emotional, and we are angry. We communicate through different languages, we do different kinds of work, and we deal with different kind of people differently. Effectively, we keep on changing ourselves as per the demands of time and situation.

In fact, success in life depends largely on whether we are able to change ourselves with changing times.

If we are flexible and formless – like water – taking the form of whatever is around us, we gain power and succeed against those who rigidly hold on to their ground.

Despite this, when it comes to our ideas – especially when we have only one – we rigidly hold on to them…

…very much like Henry Ford who supposedly said, “People can have the Model T in any colour – so long as it’s black.” This nearly ruined Ford Motors Company in the 1920s, because while Mr. Ford was in love with his idea of “only black Model T” cars, Americans were shifting to bigger, faster, fancier, and brightly painted automobiles.

…or very much like the old “me” who would often not change views on stocks even when the circumstances changed, and paid heavy prices.

I have seen several other investors fall in love with their stocks in the garb of “buy and hold”. So they will hold on to businesses, and especially those that are going downhill. They will remain stuck in a status quo mode because they hate to admit they’ve lost money. They will even put a higher value on the stocks they already own than they would be willing to pay for the same things if they didn’t own them. All this because they’re too rigid to change their ideas, even when circumstances are shouting at them to do so!

If you have been through such a moment in your own life (or investing life), you would like to hear what Bruce Lee has to say…

“Empty your mind. Be formless, shapeless, like water. Put water into a cup, it becomes the cup. Put water into a teapot, it becomes the teapot. Water can flow or creep or drip or crash. Be water my friend.”

Watch Bruce Lee say it in this video


Charlie Munger says, “The game of life is the game of everlasting learning. At least it is if you want to win.”

In fact, a few of life’s great pleasures are to keep learning, letting go of previously cherished ideas, and emptying your mind for new ideas to come in. Then you’re free to look for new ones.

It’s indeed a pleasure to be water, my friend!

If you haven’t done it already, sign up here to receive Poke the Box in your email…and get ready for stimulating weekend readings.

Keep poking.

Avoid envy.

Avoid falling in love with your ideas.

Be water, my friend.

Till next weekend…

Vishal Khandelwal
Chief Poker – Poke the Box

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. “Rs 25 lac is good enough saving for an Indian middle class family over a period of 5-6 years.”

    Jeez…I am falling behind the average Indian middle class family then….reminder to myself : need to earn more.

  2. The previous comment was made only after reading the first sentence of the article.. now having read the entire article…it appears really funny 🙂

  3. Great advice, keep up the good work.

  4. Akshay Jain says:

    Very apt videos. And the article is also extremely relevant to the markets these days when you see only a limited numbers of stocks going up everyday, taking the sensex with it. Tempting to buy those companies not on a risk-reward basis but on the feeling of being left out (envy)
    Awesome quality of articles

  5. How wonderful, both the points you have made.
    If only one could handle these two aspects it would be a lifetime achievement ! 🙂
    We often fail at the first (though with age a few get better at handling envy) and try to imbibe the analogy to water.
    If envy can be channelized into a positive “I will” “I can” it can be a great motivator, otherwise you can just keep falling into a bottomless pit. One way to chanellise it is to say wow and feel happy for the other person and then say to yourself what would it take for me to get there, assuming I want to, and put all your energy and soul into it.
    Life offers many lessons, many challenges and time and again we need to reboot, realign.
    A tree that bends with the wind survives that which remains rigid falls.

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