Premium Value Investing NewsletterDownload Free Issue

Archives for May 2018

Where is the Stock Market Headed: A Conversation With My Friend

“What is happening with the stock market, Vishal?” my very concerned trader-who-thinks-he-is-an-investor friend Ravi asked me on phone.

“Why Ravi, what happened?” I asked in my usual show of ignorance.

“Hey, haven’t you seen the crash in small and midcap stocks?”

“Okay, so you already know what is happening with the stock market, right?” I asked.

“Vishal, I have already lost all my profits in this crash, which I made during the past two years.”

“Oh! Were you playing around with stuff like Vakrangee, or PNB, or Suzlon?”

“I know I am bad at investing, but not so bad Vishal. Luckily, I never got into these stocks.”

“Wonderful. Now tell me how I can help you,” I asked.

“Tell me if you have any clue where the stock market is headed?” Ravi asked.

[Read more…]

Investing and the Art of Cloning

My friend Ravi was home for lunch on weekend. After food, as we went out for a stroll, he told me a story of a famous motivational speaker.

At a huge gathering once, the speaker proclaimed, “The best years of my life were spent in the arms of a woman, who wasn’t my wife.”

The audience was in a state of shock and silence at thus revelation, especially because it was coming from someone they looked up to.

The speaker than added, “She was my mother.”

What followed then was a huge round of applause and laughter.

Ravi then told me the story of a male participant at this event who was his friend from school. This gentleman tried to trick his wife with a similar joke.

[Read more…]

Warren Buffett, Humility, and 25 Other Lessons in Investing

This is going to be the shortest post on Safal Niveshak, but one with the most amount of wisdom (it doesn’t come from me, of course).

What follows below is a series of tweets from James O’Shaughnessy, the chairman and founder of O’Shaughnessy Asset Management, and the author of What Works on Wall Street.

The entire thread is worth reading, given that it contains the most important things an investor in stocks must understand, appreciate and tie into his/her investment philosophy.

It’s a gem of a tweetstorm, and I suggest you read through this and, maybe, print this out as it can serve as a wonderful reminder when you feel lost in the world of investing and the information overload that’s a part of it.

Click on the tweet above to read the entire series, or click here.

[Read more…]

Results: Value Investing Contest 2018

We recently concluded the 2018 edition of Safal Niveshak’s Value Investing Contest. Today, I feel happy to announce the winners of the same.

We received 34 entries in total and found it extremely tough to rank most of them in terms of quality, simplicity, and thoroughness of analysis.

While our choice of winners does not devalue the quality of analysis sent by others, it’s just that we had to pick the best very few, and here they are –

1st Prize

2nd Prize

3rd Prize

Congratulations to the winners, and thanks to all who participated!

Click here to view/download all the submitted entries.

Roulette, Mispriced Bets and Investing

Joseph Jagger, born in September 1830 in a village near Bradford, Britain, was an engineer in a cotton factory in Yorkshire.

With years of practical experience in the cotton manufacturing industry, Jagger developed an intuitive feel about what machines could do. He figured that even the most sophisticated instruments are far from mechanical perfection. Every machine has flaws. And every flaw brings with it an opportunity to exploit it.

The Englishman often wondered if it was possible to convert his expertise into more cash, not by scamming his employer at the cotton factory but by discovering the possible flaws in the gambling machines at Monte Carlo? Especially the roulette wheels.

In 1873, Joseph Jagger became the first man to break the bank at Monte Carlo.

The Beaux-Arts Casino at Monte Carlo, Monaco was inaugurated in 1863. In Beaux-Arts casino, at the start of the day, every table was funded with a cash reserve of 100,000 francs – known as ‘the bank’. François Blanc, the original owner of the casino, devised a rule for the Casino. If any gambler won more than the cash allocated for the table, the play was temporarily suspended and a black cloth was laid over the table in question. This ceremony was called breaking the bank. After an interval, while extra funds were brought out from the casino’s vaults, the table re-opened and play continued.

[Read more…]

How to Create An Antifragile Life, and A Stock Portfolio (A Personal Experiment)

Life was good when I was working at my job as a stock market analyst around 2005-06. Markets were doing well, and my stock picks were flying high. My company’s clients were happy with our recommendations, and consequently, my salary was coming in.

Talking about salaries of stock market analysts, the less that’s said the better. You get paid undeservingly (salary-to-effort ratio, as compared to most other knowledge workers) for constantly questioning the hard work of entrepreneurs and then not questioning your own analyses while churning out words that lose relevance in a few weeks or months.

Anyways, since I was an analyst then, I did not question what I am questioning now. Life was good. I felt safe and comfortable in my job, loved what I was doing, and thought that I would be happy doing the same thing for the rest of my life.

[Read more…]

Do Nothing When Nothing Must Be Done

Disclaimer: This post isn’t against doctors or financial advisors. I respect both these professions but believe that a system bent on action often leads professionals in these fields astray. The consequences are often bad for their counterparties – patients and investors.

It was sometime in 2008. I had an uncle who was a well-known dermatologist in my hometown. One day, on a routine annual checkup, the radiologist found a lump in his stomach. My uncle then got himself checked by his surgeon friend. The diagnosis was stomach cancer.

This surgeon was one of the best in this field and had even successfully tried a treatment on this exact cancer for other patients that tripled the five-year-survival odds – from 5 percent to 15 percent – albeit with a poor quality of life.

My uncle was not interested in this treatment. He knew the prognosis well and his focus now was spending time with family and feeling as good as possible for whatever time he had on hand.

A few months later, he died at home. He got no surgical treatment, no chemotherapy, no radiation.
[Read more…]