Archives for June 2018

Real Reading is Rereading

June 29, 2018 | Reading Time: 9 minutes | Leave a Comment |

Heraclitus, the Greek philosopher who lived during 5th century BC, said –

A man can never step into the same river twice, for it’s not the same river and he’s not the same man.

I would like to posit that Heraclitus’ observation applies to books also. Unlike the river, a book doesn’t change much but the reader does.

When you reread a book, what you see and understand is very different from what you saw when you read it the first time. It’s true for the good books as well as the bad ones. In your second reading, you may realize that the book you initially thought as amazing wasn’t really so and vice versa.

The Paradox of Knowledge

June 28, 2018 | Reading Time: 5 minutes | 8 Comments |

Tourist: This is a dangerously steep road with a sharp bend. Why isn’t there a hazard sign for motorists to slow down?

Guide: We had a warning sign untill yesterday. But since accidents were rare, officials concluded that the spot isn’t that dangerous after all. So they removed the sign.

Tourist: Don’t you think the rarity of the accidents was precisely because of the warning sign?

Guide: Ugh..

Amused at the stupidity of the officials? That’s because it’s easy to spot the cause and effect relationship between ‘presence of warning sign’ and ‘frequency of accidents.’ You can test the hypothesis. Remove the warning sign and if too many cars start plunging down the valley, there we have it – a clear correlation between an action and its consequences.

StockTalk (June 2018)

June 25, 2018 | Reading Time: 13 minutes | Leave a Comment |

High Quality Vs Low Price

June 25, 2018 | Reading Time: 8 minutes | 13 Comments |

If you pay peanuts, you get monkeys. ~ Old adage

If you remember the stock market crash of 2008, you also remember that it spared almost no stock. Companies, even the well-managed ones, lost half or more of their market capitalization in few months.

As an example, Pidilite (makers of Fevicol), which was one of those extremely well-managed businesses then, lost 55% between December 2007 (just before the crash started) and March 2009 (the bottom). Titan and HDFC Bank, two other stalwarts, lost 50% each. In short, the crash was like a bad dream for people even in these marquee stocks.

But for those who held on to their nerves, and to these stocks, the next decade was about to turn into a beautiful dream.

As an example, assume you were owning Pidilite near its peak in December 2007 and went into a deep sleep that continued till today (June 2018). Your return from the stock would have been around 1,000% (CAGR of 26%) over this decade!

InvestorInsights: Revisiting Lessons from 2008

June 20, 2018 | Reading Time: 22 minutes | Leave a Comment |

This isn’t your typical VIA interview, but a collection of wisdom from a few investors we have interviewed in the past. The topic is – lessons from the 2008 crisis. A decade has passed since this crisis (time flew, again!), and most lessons would have been forgotten (we have short memories).

As we see around, investors – especially new than old – are practicing speculative behavior. Not many investors who felt the pain in 2008 would possibly think this is a good idea even if no major crisis may be lurking around the corner. And this is exactly what came out from the questions we asked a few seasoned value investors, who were close witness to the crisis in 2008.