Archives for July 2019
Mr. R.K. Chandrasekhar (RKC to his friends), is not your typical money manager or professional investor, but one amongst us retail investors whom I first met in 2011. Our bond has grown stronger since then, especially with RKC opening up his investment life in front of the Safal Niveshak tribe over the years, via his comments and feedback on my posts.
RKC started investing when I was born, so it’s quite a lot of years that he has been there, seen that. As a formal introduction, he is 67 years old and is an MS (O.R) from Case Western Reserve University and BSc (Mathematics) from Loyola College, Chennai. He is now retired from work after winding down his placement business in 2013.
In this interview, RKC talks about his long investment experience, his evolution as an investor, key lessons learned, his investment process, and how he tries to minimize decision making mistakes.
Disclaimer: Stocks/Examples quoted below should not be construed as recommendations.
Here is my attempt to answers a few key questions I have received from Safal Niveshak readers on the current turmoil in the stock market.
You won’t find perfect answers below, but this is just my attempt to help you get over your fears, which may otherwise lead you to act in haste, which can cause some damage to your process of long term wealth creation.
Let’s start right here.
1. Why is the market crashing?
It hasn’t crashed…so far! The BSE-Sensex is down just 6% from its peak this year. BSE-Smallcap is down 14%. BSE-Midcap is down 11%. This isn’t a crash!
If you think it is, you maybe be suffering from ‘denominator blindness’, which is the tendency to focus on the absolute number then the percentage decline. Or you just seem to have been spoilt by rising markets over the past few years and were not investing in 2008 when the last real crash happened. That was painful for people who experienced it with their money (and not just their eyes and ears). We have not seen anything like that since then.
…is almost always more profitable than investing when everything seems certain.
Investors, like most people going about their daily lives, don’t like doubts and uncertainties. So, they pay money and give up opportunities to avoid it.
Of course, it’s a good idea to avoid entirely what you can’t totally get your mind around, successful investing is largely about living through the uncertainties.
If you need reassurance, you’re giving up quite a bit to get it. Like high fees to experts who would predict the future (which you falsely believe as reassurance, which it isn’t), or expensive prices for stocks (because everyone knows their future is clear, which often isn’t).
On July 20, 1969, Neil Armstrong and Edwin Aldrin became the first men to walk on the moon. It’s been 50 years since then, and it remains one of the single greatest achievements of modern human history.
My father, who was nearing 20 then, had in fact transcribed the event as it was happening, while listening to Voice of America station on the radio.
Here is his transcript (click on the image below to download a clearer version my father copied from his original transcript on the day the astronauts landed back on Earth).
Have you ever noticed that finding an available spot in the multilevel car parking in any mall or shopping complex is an interesting exercise in mental maths? Let me explain.
Whenever I enter the parking area, I often try to optimize, i.e., find a spot near the lift lobby/staircase. Which means the moment I enter the parking area, I have to forego the easily available spots and keep driving towards the lift lobby and then hope that there’s a spot available near it. If there isn’t, then I would have to drive up to the next floor, which is kind of worse than the case where I would have taken the first few available spots near the parking entrance. So how many first available spots should I pass before I decide to stop searching?
It turns out that mathematicians have spent centuries thinking about this class of problems. They call it The Optimal Stopping problem.
[Read more…] about Picking Stocks Like a Mathematician
I was never fond of history in school. I am, now.
The difference, as I realize, has occurred due to the way the subject was taught to me in school and the way I have come to look at it over the past few years.
What I was taught in school were the details – British Rule, French Revolution, World Wars, etc. – and the rote learning that had to accompany it.
What I now love about the subject is simply the concept of it, how we have come to be since humans first walked the Earth, how our thinking has evolved, and how some things have not changed at all.
During World War II, the United States created a classified program called The Statistical Research Group (SRG). Its purpose was to help the US army solve problems using equations and formulae. In other words, SRG was into wartime math.
One interesting problem military gave SRG was about making sense of bullet holes in American planes. When those fighter planes came back from the battle, they were usually covered with bullet holes inflicted by the enemy guns. The military wanted to figure out the most optimum way to put the armor on the plane.
Well, couldn’t they armor the whole plane?
[Read more…] about Behaviouronomics: The Case of Missing Bullet Holes
Yep, it’s time to put on the big boy pants…Safal Niveshak completes eight years today. 🙂
As per my son’s pediatrician, eight-year-olds start developing complex language skills. Their focus and attention span improves. Around this age, they see that some words have more than one meaning. That helps them understand jokes and puns and start verbally expressing a sense of humor. Kids this age also show fast growth in mental ability.
Well, except moving towards greater simplicity, not complexity, this eight-year-old named Safal Niveshak seems to match the doctor’s description to the tee. That makes me happy. 🙂
Anyways, I started this initiative with a simple idea in 2011 – that of helping people become better at their stock market investment decisions. The idea was just that, and I had no clue how I would do it (I still have no clue how I would do it tomorrow or the day after!)
However, a lot has happened in these eight quick years – and the tribe is reaching 60,000 members. But as with any kid of this age, we’re just getting started.
Most of all, I want to thank you for “raising” this initiative to this point — it truly could not have happened without you, dear tribe member.
I know I’ve said it before, but it bears repeating – Thank you so much for reading, for commenting, for your interest and support, for helping this entire movement of creating smarter and independent stock market investors become greater and spread wider.
You are magnificent, and I am supremely grateful for your time and attention.
Just in case Safal Niveshak has touched your life, I would be happy and honoured to read your thoughts in the Comments section of this post.
By the way, “eight,” also known as ashtha in Sanskrit, is the number of wealth and abundance. That is what I wish for you, dear tribe member.
Thanks again for being there!
This is the fourth leaf of the multi-part series based on Peter Bevelin’s excellent book — All I Want to Know Know is Where I’m Going to Die, So I’ll Never Go There. The goal is to cover 27 insights on “what should be avoided” in business, investing, and in life.
The greatest — and most robust — contribution to knowledge consists in removing what we think is wrong — subtractive epistemology, writes Nassim Taleb in his book Antifragile.
[Read more…] about Special Report: 27 Ideas on What Doesn’t Work — Part Four