Archives for January 2021

A Cheat Sheet To Avoid Stock Market Ruin

In his book, Skin in the Game, Nassim Taleb runs an interesting thought experiment where he talks about two cases of playing the casino.

Equate the first case with ‘stock market trading’ in general –

…one hundred people go to a casino to gamble a certain set amount each over a set period of time, and have complimentary gin and tonic. Some may lose, some may win, and we can infer at the end of the day what the “edge” is, that is, calculate the returns simply by counting the money left in the wallets of the people who return. We can thus figure out if the casino is properly pricing the odds.

Now assume that gambler number 28 goes bust. Will gambler number 29 be affected? No.

You can safely calculate, from your sample, that about 1 percent of the gamblers will go bust. And if you keep playing and playing, you will be expected to have about the same ratio, 1 percent of gamblers going bust, on average, over that same time window.

The Sketchbook of Wisdom: Pre-Order Ends Today

This post is to notify that pre-order for my new book – The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life – closes today.

Click here to read more about the book and order your copy now.

Packed with 50 timeless ideas from Lord Krishna to Charlie Munger, Socrates to Warren Buffett, Lao Tzu to Nassim Taleb, Swami Vivekanand to Steve Jobs, and Sant Kabir to Naval Ravikant – as it applies to our lives today, The Sketchbook of Wisdom is a manual on virtue, happiness, and the pursuit of wealth and good life.

Click here to read more about the book and order your copy now.

Look forward.

With respect,
Vishal

My Stock Valuation Manifesto

I had shared my Investor’s Manifesto few years back. Here is my fifteen-point stock valuation manifesto, which I have been using as part of my investment process for the past few years now.

It is evolving but is something I reflect back on if I ever feel stuck in my stock valuation process. You may modify it to suit your own process and requirements. But this in itself should keep you safe.

Read it. Edit it. Print it. Face it. Remember it. Practice it.

Beware the Boredom of Bull Market

The Sketchbook of Wisdom – Pre-Order Ends on 15th January: My new book – The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life – is almost here (shipping starts in mid-February). Pre-order by 15th January to reserve your copy. Click here to pre-order now.

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I received an email recently where one reader asked – “What you say about long-term investing in the stock market is all good. But doesn’t it get boring after a time? I mean, first the process of reading annual reports to find good businesses, and then if you find some, holding on to them for the long run doing nothing. How does one maintain interest in this thing? How does one make this process and journey exciting?”

I thought these were good questions. In fact, questions like these used to bother me when I started out on my journey of reading annual reports, analyzing financial statements, and practicing long term investing more than a decade back.

In fact, I was talking to an investor friend recently, who confessed of boredom because he was not able to find stocks worth buying in this rising market. “Even if you are a long-term investor, what do you do but feel bored when you don’t find anything worth buying because everything seems to be so inflated?” he questioned.

“I agree,” I said.