Archives for August 2024

Five Good Lessons: Fooled By Randomness

I have started this new series – Five Good Lessons – for Mastermind members, wherein I will be sharing five good lessons from a book on investing, money, behavioural finance, learning, and life, and my perspectives on the same.

The second book I write about today is Nassim Taleb’s Fooled By Randomness.

First published in 2001, this book continues to challenge our understanding of probability, risk, and success in both financial markets and life. Let’s explore five crucial lessons from this thought-provoking work, examining their relevance in today’s context.

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If you are not a member, please consider joining the Mastermind Membership to access my most comprehensive value investing course, plus practical, time-tested ideas in investing, human behaviour, business analysis, and decision making, and get onto the path of becoming a better version of yourself.

Five Good Lessons: The Intelligent Investor

I am starting this new series – Five Good Lessons – exclusively for Mastermind members, wherein I will be sharing five good lessons from a book on investing, money, behavioural finance, learning, and life.

The first book I start with is Benjamin Graham’s The Intelligent Investor, one of the very few books in investing that have stood the test of time.

First published in 1949 and revised several times since, this seminal work continues to shape the philosophy of value investing and influence investors worldwide.

Let’s delve into the five good lessons from this financial classic, examining their relevance in today’s market context.

This content is reserved for Mastermind Members. To access, please login below with your membership credentials.

Relative Valuation Methods: A Cheat Sheet for Investors

As an investor, analyst, or business owner, it is very important to understand how to value companies across different sectors. I have created this detailed guide to help you with exactly that – explore various relative valuation methods, and their applicability to different industries.

I have also added a few practical examples from the Indian market to explain the concepts better. Here, please note that the financial numbers or stock market data I have used are just for calculation purposes and are approximations around the current values (as on 28th August 2024). Also, none of the stocks listed below are recommendations.

Anyway, let’s start right away.

This content is reserved for Mastermind Members. To access, please login below with your membership credentials.

The Psychology of Investing #2: How Evolution Wired Us to Fail at Investing (And What to Do About It)

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life.

This is a masterpiece.

– Morgan Housel, Author, The Psychology of Money

Get Your Copy Now

The Internet is brimming with resources that proclaim, “nearly everything you believed about investing is incorrect.” However, there are far fewer that aim to help you become a better investor by revealing that “much of what you think you know about yourself is inaccurate.” In this series of posts on the psychology of investing, I will take you through the journey of the biggest psychological flaws we suffer from that causes us to make dumb mistakes in investing. This series is part of a joint investor education initiative between Safal Niveshak and DSP Mutual Fund.

Imagine you are one of our cave-dwelling ancestors, minding your own business, when suddenly a tiger appears. Do you –

Carefully weigh the pros and cons of running vs fighting?
Calculate the statistical probability of survival based on past tiger encounters?
Scream and run faster than Usain Bolt?

If you chose C, congratulations! You are alive (well, your ancestors were), and you are also the proud owner of a brain that is about as well-suited for modern investing as a hammer is for performing brain surgery.

[Read more…]

Leander Paes on How to Deal with Triumphs and Disasters in Tennis and Life

In the 34th episode of The One Percent Show, I talked with Leander Paes, the Indian tennis legend widely regarded as one of the greatest doubles players in tennis history. We explored Leander’s remarkable journey over four decades to become a tennis legend, his philosophy on hard work, patience, and dealing with losses and failures, and his advice to the young generation on playing the long game, in tennis and life.

[Read more…]

Inside View vs. Outside View: A Critical Thinking Framework for Investing

Online Value Investing Workshop – August 2024 Cohort: I recently opened admission to the August 2024 cohort of my Online Value Investing Workshop, which has already been taken by 1800+ students ever since I launched it two years ago. Here is what you get when you sign up for this workshop –

30+ hours of pre-recorded lectures and Q&A videos
60+ questions answered in the Q&A
Live Q&A session of 3 hours on Sunday, 25th August 2024 (7 PM IST Onwards)
One-year unrestricted access to the entire content
7 readymade screens to filter high quality stocks (and avoid the bad ones)
Bonus 1: Stock analysis spreadsheet (otherwise priced at ₹1999)
Bonus 2: Rethinking Financial Freedom Masterclass + The Art of Investing Masterclass (otherwise priced at ₹1998)

I am accepting 100 students for this cohort, and more than half the seats have been booked by now. Click here to read the details of the workshop and sign up.

I’ve been reading Michael Mauboussin’s Think Twice: Harnessing the Power of Counterintuition over the past few days. It’s one of those books that makes you pause every few pages, look up from the text, and mutter, “Oh, I’ve been thinking about this all wrong.”

Among the sea of ideas Mauboussin has covered in his book, one idea that I have been thinking about deeply is the distinction between the “inside view” and the “outside view” in decision-making.

[Read more…]

Letter to A Young Investor #2: The Money Manual

I am writing this series of letters on the art of investing, addressed to a young investor, aiming to provide timeless wisdom and practical advice that helped me when I was starting out. My idea is to help young investors navigate the complexities of the financial world, avoid misinformation, and harness the power of compounding by starting early with the right ideas and steps. This series is part of a joint investor education initiative between Safal Niveshak and DSP Mutual Fund.

Dear Young Investor,

I hope this letter finds you well and in high spirits.

You remember my uncle whom I had introduced in my previous letter, who taught me that wealth is not about accumulating money but about living a life of purpose, freedom, contentment, and fulfilment?

Well, a few years into his guidance and once I had started earning money, I remember asking him about the ‘operating manual for money’ that did not exist – and still does not – unlike most things in life that come with a manual on how to operate them.

Think about it. When you buy a new gadget, it comes with a booklet explaining how to use it, maintain it, and even troubleshoot it when things go wrong. But when it comes to money, something we use every day and crucial to our lives, there is no manual handed over. You are left to figure it out on your own, often learning through trial and error, sometimes at a great cost.

[Read more…]

The Trappings of Wealth

When I look around, I see so many people constantly racing against time. Parents, in their drive to climb the career ladder, often miss out on the precious moments of their children’s childhood. I also see relationships faltering because people are so focused on chasing something elusive in the future — something that never seems to be enough. In the process, they miss out on living and loving the people around them in the present.

[Read more…]

The Poison of Privilege: Investing Lesson from the 18th Century Rich

Welcome to the latest issue of ‘The Journal of Investing Wisdom’, where I delve into the thoughts, reflections, and readings that have recently captured my attention. This journal serves as a window into my contemplations and the resources that inspire and inform my journey as an investor. I hope you like what you read below. If you are new here, and wish to get insights and ideas like these straight into your inbox, please click here to become a member.

What I’m Reading

The Poison of Privilege

In his latest post titled A Few Little Ideas And Short Stories, Morgan Housel shared this –

Demographic historian T.H. Hollingsworth once published an analysis of the life expectancy of the British peerage. It showed a peculiar trend: Before the 1700s, the richest members of society had among the shortest lives – meaningfully below that of the overall population.

How could that be?

The best explanation is that the rich were the only ones who could afford all the quack medicines and sham doctors who peddled hope but increased your odds of being poisoned.

I would bet good money the same happens today with investing advice.

Morgan’s concluding thought about investing advice following the same path as quack medical advice is hilarious but also cautionary. The parallel drawn between the wealthy of pre-1700s Britain, who suffered shorter life expectancies due to their ability to afford harmful treatments, and today’s investors, who may be swayed by complex yet flawed financial products and strategies, is striking. In both cases, the very resources that should have provided an advantage instead became a source of harm.

[Read more…]

My 8-Point Stock Analysis Checklist

30+ hours of pre-recorded lectures and Q&A videos
60+ questions answered in the Q&A
Live Q&A session of 3 hours on Sunday, 25th August 2024 (7 PM IST Onwards)
One-year unrestricted access to the entire content
7 readymade screens to filter high quality stocks (and avoid the bad ones)
Bonus 1: Stock analysis spreadsheet (otherwise priced at ₹1999)
Bonus 2: Rethinking Financial Freedom Masterclass + The Art of Investing Masterclass (otherwise priced at ₹1998)

I am accepting 100 students for this cohort, and more than half the seats have been booked by now. Click here to read the details of the workshop and sign up.

Identifying stocks is not an easy task. You are not just ‘picking a stock’ but ‘investing in a business’ that is a complex entity driven by multiple variables.

The complexity of the task is what keeps many investors from analysing businesses who instead depend on easily available tips from strangers, especially those handing out stock names for free on social media.

[Read more…]

Five Good Lessons: Fooled By Randomness

Five Good Lessons: The Intelligent Investor

Relative Valuation Methods: A Cheat Sheet for Investors

The Psychology of Investing #2: How Evolution Wired Us to Fail at Investing (And What to Do About It)

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life.

Become a wiser investor in just 5 minutes

Leander Paes on How to Deal with Triumphs and Disasters in Tennis and Life

Get The Almanack of Good Life in your inbox

Inside View vs. Outside View: A Critical Thinking Framework for Investing

Become a wiser investor in just 5 minutes

Letter to A Young Investor #2: The Money Manual

Become a wiser investor in just 5 minutes

The Trappings of Wealth

Get The Almanack of Good Life in your inbox

The Poison of Privilege: Investing Lesson from the 18th Century Rich

Become a wiser investor in just 5 minutes

What I’m Reading

My 8-Point Stock Analysis Checklist

Become a wiser investor in just 5 minutes