Vishal Khandelwal

One Big Lesson I Learned Seeing Warren Buffett Make Mistakes

IBM and Coke represent two of Berkshire Hathaway’s three biggest investments (the biggest being Wells Fargo).

However, disappointing earnings announcements at these companies cost Warren Buffett around US$ 2.5 billion in the week gone by.

These losses add to a recent rough patch for Buffett, who slashed Berkshire Hathaway’s stake in British retailer Tesco recently. He has described buying into the stock as a “huge mistake” after the company announced another earnings disappointment and, over that, a £ 250 m accounting scandal.

Few seats remain at my Value Investing Workshop in Bangalore on 1st Nov. (Saturday). To join, please register here – https://t.co/VoXkYaHm9q

— Vishal Khandelwal (@safalniveshak) October 27, 2014

The media is rife with these big “mistakes”, especially Tesco, and is surprised how the world’s best investor could commit them. But then, Tesco isn’t Buffett first mistake and it won’t be his last mistake either.

DLF Fraud: One Big Lesson for Investors

Warren Buffett wrote this in his 1989 letter to shareholders…

Stick to proven management with a lot of integrity, talent and passion. After some other mistakes, I learned to go into business only with people whom I like, trust, and admire.

Sadly, 25 years after Buffett first said this and after his countless repetitions of this thought, investors continue to deal with managements that lack integrity, and have talent and passion not in conducting their business affairs honestly but in looting other stakeholders.

The latest case is that of India’s leading (if size matters here) real estate company, DLF, which has sent its customers and investors into a tizzy. This is after the stock market regulator SEBI barred it from raising money from the capital market for three years.

So, home buyers who have invested in DLF projects are worried because they fear the projects that have already been delayed may be pushed back further or even get stalled due to lack of funds with the company.

As for investors (or let me say speculators, who were playing with fire), they have already lost a bucket-load of money in the company’s stock. The stock is down 55% in just the past four months, and 90% down from its post-IPO highs in January 2008.

What is Your Biggest Fear of Being a Stock Market Investor?

I’ve been investing in the stock market since 2004. Over these 10 years, I have seen two big rallies in stock prices and one shattering crash.

Now, 10 years isn’t a particularly long investment resume, but in these years, owing to my work first as a stock market analyst and then as an educator, I have spent a lot of time researching businesses, studying human behaviour, and meeting thousands of small investors.

Anyways, what I have known through these years is that the stock market can be absolutely brutal to your net worth if you are not wise and prepared.

If you planned to retire in 2008-2009 you were absolutely crushed if most of your investments were in stocks. Most things have rebounded five years later, but that means you lost five years of financial freedom with a whole bunch of worrying while you worked through the recovery.

Now, when you’ve been as involved with the stock market as I have, you see a lot of ugly stuff. Leave aside the occasional financial and economic crises that dot the timeline every few years, you also get to know…

How stocks and IPOs are (mis)sold;
How equity research analysts make (read, fake) recommendations;
How professional money managers (mis)manage investors’ money; and
How corporate managers mask bad performance through fraudulent accounting.

You see, nothing is exactly what it seems.

In fact, if you, as a small investor, knew everything behind the scenes, I fear pandemonium would break out.

11 Cities, 18 Days, 9,000 KM – Final Schedule of Safal Niveshak’s True Wealth Workshop

I recently shared my plan of travelling across India’s leading non-metros with my True Wealth Workshop – a three-hour Workshop through which I plan to help people learn the basics of sensible investing and long-term wealth creation.

My travel plan is finalized now, and here is the schedule…

Phase I – North & West India

Ludhiana – 10th Nov. 2014, Monday
Jaipur – 11th Nov. 2014, Tuesday
Indore – 13th Nov. 2014, Thursday
Vadodara – 14th Nov. 2014, Friday
Surat – 15th Nov. 2014, Saturday

Phase II – Central & East India

Nagpur – 22nd Nov. 2014, Saturday
Raipur – 23rd Nov. 2014, Sunday
Bhubaneshwar – 24th Nov. 2014, Monday
Ranchi – 26th Nov. 2014, Wednesday
Patna – 27th Nov. 2014, Thursday
Lucknow – 30th Nov. 2014, Sunday

Overall, I plan to travel around 9,000 KM over an 18 day period while covering 11 cities.

If you are from any of these above-mentioned cities, please click here to fill the registration form right away. Even if you had filled it earlier, please fill again so that I know that you would really be coming. Also mention in the form any specific investment related issue(s) you want me to cover in the Workshop.

As for the fee of the Workshop, I would let the participants fix the same. 🙂

Online Shopping, Investing, and Why We Get Fooled

A three-bedroom apartment. Two cars. Enough flying miles to send an airline into losses (well almost!). Job with a foreign consulting company. Annual salary of Rs 30 lac…or around 45-times India’s average per capita income. Yet my friend Rohan is not happy.

Whenever I meet him, he is, as I put it, caught on the “work-spend treadmill.”

So, just two days back, when he was showing off his latest purchase, a fourth mobile, and one costing in excess of Rs 45,000, I asked him, “You really need one more?”

“It was selling cheap on Flipkart, and so I bought,” he replied.

I knew that handset was Rs 5,000 cheaper on some other website as my other friend had bought it very recently. But then, how do you explain that to someone who bought stuff not because he wanted it, but because “it was selling so cheap and everyone else was buying like crazy!”

I have countless other stories like Rohan’s, where people bought stuff from Flipkart on its Big Billion Day – not because they needed stuff, but because things were selling cheap (at least that was what Flipkart communicated well) and they wanted to buy because others were buying, and before others could buy what they wanted.

Seeking Wisdom in the Age of Information

T.S. Eliot posed the question more than fifty years ago – “Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?”

These questions find much greater relevance fifty years later, in an age of accelerated information and information overload, when people are living larger parts of their lives on Facebook and Twitter than with their families and ‘real’ friends.

The rate and way in which we receive information has changed dramatically – from newspapers and television to constant news online. In fact, we have made our personal lives available to the world in tweetable and retweetable moments.

Now, as much as we try to stop consuming the vast amounts of information coming at us, we wrestle against the paranoia of ‘missing out’ on important information or being out of the loop on something.

This is especially true when it comes to stock market information. As if the second-by-second changing stocks prices were not enough, we are seeing analysis of these changes at a similar pace if not faster.

Mastermind Value Investing Course: Less than 35 early bird seats remain for my premium online course in Value Investing. So, if you are interested and wish to save Rs 1,000/- in early bird discount, I invite you to join Mastermind right away. Click here to join now.

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I Own the World’s Best Business, and So Can You

I got a couple of emails from readers a few days back. The first email read…

Vishal, I would like to start a business of my own where I can put my passion of teaching Math into practice, and also earn my living out of it. I really love the way you are conducting your own business. So can you help me with the tools to start my own business?

The second email read…

Is it really possible to start a new small business that also becomes profitable over the years, given that there is so much competition all around? Also, do I really need to quit my job to start something of my own like you have done? I am not yet in a position to give up the security of a regular paycheque.

Well, here is something I wrote an year ago that is my best answer to the above two emails. I am sure many others also feel this constant urge of starting something of their own so that they can take their life’s control in their own hands.

If you are one of them, I hope you find reading what follows worthwhile and helpful in guiding you in your own journey.

Mastermind Value Investing Course: Less than 50 early bird seats remain for my premium online course in Value Investing. So, if you are interested and wish to save Rs 1,000/- in early bird discount, I invite you to join Mastermind right away. Click here to join now.

[Read more…]

Mastermind Value Investing Course: Admission Opens on 25th Sept. 2014

After innumerable requests and emails from readers to re-open admissions to my premium course in Value Investing – The Safal Niveshak Mastermind – I’m finally doing it.

Admission to the third batch of Mastermind will open on 25th September 2014 (this Thursday), and will remain so till 5th October 2014.

My idea through Mastermind is simple – to help you with a simple, common-sense approach to successful investing, so that you can avoid the uncertainty and outlandish time you would otherwise spend doing it all alone.

If you are interested to know more about the Course, I invite you to visit a new website I have designed especially for the same. You will get all details of Mastermind there.

Click here to visit Mastermind website
After reading through the details, if you have any further question(s) about the Course, please write to me at vishal@safalniveshak.com, or call me at +91-8097073918.

By the way, here is what a couple of Mastermind students have to say about the Course…

This is one of the best courses I have ever done. As a true value investor, this is one of the best investments I have made. I thoroughly enjoyed the course and would be happy to recommend the course to anyone who is interested in value investing.

Your course is the true example of ‘The more you learn, the more you’ll earn.’

~ Antony Sakkariyas

Aristotle said – “Those who know, do. Those who understand, teach.” Vishal does both!

Vishal’s course has given me the investing tools and explained how to use them as well. I have learnt a lot from the lessons and I must say I find myself indebted to Vishal’s teachings. I haven’t made significant money from them (I am sure I will with time) but I have definitely learnt how not to lose it, which, if I am to quote Warren Buffett, is a significant achievement in itself.

If you are interested in the field of investment and want to learn the basics (there probably isn’t much to learn beyond the basics!) then join Vishal’s course. It won’t promise you money but you will keep what you have and will understand how the game must be played to increase your chances of success.

~ Varenya Agrawal

Click here to visit Mastermind website
Remember, admission for the third batch opens on Thursday, 25th September 2014.

Want to Learn Charlie Munger’s Way of Thinking?

According to Colby, men will confess to treason, murder, arson, false teeth, or a wig, but not to a lack of humour.

This, I believe also happens with creative thinking.

So people, in general, like to think that they are creative thinkers, don’t even consider otherwise and, you know what, they may be right!

Most of us can become creative thinkers. It’s just that we need a catalyst to bring forth our innate thinking powers.

Roger von Oech's Creative Whack Pack One such amazing catalyst I found out two years back, through a recommendation from Prof. Sanjay Bakshi, is Roger von Oech’s Creative Whack Pack.

This is a great tool to practice thinking like Charlie Munger does – combining various ideas from different spheres of life and joining them to create a process of thinking creatively – the latticework of mental models, as he calls it.

The pack consists of a deck of 64 cards divided in four suits. Each card gives a bite-sized story or situation and a strategy that may be adapted to the problem or concept the user is working on.

The idea is that drawing cards singly or in combination and considering the strategy can shift the user’s mind to previously unexplored, creative directions.

While this entire pack of cards has helped my thought process immensely over these past two years, here are four cards that have helped me as far as my investment thinking is concerned.

The text in quotes below is from the respective card.

Charlie Munger’s Six Secrets to Winning Big in Investing

Charlie Munger, business partner of Warren Buffett and vice chairman of Berkshire Hathaway, recently did an interview with Jason Zweig published by the Wall Street Journal. You can read Zweig’s notes from the interview here.

Here are the six simple but big-big ideas I’ve pulled out from WSJ’s interview of Charlie Munger – these are all you need to become a smarter investor, if you can ingrain these in your investment philosophy and practice them while making your decisions.

Over to Charlie!