Blog on Value Investing | Safal Niveshak

Any Monkey Can Beat the Market! Really?

Any monkey can beat the market! That’s exactly how a headline of an article I recently came across reads.

This article was published in the Wall Street Journal in late 2012 (a tribesman recently shared it with me) and stated that if you give a monkey enough darts to throw at stock pages, they’ll beat the market. This was based on a research that simulated results of 100 monkeys throwing darts at the stock pages in a newspaper. The average monkey outperformed the US stock market index by an average of 1.7% per year since 1964.

Now, that would have bought them a lot of bananas!

In fact, as early as 1973, Burton Malkiel, a professor at Princeton University had claimed in his book, A Random Walk Down Wall Street, that “A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.”

Now, given that the monkeys have not just earned as much as the US stock market index, but have handsomely outperformed it, there’s something worth pondering about for those who are trying to work hard to pick their own stocks.

Why care to analyze businesses and estimate intrinsic values when you can hire a monkey (or I will send one to you for a fee 🙂 ) to pick your stocks?

You must care, dear tribesman!

10 Big Ideas from Warren Buffett’s 2014 Letter

Warren Buffett has been the highlight of two of my last three posts –

On an extended holiday, as I read more of the legend, I am happy to share more of him with you as well. 🙂

Buffett’s latest annual letter to shareholders is out (click here to read), and here are ten important ideas I have pulled out for you from the same –

Warren Buffett’s Age-Old Secret on How to Get Rich

Have you ever wondered why we are willing to hold on to our real estate investments for years even as we trade in and out of stocks?

So, we may buy and/or sell just 1-2 properties in our lifetimes, but the count of stocks we move in and move out of runs into 100s.

Of course the size of the investment plus ability to liquidate (buy and sell) is one factor. But the most important factor that is at work here is – Stocks provide you minute-to-minute valuations for your holdings, whereas you don’t see quotations for your real estate holdings so frequently.

When it comes to stocks, Ben Graham’s mentally-ill fellow Mr. Market comes to you daily and quotes a random price that causes you to behave irrationally.

“Don’t just sit there, do something!” he shouts at you daily, and you gladly take his advice and buy stocks when he quotes a high price and sell when he quotes a lower price.

Announcing: The Safal Niveshak Value Investing Contest 2014

Here’s your chance to showcase your analysis skills to the Safal Niveshak tribe, and in the process win a prize if your entry gets chosen amongst the best.

Contest Rules

Write a 2,000 word (max.) report on one Indian company of your choice. It may be a great, or good, or a gruesome business.
Deadline for report submission by email to me is 10th March 2014.
Your chosen company can be from any industry.
The stock must have a market capitalization of more than Rs 100 crore.
The idea must be well researched (by you). Your analysis must cover these areas:
- Company history and business
- Competition
- Financial strength
- Management quality (have they been good or bad allocators of capital)
- Risks (what can go wrong)
- Valuation (challenge the market’s current valuation – whether the stock is overvalued, undervalued, or fairly valued – instead of calculating your own)
The report would be exclusive to Safal Niveshak. But you can post an abstract at other places and link to the full report on Safal Niveshak.

Evaluation & Rewards
I will evaluate each submitted entry ONLY on the quality and simplicity of analysis, though good presentation and proper language is more than welcome (would save me editing time!)

There are three prizes to be won –

1st Prize – Books of choice, worth Rs 5,000/-
2nd Prize – Books of choice, worth Rs 3,000/-
3rd Prize – Books of choice, worth Rs 2,000/-

All submitted entries would be published on Safal Niveshak (the author can remain anonymous if he/she wants).

This contest is now open. Remember, the deadline is 10th March 2014.

Announcing: The Safal Niveshak Education Scholarship

Charlie Munger, in a speech at USC Law School commencement in May 2007, said –

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.

I have personally known a few such people who, by the sheer dint of their hard work and diligence, and despite various challenges they faced at each step of their way, have achieved great heights.

Sadly, I have also known a few who got stuck on the way.

One big reason that has kept most of these latter people from realizing their dreams has been the lack of sufficient money to provide for their education.

How I Multiplied My Income 2.5x, Savings 5x, and Happiness 20x (After Quitting My Job)

Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. ~ Mark Twain

On 1st January 2011, when most people around me were making resolutions to lose weight and eat better, I was making up my mind to do something else.

I finally did it on 4th January. I told my boss – “I quit!”

Quitting my job was a tough decision to come by, as I was surrounded by mixed views from all around, including from within me.

“You’re sure you want to quit your job?” asked my concerned father.

“How could you quit when we have spent so many years training you?” asked my boss, forgetting that I had also spent so many years serving the company.

“Hey, please don’t quit!” said my colleagues.

“Yes, you can do it!” said my wife.

“Yes, Papa will be at home to play with me at all times!” exclaimed my seven year old daughter.

Now, here is how my mind was playing tricks with me.

Value Investing, the Sanjay Bakshi Way 2.0

After much delay due to issues in fixing a mutually convenient date, my interview of Prof. Sanjay Bakshi is going to happen soon.

Just to give a background, Prof. Bakshi is one of the best minds in India in the fields of Value Investing and Behavioral Finance.

He teaches MBA students (at MDI Gurgaon) two popular courses: “Behavioral Finance & Business Valuation” and “Financial Shenanigans & Governance”. He is also a Managing Partner at ValueQuest Capital LLP — a value investing specialist in moats investing.

Intrinsic Value: A Big Deal?

Here is an email I received from a tribesman yesterday…

I agree that evaluating and buying great businesses at the correct price (i.e. prices below the intrinsic value) is of utmost importance.

However, while I think I am getting better in evaluating the growth of businesses, their durable moats and creating my own check list of investing, my biggest challenge is in calculating the range of the “intrinsic value”.

I am still not able to calculate the risk associated with the stock and that is prohibiting me from confidently buying a stock which I believe is a value buy.

May I request you to please share any pointers, books, frameworks which can help me estimate the risk and/or this intrinsic value?

I believe this – calculating intrinsic value – is one big issue most investors face, and thus I thought of replying to this email via a post.

Well, the concept of intrinsic value is indeed tricky.

Mastermind Value Investing Course: Admission Now Open!

Mastermind Course at a Glance After innumerable requests and hundreds of emails from readers to re-open admissions to my one-year online course in Value Investing – The Safal Niveshak Mastermind – I’m finally doing it today. 🙂

Admission to the second batch of Mastermind is now open, and will remain so till 16th February 2014.

Basically, The Safal Niveshak Mastermind is a one-year course to help you reinvent how you invest, do work that matters, and in the process, get started on creating your financial freedom.

My idea of The Safal Niveshak Mastermind is two-pronged. This course will help you with…

Deep and accelerated learning in Value Investing and personal finance to help you manage your money better; and
Step-by-step guidance on turning your passion into a money-generating small business so that you can live your life the way you want.

I’ve sifted through a mountain of amazing books, documents, lectures, websites, and the last ten years of my personal experience as an investor and three as an entrepreneur to ensure that I bring the best ideas and lessons for you in value investing, personal finance, and living life on your own terms.

The goal of The Safal Niveshak Mastermind course is simple – To help you get richer every single day.

What You’ll Get By Joining
The Safal Niveshak Mastermind
I’ve lined up a lot of things that you will receive when you become a part of The Safal Niveshak Mastermind. Here’re the key ones…

1. Premium Course in Value Investing
This course will include…

50+ lessons and several hours of video and audio classes apart from a few real-life case studies that will help you learn the nuances of Value Investing and how you can apply it to create long-term wealth through stock investing.
Lessons on identifying moats and analyzing specific sectors to help you build your circle of competence.
Lessons on building a latticework of mental models – the Charlie Munger way – to make better investment decisions.
Lessons on calculating Intrinsic Values of stocks.
Lessons on creating a portfolio of high-quality stocks.
Exclusive Forum to participate in learning exercises and discuss practical examples so that you can gain experience in doing your own independent analysis.

Here is the list of lessons you will learn as part of the Value Investing Course over the next one year…

Modules of Mastermind Value Investing Course

Plus, here is the ‘members-only’ Mastermind Forum where you will participate in Exercises and discussion with fellow students…

2. Course: Turn Your Passion into Paycheque
This is a course that a lot of tribesmen have requested me for. Here, you will learn the step-by-step method of turning your passion into a regular stream of money – or an alternative source of income – so that you can do what you love to do, and not be worried anymore about someone else deciding your financial life and future.

Through this course, I will share my experiences in changing my own life by reinventing the way I work, and guide you on how you can do it for yourself.

3. Special E-Books, Workbooks, Videos and Podcasts
From time to time, I will also send you special e-books, workbooks, videos and podcasts…all with the view of enhancing your learning in investing and personal finance, and turning your passion into lifelong earning.

You will receive all lessons in HTML and downloadable PDF formats, plus some in video and audio formats, so that you can go through them at your comfort.

Sounds a Lot, Right?

You see, it is not necessary to do extraordinary things to get extraordinary results in life.

What you need are simple ideas, and the discipline and patience to follow them.

All learning you will receive through The Safal Niveshak Mastermind will be geared in that very direction – to guide you with simple ideas that you can practice with discipline and patience to achieve your goal of living a comfortable financial life.

Now, if you are willing and ready, I invite you to join me in this endeavour.

By the way, here is what a few Mastermind subscribers have to say about their experiences with the Course…

What Mastermind Subscribers Have to Say…

The Mastermind course is top class. It taught me to (1) Read annual reports (2) Be Rational (3) Be Multi-disciplinary thinker (4) To Invert. I would have been a better investor if this course was available to me 10 years back.

The first stock that a retail investor should buy is “Mastermind”. Why? Its price is very low compared to its intrinsic value. You have a big Margin of Safety.

~ Jana Vembunarayanan

Mastermind is one of the best courses I have ever taken. The best thing about the course is the emphasis on behavioural aspects in investing.

I am from the finance domain and I can most confidently say that most of the other courses – including top MBA programmes and financial modeling / equity research training modules – do not pay adequate attention to this aspect.

~ Gaurav Bhagwat

If Mastermind existed at the time of my entry into markets, I would have saved myself from a decade of investing mistakes and plenty of painful losses.

~ Eswar Santhosh

The Mastermind course is the best investment I have ever made, and I am thoroughly enjoying it. The content is excellent and how I wish I could have done this course 15 years ago.

Its price is way lower than its Intrinsic Value!

~ Prakash Patel

I consider Mastermind Course as one of my life changing journeys.

I believe that the value investing principles taught in Mastermind can not only be applied to managing money but also to other areas of life like doing better work, and managing good relationships.

~ N. Venkateswaran

Mastermind Course truly reflects its name – “Master the Mind”. The entire course is structured beautifully. I give a thumbs up for the course!

~ Arti Rungta

Now, if you are interested in joining the Mastermind Course…

Let Me Offer You a Deal!
The Safal Niveshak Mastermind, with all its invaluable contents as I have mentioned above, is priced at Rs 14,500/- (incl. taxes) for an year’s subscription.

However, if you subscribe to the Course by 10th Feb. 2014, you can claim a Special Discount of Rs 1,000/- and thus pay Rs 13,500/- only.

You see, this is the best price I can offer you, given the immense value I believe Mastermind will add to your life for years to come.

But don’t just believe me! Here is what existing students of Mastermind have to say on the ‘price vs. value’ equation of the Course…

The first stock that a retail investor should buy is “Mastermind”. Why? Its price is very low compared to its intrinsic value. You have a big Margin of Safety. ~ Jana Vembunarayanan

The Mastermind course is the best investment I have ever made. Its price is way lower than its Intrinsic Value! ~ Prakash Patel

Now, if you are interested to reinvent how you invest, do work that matters, and create your own financial freedom…

Click Here to Join Mastermind Now!
The Safal Niveshak Mastermind course is the one tool that can help you…

Create life-changing financial habits
Transform how you make your living
Create your financial freedom

It’s your chance to break the shackles, reinvent the way you invest, do what you love, and create a new future.

After all, it’s your life and you wouldn’t want to waste it living someone else’s.

With respect,
Vishal Khandelwal
Chief Tribesman, Safal Niveshak

P.S. If you liked what you just read and want your friends and colleagues to also know about this Course, kindly forward them the link to this page.

P.P.S. In case you face any issues making the payment, please write to me at vishal@safalniveshak.com or call me at +91-80970 73918.

P.P.P.S. Please read the “Frequently Asked Questions” to avoid future confusions/conflicts.

Safal Niveshak StockTalk: Info Edge

Statutory Warning: This report may cause a reaction, and acting on it can be injurious to your wealth.

I recently talked to the management of Info Edge (India) Ltd. (IEL) to understand the company’s business, what drives it, and the challenges it faces.

Here is analysis of the business for you, with the view that it would help you understand it better.

Let’s start with understanding the business and its core underlying dynamics.

Info Edge’s Business
IEL is India’s leading online classifieds company with presence in the recruitment, matrimony, real estate, education and related services.

Unlike the first impression of it being an “Internet or dotcom” business, look deeper and you will see a “media” business (classifieds) that is on the Internet.