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How to Create An Antifragile Life, and A Stock Portfolio (A Personal Experiment)

Life was good when I was working at my job as a stock market analyst around 2005-06. Markets were doing well, and my stock picks were flying high. My company’s clients were happy with our recommendations, and consequently, my salary was coming in.

Talking about salaries of stock market analysts, the less that’s said the better. You get paid undeservingly (salary-to-effort ratio, as compared to most other knowledge workers) for constantly questioning the hard work of entrepreneurs and then not questioning your own analyses while churning out words that lose relevance in a few weeks or months.

Anyways, since I was an analyst then, I did not question what I am questioning now. Life was good. I felt safe and comfortable in my job, loved what I was doing, and thought that I would be happy doing the same thing for the rest of my life.

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Do Nothing When Nothing Must Be Done

Disclaimer: This post isn’t against doctors or financial advisors. I respect both these professions but believe that a system bent on action often leads professionals in these fields astray. The consequences are often bad for their counterparties – patients and investors.

It was sometime in 2008. I had an uncle who was a well-known dermatologist in my hometown. One day, on a routine annual checkup, the radiologist found a lump in his stomach. My uncle then got himself checked by his surgeon friend. The diagnosis was stomach cancer.

This surgeon was one of the best in this field and had even successfully tried a treatment on this exact cancer for other patients that tripled the five-year-survival odds – from 5 percent to 15 percent – albeit with a poor quality of life.

My uncle was not interested in this treatment. He knew the prognosis well and his focus now was spending time with family and feeling as good as possible for whatever time he had on hand.

A few months later, he died at home. He got no surgical treatment, no chemotherapy, no radiation.
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Nassim Taleb on True Wealth

Here’s some good stuff I read in recent times that might interest you…

Nassim Taleb on True Wealth
Nassim Taleb is one of my favourite authors, and his Antifragile is one of my favourite books. One of this book’s chapters that interests me particularly is titled Via Negativa. Here, Taleb argues that the solution to many problems in life is by removing things, not adding things.

For example, here is a list of things Taleb counts as constituents of true wealth that are all about subtracting things (via negativa) from life than adding –

  1. Worriless sleeping
  2. Clear conscience
  3. Reciprocal gratitude
  4. Absence of envy
  5. Good appetite
  6. Muscle strength
  7. Physical energy
  8. Frequent laughs
  9. No meals alone
  10. No gym classes
  11. Some physical labor
  12. Good bowel movements
  13. No meeting rooms
  14. Periodic surprises

I could check twelve from this list (let the ones I didn’t check remain a secret). What about you? What in the list remains getting checked for you?

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How Not to Bet

Jeanne was in her late 80s. Her husband had already passed away twenty years back. Her only daughter, Yvonne, had died much earlier at a relatively young age. Yvonne’s son, Frédéric, was raised by Jeanne herself. Unfortunately, like his mother, Frédéric too had a premature demise when he was killed in an automobile accident at a young age of 36.

All her life Jeanne had lived in Arles, France and had no wish to leave the place in her final years. However, living alone with no source of income, it was hard to support herself.

That’s when a forty-seven-year-old lawyer named André-François Raffray offered a deal to the old lady.

At age ninety and with no heirs, Jeanne agreed to sell her apartment to Raffray for the price of a low monthly subsistence payment of 2,500 francs. The contract said that the payments would stop upon her death, at which point she would be carried out and Raffray could move in.

Jeanne would thus have an ongoing source of cash to live on in her last years, and the lawyer would get an apartment cheaply, with no money down, in return for accepting the uncertainty as to when he would take possession.

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What You Need to Succeed in Investing (Hint: It’s Not Genius Brain)

“Hey Vishal, have you read about how Albert Einstein lost so much money in the stock market?” asked my friend Ravi as we met for dinner over the weekend.

“Yes Ravi,” I said. “In fact, he lost most of his winnings from the 1921 Nobel Prize in the stock market crash of 1929.”

“Wow!” Ravi exclaimed. “And we are talking about one of the genius minds to have ever walked this planet.

“Right Ravi. And I’m sure you’ve also heard about Mr. Newton, who was wiped out while chasing the stock market bubble in 18th century England.”

“Yes Vishal, you only told me about Mr. Newton’s misdoings when we met a few months back.”

“Sometimes I fail to understand,” Ravi continued, “how men with such high levels of intelligence fail at such petty things as the stock market, even when you hear of investment stories about individuals who’ve made fortunes because of exceptional insights or sheer genius!”

“Because, my dear friend, the best rewards in investing don’t generally go to investors with the smartest brains but to those with the strongest stomachs.”

“Stomach? Are you serious?”

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