Blog on Value Investing | Safal Niveshak

10 Demons of Investing

October 19, 2018 | 15 Comments

I wish all tribe members of Safal Niveshak a very happy Vijayadasami or Dussehra. As per Hindu tradition, today marks the victory of Goddess Durga over the demon Mahishasura. Today also marks the victory of Lord Rama over demon Ravana.

Consider Ravana. He is depicted and described as having ten heads and as a follower of Shiva. He is a great scholar, a capable ruler and a maestro of the veena, but someone who wished to overpower the devas. His ten heads represent his knowledge of the six shastras and the four Vedas.

A negative interpretation of Ravana’s ten heads are the ten emotions or senses in humans –

Kama (Lust),
Krodha (Anger),
Moha (Delusion),
Lobha (Greed),
Mada (Pride),
Matsar (Envy),
Manas (Mind),
Buddhi (Intellect),
Chitta (Will), and
Ahamkara (Ego)

When it comes to investing, some of these emotions stand in between the investor and his long-term success.

As the story of Ravana depicts, the mind tends to shun all things good for our life and seek all things bad for our life. To attain wisdom, one of the most important things we must do is witness the tricks of the mind, and avoid playing the wrong hand as much as possible.

In the illustration that follows, I have tried to depict the ten emotions, or the ten demons, or the ten tricks of our minds, when it comes to investing. Print it, paste it on your work desk, and look at it often.

Stock Analysis Excel Version 4.0

October 17, 2018 | 17 Comments

Whether you’re training for a marathon or going on an adventure trip, being ready can make a world of difference.

The same is true for the stock market. It’s important to be prepared with a watchlist of fundamentally sound stocks ready to be bought at the right prices. Whether the market is in rally mode or in a phase of correction, being prepared with a watchlist is key.

Here is Version 4.0 of my Stock Analysis Excel Sheet that will help you with exactly that – identify high-quality businesses to create your watchlist and buy them when the prices are right.

Download this sheet on your computer, read carefully through the instructions to follow a few simple steps, and then analyze not just the past performance of a company but also arrive at its approximate intrinsic value range.

Like the previous version 3.0, this latest version feeds in data automatically from Screener.in website, which subsequently feeds into my sheets on financial analyses and intrinsic value calculations. So, please thank Screener’s creators and my friends Ayush and Pratyush before thanking me. 🙂

If you have been into financial modeling in the past, this excel file may seem like a child’s play. But, if my 15+ years of experience as an analyst is anything to go by, this is most of all you require to “quantitatively” analyze stocks…not models running into hundreds of rows and tens of sheets.

Saving Your Retirement from a Stock Market Crash

October 11, 2018 | 3 Comments

Disclaimer: I am not a financial advisor. The advice given below is not a financial advice even though my excitement might make it look like such. In fact, what follows below are just my thoughts, those of an ordinary person who works hard, and tries to save and invest as sensibly as he can.

I received a call from a 59-year old gentleman, a distant relative, yesterday. We have not met in the past two decades, so the sudden call was surprising. But not after the first minute of our talk when he asked, “I’ve heard from your aunt that you work in the stock market. I wanted to discuss my investments. Can you please help?”

“Hmmm…sure,” I said, “almost sensing that he wanted to discuss his stock portfolio with me.”

But he started talking about his upcoming retirement – planned for 2019 – and about a plot of land sitting in his hometown waiting to build his retirement home next year.

He said he had been saving and investing as much money as he could for his retirement and for building this home.

How to Deal With the Harsh Reality of a Stock Market Crash

October 8, 2018 | 5 Comments

Short practical advice (may skip) – If you cannot withstand losing a bit of your money in a stock market crash (where things easily go from bad to worse to brutal), please stay away from stocks. But if you are fine with the risk of losing some money in the short run in return of wealth creation in the long run, keep owing your good stocks and/or good mutual funds. Buy more (and keep buying) if you believe the quoted (now lower after the crash) prices offer great value in the long run. Then, once you are with your chosen good investments, just get going with other more important things in life like family, work, and self-development…and let go of the outcome of your investments. Accept that whatever happens, happens.

How to Deal With the Harsh Reality of a Stock Market Crash

Slightly long theoretical advice (must read) – I read a nice article earlier today on dealing with life’s harsh realities – sharp fall in stock prices is one such reality for most investors – and here is an excerpt from the same…

…the only intelligent thing to do when such turbulent change occurs is for us to sit back and realize that we are only to be witnesses to change, and to respond to it rather than to react to it — much like we would watch a movie unfold on the screen and laugh at the funny bits and cry at the sad bits, while always knowing that what is happening before our eyes is unreal.

Modern quantum physics after Einstein also points us this way — it says that what occurs depends upon the observer, and not on what is observed. So, in effect, as a witness, I am free to choose my response, and therefore the reality I actually experience.

3 Iron Rules of Life and Investing

October 4, 2018 | 34 Comments

You seem to be stressed out today?” asked my Yoga teacher, a gentleman in his late fifties.

“Oh, not really!” I said.

“No, you look a bit stressed. Are you unwell?”

“Not at all. Just feeling a bit confused.”

“May I help?”

“Knowing you, I think you can.”

“Shoot!”

“You see, I have been a stock market investor for many years now, and now also don the role of a teacher trying to help people make saner and better investment decisions. But I am often faced with a dissonance.”

“And what’s that?”