Safal Niveshak

Wit. Wisdom. Value Investing.

The Psychology of Investing #15: Better Roughly Right Than Precisely Wrong

Two Books. One Purpose. A Better Life.

🎁 Now Available At Special Prices!

“This is a masterpiece.”

—Morgan Housel, Author, Psychology of Money

“Discover the extraordinary within.”

—Manish Chokhani, Director, Enam Holdings

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.

A group of tourists was visiting a dinosaur museum. A guide was entertaining them with interesting trivia about various dinosaur species. Just when they were passing by a huge skeleton of an ancient carnivore, an inquisitive member of the tourist group asked the guide, “How old is this skeleton?”

“Oh, that big T-rex skeleton? It’s about 100 million and 5 years old.” quipped the guide.

“That’s quite an odd figure. I understand the 100 million part but how are you so sure about the last 5 years?”

[Read more…] about The Psychology of Investing #15: Better Roughly Right Than Precisely Wrong

Money Is Simple. Why Do We Make It Complicated?

You may not have heard of Jonathan Clements. He wasn’t a fund manager or a market guru. He was a journalist who tried to make sense of money in a way that felt real, not intimidating.

Between 1994 and 2008, Clements wrote more than a thousand columns for The Wall Street Journal. Later, he started his own site, HumbleDollar. A few days ago, he died at 62, after fighting a rare form of lung cancer for nearly 18 months.

Jason Zweig, his colleague and friend, wrote a remembrance of him. He spoke about Clements’ “obsession” with index funds and his stubborn courage in calling out the financial industry when it misled people.

[Read more…] about Money Is Simple. Why Do We Make It Complicated?

Letter to A Young Investor #15: Are You a Stock or a Bond?

Two Books. One Purpose. A Better Life.

🎁 Now Available At Special Prices!

“This is a masterpiece.”

—Morgan Housel, Author, Psychology of Money

“Discover the extraordinary within.”

—Manish Chokhani, Director, Enam Holdings

I am writing this series of letters on the art of investing, addressed to a young investor, with the aim to provide timeless wisdom and practical advice that helped me when I was starting out. My goal 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 principles and actions. 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.

Let me quickly take you back to when I began my journey in investing almost 22 years back. I thought the most important questions were the obvious ones, like: Which stock should I buy? How much return can I expect? What mutual fund is better than the other? How much should I invest in bonds and how much in stocks?

[Read more…] about Letter to A Young Investor #15: Are You a Stock or a Bond?

A 5% Decade

Join the Mastermind Membership

The Only Investing Membership You’ll Ever Need

Join 10,000+ students from 30+ countries and learn the structured, step-by-step process of stock picking as practiced by the world’s most successful stock market investors.

Join Mastermind

On the morning of April 10, 1912, the Titanic set sail on her maiden voyage. She was the largest ship afloat, built with the latest technology, and marketed as “unsinkable.”

Her captain, Edward Smith, was a veteran of the seas. The ship’s design was considered so safe that she carried lifeboats for only about half the passengers on board. Even the safety drills were minimal.

[Read more…] about A 5% Decade

Impermanence

🔔 A Note on My Books and Courses

Hardcover Books: The Sketchbook of Wisdom & Boundless

Mastermind Value Investing membership: Learn, connect, and grow with a private community of serious value investors. Click here to join now.

Value Investing Almanack newsletter: Deep, timeless investing insights delivered to your inbox every month. Click here to join now.

The first mobile phone I bought was in 2003. It was with my second salary, and it was a Nokia 3315. In fact, when I looked around, almost everyone had one, and for good reason. You could drop it or even throw it at a wall, and it would still work fine.

Back then, Nokia wasn’t just a company, but the company. If you’d asked me names of businesses that would last forever, I’d have said “Nokia” as one of them without a second thought.

[Read more…] about Impermanence

Investing in Your 40s and 50s: The No-Mistake Zone

🔔 A Note on My Books and Courses

Hardcover Books: The Sketchbook of Wisdom & Boundless

Mastermind Value Investing membership: Learn, connect, and grow with a private community of serious value investors. Click here to join now.

Value Investing Almanack newsletter: Deep, timeless investing insights delivered to your inbox every month. Click here to join now.

Disclaimer: What follows is based on my personal views and experiences, and may not apply to everyone’s circumstances. Your financial situation, risk appetite, and life stage may be very different from mine. Please don’t take offence if something here doesn’t match your approach. Use it only as a perspective, not a prescription.

I received a letter from a reader a few days ago. He was someone around my age and wrote:

I’m in my mid-40s, my kids are growing up, my parents are ageing, and I’m suddenly feeling this urgency about my finances. I’ve been investing, but I don’t know if I’m doing enough or if I’m doing it right. There’s no social security here, and if I mess up, there’s no safety net. What should I do?

I read it twice because it could have easily been me writing that letter. I am middle-aged myself, and lately I’ve been thinking a lot about these same questions about money, security, and the strange cocktail of restlessness and responsibility that creeps up on you in this phase of life.

[Read more…] about Investing in Your 40s and 50s: The No-Mistake Zone

The Psychology of Investing #14: The Authority Illusion

🔔 A Note on My Books and Courses

Hardcover Books: The Sketchbook of Wisdom & Boundless

Mastermind Value Investing membership: Learn, connect, and grow with a private community of serious value investors. Click here to join now.

Value Investing Almanack newsletter: Deep, timeless investing insights delivered to your inbox every month. Click here to join 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.

A relative of mine once struggled with a stubborn stomach problem, which included constant acidity, bloating, and fatigue. It wasn’t life-threatening, but it made daily life miserable. At first, he brushed it off as stress, or too much tea and late nights, like most of us would. But after three or four months, the discomfort became impossible to ignore.

Finally, he decided to see a senior doctor in the city, one with decades of experience, consultant at a top private hospital and to a few celebrities, and long waiting lists. As my relative described him later, the aura around him was unmistakable.

But as often happens in doctor visits, the consultation was brisk. After a few quick questions, the doctor prescribed an aggressive line of checkups and treatment. That included an endoscopy, blood tests, ultrasound, and an expensive combination of medicines. The doctor’s fee and tests, which were all done at his clinic, alone cost almost ₹30,000.

[Read more…] about The Psychology of Investing #14: The Authority Illusion

Just Stay Out of Trouble

🔔 A Note on My Books and Courses

Hardcover Books: The Sketchbook of Wisdom & Boundless

Mastermind Value Investing membership: Learn, connect, and grow with a private community of serious value investors. Click here to join now.

Value Investing Almanack newsletter: Deep, timeless investing insights delivered to your inbox every month. Click here to join now.

It began innocently enough, with a conversation over tea. My friend was telling me about a new real estate project he had been “looking into.” He didn’t say much at first, just that it was in a location everyone said was going to boom in a few years. The government had announced a new airport and a highway project nearby. Also, as per my friend, the pre-launch price was “ridiculously good,” and the developer had a name people in the city recognised.

He didn’t sit on it for long. Within days, he had paid the booking amount and signed the papers. In his mind, the deal was already a success. He could picture the appreciation in value and the approving nods from his family and friends when he’d tell them he saw the opportunity early. It all looked like a straight road to a happy ending.

[Read more…] about Just Stay Out of Trouble

The ₹1,038 Illusion

🔔 A Note on My Books and Courses

Hardcover Books: The Sketchbook of Wisdom & Boundless

Mastermind Value Investing membership: Learn, connect, and grow with a private community of serious value investors. Click here to join now.

Value Investing Almanack newsletter: Deep, timeless investing insights delivered to your inbox every month. Click here to join now.

This is from sometime around 2005 while I was just two years into my role as an equity research analyst. I was working on a mid-size auto ancillary company that had been on my watchlist for months.

Auto ancillary was then an unglamorous industry, and the company had been doing roughly the same thing for decades. But it had a reasonable track record of generating cash, and recently its stock price had been drifting lower. It felt like the sort of under-the-radar situation that might turn into a good investment if the numbers lined up.

I started in the usual way, pulling up a decade’s worth of financial statements. I went line by line through revenues, operating margins, capital expenditures, debt levels, and cash flows. Nothing leapt off the page. Everything looked… just fine. I decided to dig deeper and run the numbers.

[Read more…] about The ₹1,038 Illusion

Your Last Great Edge in Investing

🔔 A Note on My Books and Courses

Hardcover Books: The Sketchbook of Wisdom & Boundless

Mastermind Value Investing membership: Learn, connect, and grow with a private community of serious value investors. Click here to join now.

Value Investing Almanack newsletter: Deep, timeless investing insights delivered to your inbox every month. Click here to join now.

Few serious investors were excited about Amazon in the early 2000s. The company was less than 5 years old, and despite rapid revenue growth over the previous years, was still reeling under deep losses at the operating and the net levels. What’s more, the dot-com bubble had recently burst, and the stock had fallen more than 90% from its highs.

[Read more…] about Your Last Great Edge in Investing