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The Sketchbook of Wisdom: The first print of my book – The Sketchbook of Wisdom – got sold out in a matter of 3 months. Now, the second print is reaching me soon. Click here to reserve your copy. I will start shipping next week. Send me an email at vishal@safalniveshak.com if you wish to place bulk orders.

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In my past communications, I have written about the idea of avoiding online portfolio trackers, given the amount of irrelevant information that you get to see when you log into such trackers, and the unwanted action such noise may lead you to.

As an alternative, I have advised maintaining simple excel based trackers. Since you must enter data manually here, that may keep you away from tinkering much with it.

[Read more…] about A Simple Online Stock Portfolio Tracker

“The greatest obstacle to discovery is not ignorance – it is the illusion of knowledge.” ~ Daniel Boorstin

The Art of Thinking Clearly is a nice book from Rolf Dobelli. In one chapter, Dobelli shares a couple of instances…

Every day, shortly before nine o’clock, a man with a red hat stands in a square and begins to wave his cap around wildly. After five minutes he disappears. One day, a policeman comes up to him and asks: ‘What are you doing?’ ‘I’m keeping the giraffes away.’ ‘But there aren’t any giraffes here.’ ‘Well, I must be doing a good job, then.’

A friend with a broken leg was stuck in bed and asked me to pick up a lottery ticket for him. I went to the store, checked a few boxes, wrote his name on it and paid. As I handed him the copy of the ticket, he balked. ‘Why did you fill it out? I wanted to do that. I’m never going to win anything with your numbers!’ ‘Do you really think it affects the draw if you pick the numbers?’ I inquired. He looked at me blankly.

Consider my own example. I was once a die-hard cricket fan…or let me say I was a fan of only watching India win (and hated it when they lost).

So, during crunch matches, I used to change my seating places in front of the TV frequently to hit upon one from when India started doing well.

I got up from that place, and the Indians either lost a wicket or dropped a catch, so I stuck to that place throughout the crunch situation.

I thought my seating place controlled the fate of the Indian team, which was such a stupid thought.

[Read more…] about Stock Analysis and the Illusion of Control

Richard Feynman, a celebrated scientist and the winner of Nobel prize in Theoretical Physics, was infamous for barging into any classroom (unrelated to Physics) in his university. He would then ask questions and make his fellow professors uncomfortable.

One day Feynman decided to attend a Biology class. Being aware of Feynman’s history of mischief, the Biology professor posed a condition to discourage him. Feynman could attend the class provided he would do all the assignments and write research papers like everyone else attending that class. To the professor’s surprise, Feynman agreed.

Feynman’s first assignment required him to study the nervous system of cats. So he went to the librarian in the biology section and asked her if she could give him a map of the cat.

“A map of the cat, sir?” she asked, horrified. “You mean a zoological chart!”

[Read more…] about Feynman’s Hack and the Map of the Cat

Two hunters are out in the jungle when suddenly one of them collapses. His pulse is gone and his eyes are glazed. The other guy yanks out his cell phone and calls the emergency services.

He gasps, “My friend is dead! What should I do?”

The operator says “Calm down, sir. I can help. First, let’s make sure if he’s really dead.”

After few moments of silence, the operator hears a loud gunshot. Back on the phone, the guy says “OK, now what?”

The hunter was dumb but given the high adrenalin and panicky situation, the operator’s question wasn’t brilliant either, was it?

There’s some truth to the saying – the quality of your questions determine the quality of solutions. Computer programmers know this very well. They call it GIGO, i.e., garbage in garbage out.

Good question begets good answer. Bad question leads to bad answer.

[Read more…] about The Art of Asking Good Questions

Peter Bevelin has written a few amazing books, like Seeking Wisdom: From Darwin to Munger, A Few Lessons for Investors and Managers, and the latest All I Want To Know Is Where I’m Going To Die So I’ll Never Go There.

But one of his lesser-known books that I have on my all time favourites lists is A Few Lessons from Sherlock Holmes. Through this book, Bevelin has distilled Arthur Conan Doyle’s Sherlock Holmes into bite-sized principles and key quotes. In fact, this book is much more than a collection of quotes. It is a way to learn the powers of observation, understand the limits of our mind, and counter the narrative fallacy.

Bevelin writes in the book…

What distinguishes Holmes from most mortals is that he knows where to look and what questions to ask. He pays attention to the important things and he knows where to find them.

[Read more…] about How to Analyze a Business, the Sherlock Holmes Way

I have been reading Edwin Lefèvre Reminiscences of a Stock Operator over the past few days.

It’s a brilliant first-person account of the career of “Lawrence Livingston”, who is a slightly fictionalized version of Jesse Livermore, one of the greatest stock speculators of all times.

Livingston, just out of school, goes to work as a quotation-board boy in a stock-brokerage office. This was sometime in the 1890s, one hundred years before the advent of real-time internet stock quotes. Stock quotes were written on chalkboards.

He develops a feel for the stock market and, in time, begins to speculate. He’s not an investor — he’s a speculator. He gambles in stocks. And he does a great job at it, building a million-dollar fortune during his twenties.

Then he loses everything. In fact, Livingston builds — and loses — several million-dollar fortunes between the first twenty years of 1900s.

Reminiscences of a Stock Operator is an entertaining and educational book on Livingston’s career (read Livermore’s). It contains great many lessons that are also valid for investors.

Here are three such lessons straight out of the book that I believe would serve you well. The emphasis is mine.

[Read more…] about 3 Big Investing Lessons from the World’s Greatest Stock Market Speculator

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 go at right prices.

Whether the market is in rally mode or in a correction, being prepared with a watchlist is key.

Here is a video I’ve prepared to help you learn a simple yet powerful tool of creating your own stock watchlist, which is dynamic and tells you in a snap the status of stocks you are watching.

If you can’t see the video above, click here to see.

Let me know your thoughts on the video, and also share any other way(s) you maintain your own stock watchlist.

Resources:
1. Sample Stock Watchlist
2. Google Spreadsheets Help Center

P.S. This post was originally published in Dec. 2013, and has been republished following a lot of reader questions on this topic.

Here is a video I created for students of my Mastermind Value Investing Course.

I thought it would be useful for you as well, so sharing it here.

If you can’t see the video above, see here.

Tom Watson [the founder of IBM] said – “I’m no genius. I’m smart in spots and I stay around those spots.”

The entire idea about the Circle of Competence concept is to help you find your spots, which is so very important to your success as an investor. And that’s exactly what the above video will help you learn.