Investing Behaviour

The Risks of Speculating During Rising Markets

May 9, 2019 | 13 Comments

It was sometime during late 1999 through early 2000, near the peak of the dot-com bubble, the legendary George Soros and his hedge-fund team were working on how to prepare for the inevitable sell-off in technology stocks.

The man in charge of Soros’ high profile technology funds was Stanley Druckenmiller – one of the best-performing hedge fund managers of all time, till date – and he was busy warning his team that the sell-off could be near and could be brutal.

As the markets soared further in March 2000, Druckenmiller was quoted as saying, “I don’t like this market. I think we should probably lighten up.” Soros himself would regularly warn his team that tech stocks were a bubble set to burst.

Despite this, when the sell-off finally did begin in mid-March 2000, Soros Fund Management wasn’t ready for it. His funds were still loaded with high-tech and biotech stocks. Just in five days, starting 15th March, Soros’s flagship Quantum Fund saw what had been a 2% year-to-date gain turn into an 11% loss. By the end of April, the Quantum Fund was down 22% since the start of the year, and the smaller Quota Fund was down 32%.

Post that, in April 2000, Soros said at a conference, “Maybe I don’t understand the market. Maybe the music has stopped, but people are still dancing.”

My Talk at Value Investing Summit, Kuala Lumpur

February 15, 2019 | 4 Comments

I recently spoke at the Value Investing Summit in Kuala Lumpur, Malaysia. My topic was ‘The Path of Successful Investing.’

Click here to download the presentation.

Click here to watch the video of my talk, or watch below.

P.S. In the talk, I quoted Peter Bernstein’s book Against the Gods as containing the story of the hedge fund LTCM. It was a mistake! The book that chronicles the story of LTCM is Roger Lowenstein’s When Genius Failed.

Statutory Warning: Nothing in my talk should be construed as investment advice to buy or sell shares. Please make your own decision, as blindly acting on anyone else’s research and opinions can be injurious to your wealth. My analysis may be biased, and wrong. I have been wrong many times in the past. I am a registered Research Analyst as per SEBI (Research Analyst) Regulations, 2014 (Registration No. INH000000578).

Wall of Ideas

February 12, 2019 | 61 Comments

Welcome to Safal Niveshak’s Wall of Ideas, where I present hand-drawn illustrations of a few thoughts on investing, learning, decision-making, and living.

The permanent home of these illustrations lies here, where all my future updates will happen.

If you like what you see below, please share your love in the Comments section of this post. Also, please share your ideas for future such illustrations.

Sharing the illustrations socially – Twitter, Facebook, LinkedIn, etc. – would also help spread the word. Thank you!
[Read more…] about Wall of Ideas

The Untold Story of A Self-Made Investing Millionaire

January 21, 2019 | 6 Comments

In a world dominated by men, here is a rare untold story of a woman who quietly made it big as a stock market investor.

Anne Scheiber was 51 years old when she retired from her job as a low-level auditor from the American Internal Revenue Service in 1944. She never earned a salary of more than $4,000 per year, and although she was an exemplary worker, she never received a promotion. Maybe, because she was a woman and a Jew, the lots that were discriminated against in the workforce in general in the west during that period.

As per the executor of her Will, Benjamin Clark, Scheiber, who was already investing her small savings in the stock market when she retired in 1944, started here post-retirement life with a portfolio of about $21,000. Adjusted for inflation, that was about $297,000 in today’s money. Not really a large sum to retire in the US.

Stress and Investing: A 20-Point Checklist

January 16, 2019 | 2 Comments

I was at my hometown recently and chanced upon a friend who works as an investment banker in Delhi. We had met almost after 15 years, and so I could notice a big contrast in his looks as compared to what it was in the early 2000s. He looked much older than his age, around 39, and so I enquired about his health.

To my utter shock, he said, “I had an angioplasty late last year, where they put a tiny tube in my blood vessel to restore blood flow through my arteries.”

In short, he meant, “I just survived a heart attack.”

“Stress is part of my job profile, you see,” he shrugged it off jokingly.

I had earlier read of a 35-year-old London-based hedge fund trader who died of a heart attack in 2013, and of the head of JP Morgan’s equity sales, aged 37, who had also died of heart failure in 2012. But my friend was, well, my friend, and thus the gravity of the situation weighed heavier this time.

“Is it worth it?” I asked my friend.