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Happy Diwali…and My Wish for You

I was recently reading a story on the classical Greek philosopher, Socrates, who was tried and executed in 399 BC. He was tried on two charges – corrupting the youth, and impiety (perceived lack of proper respect for something considered sacred).


Socrates had done no such thing. What he had done was educate the youth, teaching them to challenge arguments from authority and question what they believed to be true.

In the process, he frustrated and embarrassed many powerful people with his constant line of questioning, known today as the Socratic method.

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The Most Important Thing That Counts in Investing is Character

The Diary of a Young Girl - Anne FrankOne story from World War II that I found as tragic as it was magnificent was that of Anne Frank.

Frank was born in Frankfurt, Germany but moved to the Netherlands for safety in 1934, five years after she was born. The Frank family hid in their basement with four other Jews when Germany took control of the Netherlands.

Anne then began to write, at age thirteen, in a diary of her life, feelings and the outside world. She wrote in the diary every day for two years until their hiding place was found and she was forced into a concentration camp where she died with her sister due to a sickness. She was just fifteen when she died.

Although Anne wasn’t only a tragic girl in this war, her diary that is available to read as The Diary of a Young Girl displays the strength of her character. The diary portrays her as a brave and hopeful girl, character traits that are hard to manage in the kind of hardship that she was a part of.

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How to Teach Kids the Value of Money

Warren Buffett is undoubtedly a famous man. And he is not just famous for his riches, but also for his rejection of the trappings of wealth. As we all know, he lives in the same house he had bought in 1958 for US$ 31,500, and his annual salary of US$ 100,000 is far less than what most CEOs (including many in India) earn.

But there’s one aspect of Buffett that many people don’t know much about. And that is about how he has brought up his kids when it comes to the subject of money.

Over the years, several interviews with his kids have revealed how Buffett’s message to them on money was loud and clear as they were growing up. And it was that money wasn’t what mattered in life. Instead, it was finding something you loved to do and then doing it.

In his book, “Life Is What You Make Of It,” Peter Buffett, a musician and the youngest son of senior Buffett writes about the values he absorbed growing up as the son of Warren Buffett and his late mother, Susan Buffett, and the path he has pursued to identify and pursue his passions in life.

He also writes about things like requiring children to do chores and letting them solve problems on their own instead of bailing them out. But he warns that children will pick up on their parents’ true beliefs about money – no matter what a parent says about money.

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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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10-Point Action Plan for a Young Earner

Noted Irish playwright and philosopher George Bernard Shaw opined, “Youth is wasted on the young.”

What he possibly meant was that many young people have everything going for them physically; they’re in the best health they will ever be in, and their minds are sharp and clear.

However, they lack patience, understanding, and wisdom which results in so much wasted efforts.

The energy that can be directed towards building a solid thought process and action plan for the future is spent on short-lived pleasures.

Shaw’s words are especially applicable to those young adults who are starting a career and wondering if they should start saving and investing for their future or spend the next few years living life kingsize.

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How to Generate Stock Ideas: An Unusual Lesson from a 1939 Book

One of the best books I read before starting on my journey of building Safal Niveshak was James Webb Young’s A Technique for Producing Ideas, originally published in 1939. After all, I was trying to build my idea bank for things I wanted to do in life then.

In this book, Young lays out with brilliant simplicity the five essential steps for a productive creative process. Explaining how the production of ideas is largely a result of process than talent, he writes –

The production of ideas is just as definite a process as the production of Fords; that the production of ideas, too, runs on an assembly line; that in this production the mind follows an operative technique which can be learned and controlled; and that its effective use is just as much a matter of practice in the technique as is the effective use of any tool.

My limited experience in investing suggests that what is most valuable to know about idea generation is not just where to look for a particular idea, but how to train the brain in the method by which all ideas are produced and how to grasp the principles which are at the source of all ideas.

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How to Survive the Next Stock Market Crisis

Note: I am not predicting a stock market crisis in the near term. But what follows below is a discussion on how an investor can survive a crisis that will certainly happen at some time in the future. That’s the nature of financial markets, you see.



“Hey Vishal, how are you doing today?” asked my friend Ravi as we met for lunch last weekend.

“I’m good, Ravi. How have you been?”

“Super, and more excited than ever!” he replied.

“Glad to know that,” I said. “You got a promotion at the job?”

“No, I’m excited for another reason.”

“Bull market?” I asked, almost knowing what was coming next.

“Yeah, yeah, you guessed it right this time!” Ravi exclaimed. His joy seemed to know no bounds.

“I just sold a five-bagger from my portfolio,” he said with great pride, “And three more stocks are almost hitting that level.”

“Great to know that Ravi. The last time I saw you this happy was in 2007.”

“Oh, don’t be a sadist Vishal,” Ravi said. “Don’t remind me of what happened then.”

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Reasonable Expectations

“You’ve got to be careful if you don’t know where you’re going, ’cause you might not get there.” ~ Yogi Berra

At the heart of Ben Graham’s teachings lies his advice that the intelligent investor must never forecast the future exclusively by extrapolating the past.

Unfortunately, that’s exactly the mistake that stock market experts and investors have made innumerable times in the past. Some go even further. Since stocks had “always” beaten bonds over any period of at least 30 years, stocks must be less risky than bonds or even cash in the bank. And if you can eliminate all the risk of owning stocks simply by hanging on to them long enough, then why quibble over how much you pay for them in the first place?

In India, it’s easy to find a forecaster who argues that stocks have returned an annual average of around 18% over the past 30 years and thus that’s what investors can easily expect in the future. But what if I tell you that the average annual return for the BSE-Sensex has been just around 10% over the past 25 years (since the peak of Harshad Mehta bull run)?

Of course, this is just one number and you may accuse me of being selective in my choice to prove a point. But that’s what I am up to – prove a point, that when you do not pay heed to the price you are paying for stocks because you have unreasonable expectations for the future, you are bound to get disappointed.

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