Investing Behaviour

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life.

This is a masterpiece.

– Morgan Housel, Author, The Psychology of Money

Get Your Copy 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.

The Art of Thinking Clearly is an excellent book by 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.

Imagine explaining why a leaf fell from a tree at 3:42 PM on a Tuesday.

Was it the wind? The age of the leaf? A butterfly flapping its wings in Kashmir?

In reality, it was most likely a combination of multiple factors, many too small for us to even notice.

Well, every movement in the stock market is like that leaf, but infinitely more complex. However, here we have a story for every leaf falling.

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

This is a masterpiece.

Morgan Housel, Author, The Psychology of Money

Get Your Copy Now

There is a quirk in human nature that is as old as time itself. Yet, it is as relevant today as it was when our ancestors first started trading seashells.

I am talking about the tendency to see the world through rose-coloured glasses when it comes to potential gains, while simultaneously downplaying the very real risks that lurk in the shadows.

Now, this not just a passing academic observation, but a force that affects not only our everyday lives but also our economies and even the path of history. And it is worth pausing to think about how it might be affecting your own choices, big and small…in life, investing, everywhere.

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life.

This is a masterpiece.

– Morgan Housel, Author, The Psychology of Money

Get Your Copy 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.

Imagine you are one of our cave-dwelling ancestors, minding your own business, when suddenly a tiger appears. Do you –

• Carefully weigh the pros and cons of running vs fighting?
• Calculate the statistical probability of survival based on past tiger encounters?
• Scream and run faster than Usain Bolt?

If you chose C, congratulations! You are alive (well, your ancestors were), and you are also the proud owner of a brain that is about as well-suited for modern investing as a hammer is for performing brain surgery.

Welcome to the latest issue of ‘The Journal of Investing Wisdom’, where I delve into the thoughts, reflections, and readings that have recently captured my attention. This journal serves as a window into my contemplations and the resources that inspire and inform my journey as an investor. I hope you like what you read below. If you are new here, and wish to get insights and ideas like these straight into your inbox, please click here to become a member.

What I’m Reading

A Yogi’s Rules on Money and Happiness

I read an article recently written by Paramhansa Yogananda – of Autobiography of a Yogi fame – during the Great Depression in the US. It was titled Creating Your Happiness.

Not surprisingly, the principles laid out by Yogananda remain relevant even today, 90+ years after he wrote about them.

You see, the old rules of life or money never change and they only become tough on you when you ignore them. Like these golden rules laid out by Yogananda (the emphasis is mine), which if you continue to ignore, may make your life tough.

Over to Yogananda.