Investing

What Are You Afraid Of?

September 24, 2018 | Leave a Comment

I am in Chennai for my Value Investing Workshop that happened yesterday.

After my session, I went to meet a friend in the evening. His residential society had organized a bicycle race for kids. I saw more than 50 kids out there jostling for space meant for not more than 10 cyclists. Worse, most of them were without a helmet.

Now, letting your child cycle without a helmet may be ten times riskier than feeding him a course of dangerous non-steroidal anti-inflammatory drugs. And a thousand times riskier than flying in an airplane.

Moving in the front seat of a car without a seatbelt (which most people, especially teens, do when the policeman is not watching) is hundred times riskier than many common and ‘scary’ diseases in India, like swine flu.

Yet we obsess about the low probability events and take big chances with the high probability ones. Why?

Meditations on Mortality in Life and Investing

September 22, 2018 | 3 Comments

There is a story, not often told, in Mahabharata where the eldest of the Pandavas, Yudhishthira, comes upon a lake and finds that his brothers lay dead on its banks.

Before beginning the search into his brothers’ murder, the prince in exile finds himself burning with thirst and reaches into the lake to drink, not knowing that it was drinking from the lake that brought his brothers’ end.

At that moment a celestial appears, a Yaksha, no god or angel but instead a presence of power presiding over the lake. The Yaksha warns Yudhisthira not to drink lest he suffers the fate of his brothers.

He has an alternative: Yudhisthira can instead answer Yaksha’s questions. There are said to be eighteen questions that Yaksha asked Yudhisthira, but here is the one that concerns what I am writing today.

Investing and the Art of Stillness

September 17, 2018 | 1 Comment

This is the fourth issue of Outside the Box newsletter, and is authored by my friend Arpit Ranka. Arpit is a value investor based out of Mumbai. He has worked with two of the leading value investors in India, Prof. Sanjay Bakshi and Late Mr. Parag Parikh before starting out on his own.

In this post, Arpit talks about how we, as investors, need to embrace the good, bad, and ugly side of every investment thesis/strategy and be willing to live through all the seasons, if we have to stand a chance to succeed in the long run. Over to him.

The Art of Stillness
by Arpit Ranka

The noted English singer and songwriter John Lennon said, “Life is what happens while you are busy making plans.”

As an investor, I can tweak this thought to — “Investing is what happens when you are busy pursuing the next big investment idea.”

No doubt that ideation is a very integral part of any investment process but then equally central is to develop a mindset, which allows us to capitalize on the full potential of that investment strategy.

Remembering the 2008 Crisis, and A Few Lessons Learned

September 14, 2018 | 3 Comments

It seems like yesterday, but it was ten years ago. I was in the US for a conference and, on 15th September 2008, was visiting the Wall Street to check out the heart (maybe, the dark underbelly) of the global financial system.

I had just reached there after a visiting the site of the World Trade Center, which was tragically brought down on 11th September seven years ago.

Now, another tragedy was about to happen just five miles from where I was. This time it wasn’t about loss of lives but of livelihood.

Lehman Brothers declared bankruptcy and the world financial system was on the verge of collapsing. It was, and remains, the largest bankruptcy filing in the US history, with Lehman holding over US$ 600 billion in assets, supported by less than US$ 25 billion of own capital. That’s around 23-times debt to equity. In such a highly leveraged structure, a 4-5% percent decline in asset values would wipe out all capital, which it did.

Of Politics, Biases, and Investing

September 10, 2018 | 3 Comments

First, an update. I did my Value Investing Workshop in Bangalore yesterday, and received an overwhelming reponse…

The upcoming sessions are in Chennai (23rd Sept), Mumbai (30th Sept), and Hyderabad (7th Oct). If you wish to register for any of these, please click here.

Coming to this post, this is the third issue of Outside the Box newsletter, and is authored by my friend Ninad Kunder. Ninad runs a venture in the HR staffing space and manages family money. Shuffling between these two hats has helped him both in business and value investing.