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How to Get Wealthy (Over Time)

Life is simple. Why do we make it so hard?

This is what Jon Jandai, a farmer from northeastern Thailand, asked the audience while delivering a TED speech in 2011.

He echoed what Confucius had said 2,500 years earlier, “Life is really simple, but we insist on making it complicated.”

While I recommend you watch Jon’s complete speech, the crux of what he says is that we don’t have to do what society tells us, we can have the life we want, and our choices determine if we get such a life.

Consider saving money and investing it well over a long period of time. This is all you need to create wealth. Simple, right? But the question again is, like Jon asked, why do we make it so hard?

Look at this chart that talks about the three simple steps to get wealthy over time…

How to Get Wealthy - Safal Niveshak

Could this get any simpler?

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Where is the Stock Market Headed: A Conversation With My Friend

“What is happening with the stock market, Vishal?” my very concerned trader-who-thinks-he-is-an-investor friend Ravi asked me on phone.

“Why Ravi, what happened?” I asked in my usual show of ignorance.

“Hey, haven’t you seen the crash in small and midcap stocks?”

“Okay, so you already know what is happening with the stock market, right?” I asked.

“Vishal, I have already lost all my profits in this crash, which I made during the past two years.”

“Oh! Were you playing around with stuff like Vakrangee, or PNB, or Suzlon?”

“I know I am bad at investing, but not so bad Vishal. Luckily, I never got into these stocks.”

“Wonderful. Now tell me how I can help you,” I asked.

“Tell me if you have any clue where the stock market is headed?” Ravi asked.

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Investing and the Art of Cloning

My friend Ravi was home for lunch on weekend. After food, as we went out for a stroll, he told me a story of a famous motivational speaker.

At a huge gathering once, the speaker proclaimed, “The best years of my life were spent in the arms of a woman, who wasn’t my wife.”

The audience was in a state of shock and silence at thus revelation, especially because it was coming from someone they looked up to.

The speaker than added, “She was my mother.”

What followed then was a huge round of applause and laughter.

Ravi then told me the story of a male participant at this event who was his friend from school. This gentleman tried to trick his wife with a similar joke.

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Warren Buffett, Humility, and 25 Other Lessons in Investing

This is going to be the shortest post on Safal Niveshak, but one with the most amount of wisdom (it doesn’t come from me, of course).

What follows below is a series of tweets from James O’Shaughnessy, the chairman and founder of O’Shaughnessy Asset Management, and the author of What Works on Wall Street.

The entire thread is worth reading, given that it contains the most important things an investor in stocks must understand, appreciate and tie into his/her investment philosophy.

It’s a gem of a tweetstorm, and I suggest you read through this and, maybe, print this out as it can serve as a wonderful reminder when you feel lost in the world of investing and the information overload that’s a part of it.

Click on the tweet above to read the entire series, or click here.

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Roulette, Mispriced Bets and Investing

Joseph Jagger, born in September 1830 in a village near Bradford, Britain, was an engineer in a cotton factory in Yorkshire.

With years of practical experience in the cotton manufacturing industry, Jagger developed an intuitive feel about what machines could do. He figured that even the most sophisticated instruments are far from mechanical perfection. Every machine has flaws. And every flaw brings with it an opportunity to exploit it.

The Englishman often wondered if it was possible to convert his expertise into more cash, not by scamming his employer at the cotton factory but by discovering the possible flaws in the gambling machines at Monte Carlo? Especially the roulette wheels.

In 1873, Joseph Jagger became the first man to break the bank at Monte Carlo.

The Beaux-Arts Casino at Monte Carlo, Monaco was inaugurated in 1863. In Beaux-Arts casino, at the start of the day, every table was funded with a cash reserve of 100,000 francs – known as ‘the bank’. François Blanc, the original owner of the casino, devised a rule for the Casino. If any gambler won more than the cash allocated for the table, the play was temporarily suspended and a black cloth was laid over the table in question. This ceremony was called breaking the bank. After an interval, while extra funds were brought out from the casino’s vaults, the table re-opened and play continued.

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How to Create An Antifragile Life, and A Stock Portfolio (A Personal Experiment)

Life was good when I was working at my job as a stock market analyst around 2005-06. Markets were doing well, and my stock picks were flying high. My company’s clients were happy with our recommendations, and consequently, my salary was coming in.

Talking about salaries of stock market analysts, the less that’s said the better. You get paid undeservingly (salary-to-effort ratio, as compared to most other knowledge workers) for constantly questioning the hard work of entrepreneurs and then not questioning your own analyses while churning out words that lose relevance in a few weeks or months.

Anyways, since I was an analyst then, I did not question what I am questioning now. Life was good. I felt safe and comfortable in my job, loved what I was doing, and thought that I would be happy doing the same thing for the rest of my life.

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Do Nothing When Nothing Must Be Done

Disclaimer: This post isn’t against doctors or financial advisors. I respect both these professions but believe that a system bent on action often leads professionals in these fields astray. The consequences are often bad for their counterparties – patients and investors.

It was sometime in 2008. I had an uncle who was a well-known dermatologist in my hometown. One day, on a routine annual checkup, the radiologist found a lump in his stomach. My uncle then got himself checked by his surgeon friend. The diagnosis was stomach cancer.

This surgeon was one of the best in this field and had even successfully tried a treatment on this exact cancer for other patients that tripled the five-year-survival odds – from 5 percent to 15 percent – albeit with a poor quality of life.

My uncle was not interested in this treatment. He knew the prognosis well and his focus now was spending time with family and feeling as good as possible for whatever time he had on hand.

A few months later, he died at home. He got no surgical treatment, no chemotherapy, no radiation.
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Nassim Taleb on True Wealth

Here’s some good stuff I read in recent times that might interest you…

Nassim Taleb on True Wealth
Nassim Taleb is one of my favourite authors, and his Antifragile is one of my favourite books. One of this book’s chapters that interests me particularly is titled Via Negativa. Here, Taleb argues that the solution to many problems in life is by removing things, not adding things.

For example, here is a list of things Taleb counts as constituents of true wealth that are all about subtracting things (via negativa) from life than adding –

  1. Worriless sleeping
  2. Clear conscience
  3. Reciprocal gratitude
  4. Absence of envy
  5. Good appetite
  6. Muscle strength
  7. Physical energy
  8. Frequent laughs
  9. No meals alone
  10. No gym classes
  11. Some physical labor
  12. Good bowel movements
  13. No meeting rooms
  14. Periodic surprises

I could check twelve from this list (let the ones I didn’t check remain a secret). What about you? What in the list remains getting checked for you?

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