Investing

By the fifth century BC, the Greeks had firmly established that the earth was a sphere. Although they knew it was a sphere, they did not know how big the sphere was.

The philosopher Plato (400 BC) declared the earth’s circumference to be 64,412 km. Some 150 years later, the mathematician Archimedes estimated it to be 48,309 km.

It is not known exactly how Plato or Archimedes arrived at their calculations, but Plato’s measurement was off by sixty percent and Archimedes’ by twenty percent. At least they were making progress.

Then, in around the third century BC, which is more than 2,200 years before modern scientists calculated it, the Greek mathematician Eratosthenes used just a tower and simple math to arrive at Earth’s circumference of about 40,000 km (less than one percent off the mark from the exact circumference of 40,075 km).

Eratosthenes lived in the city of Alexandria in northern Egypt. He knew that on a certain day each year, the Summer Solstice (21st June), in the town of Syene in southern Egypt, there was no shadow at the bottom of a well.

[Read more…] about Lesson in Valuation from a 2200-Year-Old Greek Mathematician

Update: Admission to the 12th batch of my premium, online course in Value Investing – Mastermind – is now open, and will remain so till tomorrow, 20th October. Click here to subscribe at a special discount.

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We have seen some dramatic market action over the last eight months.

An eleven-year bull market turned into a bear market in less than four weeks, the fastest on record.

From its high on February 19, the BSE-Sensex fell more than 37% to its March 23 low. It then bounced around 30% off the bottom over the next four weeks.

Since then we have had up days and down days, but the market has mostly held its ground and has risen another 20% over the past six months.

[Read more…] about The Easier Money Has Been Made

Update: Admission to the 12th batch of my premium, online course in Value Investing – Mastermind – is now open, and will remain so till 20th October. Click here to subscribe at a special discount.

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Just last night, as I was watching (maybe, for the twentieth time) the animated adventure comedy film ‘The Croods’ with my kids, I got particularly captivated by a specific scene.

I saw it a few times and loved it each time I heard the story in that scene.

Before I share the scene with you, and why it holds great relevance to your own life, let me tell you the movie’s plot as quickly as I can.

The Croods is the story of an overprotective caveman Grug who, along with his family, is one of the few survivors in the hostile pre-historic times.

“Never not be afraid” is Grug’s repeated advice to his family, and especially to his curious daughter Eep.

For Grug, anything new, anything that raises curiosity, is bad. And this is good advice as it has helped his family survive against the predators.

But then things change when Grug and his family meet a clever and inventive caveboy named Guy who tells them that the world is reaching its end, and asks them to join him in the pursuit of survival.

[Read more…] about I Have Seen Tomorrow

First things first. I have two friends who are stockbrokers. Both are kind and hard-working people. Both take good care of their families. Most important, both would happily hide me when required.

In short, they are good people whom I love being friends with and love talking to…

…except Monday to Friday, 9.15 AM to 3.30 PM IST.

Reason? They are stockbrokers and their minds run haywire during these stock trading hours. Like all other stockbrokers, they have just one priority during this period – to make a good income for themselves and their employers. And like all other stockbrokers, their real job during these hours is not to make money ‘for’ their clients, including friends, but to make money ‘from’ them.

[Read more…] about Beware of Stockbrokers

Consider these statistics.

• The average commercial aircraft flies at an altitude of thirty-five thousand feet.
• The average passenger in a commercial aircraft flies at an altitude of twenty thousand feet.

[Read more…] about The Fault, Dear Investor, is Not in Your Investments, But in You

The Money Game by Adam Smith (pseudonym used by George Goodman), first published in 1968, is a timeless classic on investing and human behaviour.

It is a witty book wherein the author shares his insights on the irrationality with which most of us make our investment decisions. He also shatters common myths and misconceptions, revealing why nothing works all the time and illustrating how greed and fear fuel the market.

As I was re-reading the book, I came across this passage that details the dangers of trying to earn a lot of money to be able to achieve a certain level of happiness and peace in our lives. It is as relevant today as it was when the book was written 50+ years back.

It has been my fate to know people who have made considerable amounts of money, sometimes millions, in the market.

[One of them] had a very good point when he said the end object of investment ought to be serenity.

Now if you think making a million dollars will give you serenity, there are two things you can do. One is to find a good head doctor and see if you can discover why you think a million dollars will give you this serenity. This will involve lying on a couch, remembering dreams, talking about your mother, and paying forty dollars an hour.

If your course is successful, you will realise that you do not want a million dollars but something else which the million dollars represents to you, such as love, potency, mother, or what have you.

Released, you can go off about your business and not worry anymore, and you will be poorer only by the number of hours you spent in accomplishing this times forty dollars.

The other thing you can do is to go ahead and make the million dollars and be serene. Then you will have both a million dollars and serenity, and you do not have to deduct the number of hours times forty dollars unless you feel guilty about making it.

It seems simple, and there is indeed a catch.

What do you do with the million dollars arrives and serenity does not?

Aha, you say, you will worry about that when you get to it, you are sure you can handle it. Perhaps you can.

Money, contrary to popular myth, does help people more than its spoils them, simply because it opens up more options.

The danger is that when you have your million, you then want two, because you have a button saying I Am A Millionaire and that is who you are, and there are, all of a sudden – as you will notice – so many people with buttons saying I Am A Double Millionaire.

The core idea of Mr. Goodman’s book is that money game is about the players, not the rules or the features of the board. And so how we play the game matters much more than how the game is stacked.

Some books never lose their relevance, no matter how old. The Money Game is one of them.

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Here are few things I thought were worth sharing with you:

• An Investor’s Spam Filter (Anand Sridharan)
• Risk and Return in the Stock Market Are Not Evenly Distributed (Ben Carlson)
• Preparing Your Mind for Uncertain Times (The Atlantic)
• My Son Is Looking to Me for Answers—And I Don’t Have Them Anymore (Uri Friedman)
• Your Financial Portfolio and Japanese Principles (Fortune)

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That’s about it from me for today.

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Stay safe.

Regards,
Vishal