Investing

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

• Long term investing is a good idea. Forced long term investing is not. When your premise does not work out, or you no longer believe in a stock, you must sell, even if it means a loss. A lot of investors hold on to bad stocks just to get their “money back.” This, I believe, is one of the biggest reasons to lose money in stocks. Remember that the deeper you fall with bad stocks, the more you must gain back to get your money back. And it is often a bad idea to try to get your money back the exact way you lost it.
  
  When it comes to losing stocks in your portfolio, always remember the first law of holes – If you find yourself in a hole, stop digging.
   

• From the archives: Zoom Out, Baby, Zoom Out –
  

  Much of the time, in life and in investing, we would be better off zooming out than zooming in. Rather than being ticker watchers of our own lives, and rather than zooming in and magnifying and thus worrying about the daily volatility in our stocks, we would be better off thinking about our lives and investments as pale dots that are just specks on the canvas of eternity. Within this, if we keep doing our work well, the daily motions and volatility that we pass by must not worry us therefore.

• We must be antifragile, writes The Daily Stoic –
  

  The world is a cruel and random place. Our plans are dashed. Our systems are broken. People we love die. We lose what we have built and what we have so carefully saved and invested.

  So much of what happens is out of our control: Pandemics. The markets. Supply chains. World leaders. What our neighbors do. We are drafted to fight in wars, to bear huge tax or familial burdens. We are forced to admit defeat about the thing we wanted to win so badly.

  This hurts. There’s no denying that.

  A Stoic heals by focusing on what they can control: Their response. The repairing. The learning of the lessons. Preparing for the future. It is in this that we become, as Nassim Taleb has said in his wonderful book by the same name, antifragile. We become better because of what we went through, better than if we had resisted and never been broken in the first place.

• Many theories have been floated about a farm economy-fuelled revival. Those hopes are unrealistic –
  

  …it is worth remembering that the share of agriculture in the Indian economy has been falling over the years. It had stood at 54.1% of the economy back in 1960-61 and has come down to 13.4% in 2019-20. The question is: How can a sector, which is anywhere between one-seventh and one eight of the overall economy, revive the country’s economic fortunes?

• How bicycles transformed our world. Coronavirus has sparked a two-wheeled transport boom in many parts of the globe. But this isn’t the first time bicycles have been the hottest machines on the market.
   

• Why Microsoft wants Tiktok? It’s the data, stupid!
   

• Seth Godin writes on the two kinds of decisions worth focusing on –
  

  HARD ONES because you know that whatever you choose is possibly the wrong path. Hard decisions are hard because you have competing priorities. Hard decisions that happen often are probably a sign that the system you’re relying on isn’t stable, which means that the thing you did last time might not be the thing you want to do this time.

  EASY ONES because it probably means that you’ve got a habit going. And an unexamined habit can easily become a rut, a trap that leads to digging yourself deeper over time.

• Read this resignation letter by Ariana Pekary from MSNBC. It documents the complete breakdown of our information supply chain due to bad incentives. For media corporations, truth no longer matters. Only popularity does, in the form of ratings and clicks.
   

• I have been writing screenshot-sized posts and book reviews recently. You may find all of them here.
   

• Books: I am reading Scott Young’s Ultralearning, which offers powerful ideas on learning anything deeply and quickly, without teachers or budget-busting tuition costs. Also re-reading Jason Fried’s Rework that shows a better, faster, easier way to succeed in business, and Dale Carnegie’s How to Win Friends and Influence People, which is about changing how the world views and treats you by changing your own behaviour.
   

• Meditation: The meaning of life is just to be alive. It is so plain and so obvious and so simple. And yet, everybody rushes around in a great panic as if it were necessary to achieve something beyond themselves. ~ Alan Watts

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That’s about it from me for today.

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Stay safe.

Regards,
Vishal

Warren Buffett’s formula for becoming smarter in life and investing is simple – “Read. A lot.”

“I just sit in my office and read all day,” he is often quoted to have said this.

I have seen a lot of investors, including myself, take this advice seriously. Though I don’t read all day, reading books – and a lot of them – seems a great way to build my learning.

My bond with books has grown so stronger over the years that now, just holding a book in my hands makes me feels smarter. 🙂

I don’t have a name for this bias, but our mind plays this funny trick with us often. Just after we buy a book, or pay for an education, we “feel” we have learned what lies inside it.

That is probably the reason most people I meet in my investing workshops want to get my recommendation for the best investing books to buy. We all feel smarter just by owning these books.

But the question is – Can you really become a smarter investor just by reading all these books, blogs, and other resources out there?

Is there something else you need more to become educated and smarter as an investor?

[Read more…] about The Right Kind of Investing Education

Why is this post so small? I have long been thinking of writing short posts, for multiple reasons. One, brevity makes me think harder as I must cut through the clutter and write only what is essential. Two, with considerably reduced attention spans, I risk losing your attention with long posts. Three, it makes my writing task easier. And so, here I am. Starting today, I am experimenting with writing posts that can fit into a mobile screenshot. I got this idea from here.

So, here is my first post that you may download as a screenshot. This should also help you save all my “screenshot posts” without the need to print them (maybe, use them as mobile flash cards), and also share with your friends etc.

[Read more…] about Stock Prices: Information or Influence?

Safal Niveshak completes nine years today. 🙂

I started with a simple idea in 2011, that of helping people become better at their stock market investment decisions. The idea was just that, and I had no clue how I would do it (I still have no clue about the future!)

However, a lot has happened in these nine quick years – and the tribe is nearing 85,000 members – but as with any kid of this age, we’re just getting started.

Most of all, I want to thank you for “raising” this initiative to this point — it truly could not have happened without you, dear tribe member.

I know I’ve said it before, but it bears repeating – Thank you so much for reading, for commenting, for your interest and support, for helping this entire movement of creating smarter and independent stock market investors become greater and spread wider.

You are magnificent, and I am supremely grateful for your time and attention.

Just in case Safal Niveshak has touched your life, I would be happy and honored to read your thoughts in the Comments section of this post.

Thanks again for being here!

With respect,
Vishal

If your portfolio earns 50% in one year and then loses 50% the next year, you are back to the same level, right?

Wrong!

Your two year return is still a negative 25%.

Here’s the calculation. Rs 100 becomes Rs 150 in year one, and then halves to Rs 75 in year two. So, net-net, you are down from Rs 100 to Rs 75 over two years, which is a -25% decline.

This seems elementary, but a lot of us miss this simple math.

Anyways, the point I am trying to make today is not about our innumeracy, but that to achieve a high return over a long period of time, we must focus on minimizing our mistakes.

[Read more…] about As Long As You Don’t Lose Money