Safal Niveshak

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The Psychology of Investing #12: What You Don’t See Can Hurt You

Admission Open for My Value Investing Workshops (Offline): I’m excited to announce admissions to my upcoming in-person value investing workshops in the following cities:

  • Bengaluru – Sunday, 13th July 2025
  • Hyderabad – Sunday, 27th July 2025
  • Mumbai – Sunday, 10th August 2025

Click here to know more and book your seat.

Seats are limited in each city. The first 20 participants can claim an early bird discount.

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 an eccentric (and bored) tycoon offering you $10 million to play Russian roulette… Five of the six histories would lead to enrichment; one would lead to a statistic… The problem is that only one of the histories is observed in reality.

— Nassim Taleb, Fooled by Randomness

We are a story-driven species. From cave walls to balance sheets, we look for narratives that explain the world and our place in it. And nowhere is this tendency more dangerous than when we only learn from the winners. When we allow survival alone to imply superiority. When the fact that someone or something made it through becomes enough proof that they knew what they were doing.

[Read more…] about The Psychology of Investing #12: What You Don’t See Can Hurt You

No Stock is Safe

Admission Open for My Value Investing Workshops (Offline): I’m excited to announce admissions to my upcoming in-person value investing workshops in the following cities:

  • Bengaluru – Sunday, 13th July 2025
  • Hyderabad – Sunday, 27th July 2025
  • Mumbai – Sunday, 10th August 2025

Click here to know more and book your seat.

Seats are limited in each city. The first 20 participants can claim an early bird discount.

The bulls will often try to convince you otherwise, but let’s get one thing straight: no stock is ever truly safe.

Some businesses may look like fortresses. They generate high returns on capital, enjoy strong moats, and carry the aura of invincibility. But even the best businesses are not immune to time, competition, disruption, or human folly. Just because a company has done well so far doesn’t mean it will do so forever. No matter how great the track record, infinite valuations are a dangerous illusion.

Why? Because capitalism has a way of balancing the scales.

When a company earns unusually high returns on capital, it sends out a silent invitation to competitors. Sooner or later, capital flows in. Moats erode. Margins shrink. What looked like a golden goose begins to look more like just another bird. Over time, returns on capital tend to gravitate toward the cost of capital, especially in industries where advantages are not enduring or where management becomes complacent.

This doesn’t mean that all great companies are doomed. Far from it. Some businesses, especially those with high-quality products and services, wide moats, disciplined leadership, and sound internal cultures, can defy this gravity for long stretches. But even then, they’re not immune. The decline might be slow and graceful, rather than sudden and steep, but the trajectory of excess returns generally slopes downward.

That’s the uncomfortable truth: everything in this world is momentary. Including greatness.

Your only defense is discernment. Stick with quality. Not because it’s permanent, but because it tends to last longer than most alternatives. And those extra years of sustained excellence are what give compounding the runway it needs to perform miracles.

Yes, high-quality businesses often look expensive. And yes, you’ll sometimes feel foolish for “paying up.” But as long as you’re not grossly overpaying, and the business continues to compound capital efficiently, you’ll still do just fine.

That’s the paradox of quality: it often rewards patience and discipline, even if the entry price wasn’t perfect.

Poor-quality businesses, on the other hand, rarely give you that chance. You can buy them cheap. You can hope for turnarounds. But more often than not, there’s no happy ending. Time is the enemy of poor businesses. It only magnifies their weaknesses.

As Charlie Munger wisely said:

Over the long term, it’s hard for a stock to earn a much better return than the business which underlies it earns. If the business earns six percent on capital over forty years and you hold it for that forty years, you’re not going to make much different than a six percent return – even if you originally buy it at a huge discount. Conversely, if a business earns eighteen percent on capital over twenty or thirty years, even if you pay an expensive-looking price, you’ll end up with one hell of a result.

So the goal isn’t to find the perfect stock. That doesn’t exist. The goal is to find a good business, at a reasonable price, with a decent chance of staying good for long enough.

That’s all investing really is. Everything else is noise, narrative, or wishful thinking.

Two Books. One Purpose. A Better Life.

“Discover the extraordinary within.”

—Manish Chokhani, Director, Enam Holdings

“This is a masterpiece.”

—Morgan Housel, Author, Psychology of Money

Lose First, Lose Forever: The Trap Most Investors Don’t See

Admission Open for My Value Investing Workshops (Offline): I’m excited to announce admissions to my upcoming in-person value investing workshops in the following cities:

  • Bengaluru – Sunday, 13th July 2025
  • Hyderabad – Sunday, 27th July 2025
  • Mumbai – Sunday, 10th August 2025

Click here to know more and book your seat.

Seats are limited in each city. The first 20 participants can claim an early bird discount.

While flipping through a few of my old notes, I stumbled upon a thought from Nassim Taleb that struck me again with its wisdom. He was explaining the concept of path dependence, which is a phenomenon where outcomes are not just a function of present conditions, but heavily shaped by the sequence of events that preceded them.

Taleb used a metaphor to explain this idea:

Ironing your shirts then putting them in the washing machine produces a different outcome from washing your shirts first, then ironing them. The reader can either trust me on this, or try the experiment with both sequences on the next Sunday afternoon.

He then applied that same thought to money:

Assume that your capital is around one million dollars and you are involved in speculation. Making a million dollars first, then losing it, is markedly different from losing a million dollars first, then making it.

In the first path (make, then lose), you’re at least alive to fight another day. You may end up with less, but you’ve tasted survival. In the second path (lose, then make), you may never even get to the “make” part. Because losing early can leave you bankrupt, broken, demoralized, and most importantly, unable to stay in the game.

[Read more…] about Lose First, Lose Forever: The Trap Most Investors Don’t See

Letter to A Young Investor #12: The Powerful Thinking Skill Nobody Ever Taught You

Two Books. One Purpose. A Better Life.

“Discover the extraordinary within.”

—Manish Chokhani, Director, Enam Holdings

“This is a masterpiece.”

—Morgan Housel, Author, Psychology of Money

I am writing this series of letters on the art of investing, addressed to a young investor, with the aim to provide timeless wisdom and practical advice that helped me when I was starting out. My goal is to help young investors navigate the complexities of the financial world, avoid misinformation, and harness the power of compounding by starting early with the right principles and actions. This series is part of a joint investor education initiative between Safal Niveshak and DSP Mutual Fund.

Dear Young Investor,

I hope this letter finds you well.

So far, in our journey together over the past few months, I’ve shared my thoughts on building the right money habits, learning to deal with fear, avoiding money traps, and a few essential steps to lay the foundation for a successful financial life.

Today, I want to hand you a tool, one that has saved me more times than I can count. It’s called ‘inversion.’ And I believe, with all my heart, that if you really understand and apply this mental model, it will save you from the kinds of investing mistakes that don’t just hurt your portfolio but also bruise your confidence.

[Read more…] about Letter to A Young Investor #12: The Powerful Thinking Skill Nobody Ever Taught You

A Business is Not a Math Problem

Two Books. One Purpose. A Better Life.

Imagine the scene from the battlefield of Kurukshetra, where Arjuna stands frozen. He is not fearful, just confused. He looks at the faces on the other side, and sees family, teachers, and cousins. Suddenly, the whole battle doesn’t make sense anymore.

Here’s a warrior, born and trained to fight, and yet, when the moment comes, he lowers his bow.

And what does Krishna do? He doesn’t give him a five-point strategy like you find thrown around on LinkedIn, or even a “battlefield ROI calculator.” He doesn’t even talk about odds or probabilities.

Instead, Krishna tells Arjuna a story. Or rather, he reminds him of his story…about who he is, what his role is, and why he is there. And only once Arjuna understands that does he lift his bow again. Now, none of the facts have changed for Arjuna, but the meaning behind the facts have become clear to him.

I think about that moment a lot, especially when I see how most of us go about investing. We open the annual report, we skip to the numbers, and ask questions like, “What’s the profit growth?” “What’s the ROCE?” “What’s the free cash flow?” And we think, “Yes, this looks investable.”

[Read more…] about A Business is Not a Math Problem

The Psychology of Investing #11: The Most Dangerous Story is the One You Tell Yourself

A quick announcement before I begin today’s post – 

My new book, Boundless, is now available for ordering!

After a wonderful response during the pre-order phase, I finally have the book in my hands and am shipping it out quickly. If you’d like to get your copy, click here to order now. You can also enjoy lower prices on multiple-copy orders.

Plus, I’m offering a special combo discount if you order Boundless along with my first book, The Sketchbook of Wisdom. Click here to order your set.

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.

One of the most damaging patterns in investing isn’t what we believe about the market.

It’s what we believe about ourselves.

So, when we make a winning investment, we often quietly assume we’re a genius, yet when an idea goes sour, we believe we got unlucky and blame the market or some outside factor.

If you think this has applied to you sometime in the past, welcome to the world of Self-Attribution Bias. This is a common psychological pitfall in investing (and life) where we credit our successes to our skill and intelligence but blame failures on bad luck or others.

[Read more…] about The Psychology of Investing #11: The Most Dangerous Story is the One You Tell Yourself

Be the Calm

Two Books. One Purpose. A Better Life.

(Now at a Special Price. Ends today — 10th May 2025)

There are moments in life when everything feels fragile.

You wake up to news of conflict, war, tragedy, or chaos. Even if it’s happening far away, or on a screen, it seeps into your system. And suddenly, that spreadsheet of stocks you were reviewing just yesterday seems almost pointless.

What’s the use of a long-term plan when the world itself feels unsure?

[Read more…] about Be the Calm

Letter to A Young Investor #11: The Warrior’s Way

Two Books. One Purpose. A Better Life.

(Now at a Special Price. Until 10th May 2025)

I am writing this series of letters on the art of investing, addressed to a young investor, with the aim to provide timeless wisdom and practical advice that helped me when I was starting out. My goal is to help young investors navigate the complexities of the financial world, avoid misinformation, and harness the power of compounding by starting early with the right principles and actions. This series is part of a joint investor education initiative between Safal Niveshak and DSP Mutual Fund.

Dear Young Investor,

I hope you are doing well, and that the lessons we’ve covered so far have been useful in guiding you through the early stages of your investing journey.

In the last letter, I wrote about something I believe sits at the very foundation of investing success: character. We looked at how humility, integrity, tenacity, self-awareness, and adaptability are what really shape an investor’s journey. And if you remember, I shared that character is mostly revealed not when things are easy, but when they’re falling apart.

[Read more…] about Letter to A Young Investor #11: The Warrior’s Way

Warren Buffett’s Timeless Wisdom: Notes from Berkshire’s 2025 AGM

Special Discount on My Books! (Until 10th May 2025)

Each year, Berkshire Hathaway’s Annual General Meeting in Omaha draws tens of thousands of shareholders, investors, and admirers from around the world, to hear the thoughts of Warren Buffett, whose calm, rational voice continues to cut through the noise of the financial world.

I attended the meeting last year, but this year I followed from afar. And I must admit, I missed being there in person. There’s something grounding about sitting in that arena, surrounded by people from every corner of the globe, all gathered to learn from a man whose clarity and humility have remain unmatched.

Anyways, the 2025 meeting carried a historical weight. Buffett, now 94, formally announced that he will step down as Berkshire’s CEO by the end of the year. While the transition of leadership to Greg Abel has been long anticipated, the announcement was like a passing of the torch. Buffett handled it with the humility and wit that has long characterised his approach.

[Read more…] about Warren Buffett’s Timeless Wisdom: Notes from Berkshire’s 2025 AGM

The Price of Freedom

A couple of quick announcements before I begin today’s post.

1. My new book, Boundless, is now available for ordering: After a wonderful response during the pre-order phase, I finally have the book in my hands and am shipping it out quickly. If you’d like to get your copy, click here to order now at a special discount (available till 10th May). Plus, I’m offering a special combo discount if you order Boundless along with my first book, The Sketchbook of Wisdom. Click here to order your set.

2. Relaunch of Value Investing Almanack: I have relaunched my premium newsletter, the Value Investing Almanack (VIA), which subscribers have called “…the best source in India on Value Investing, for both beginners and experts.” Click here to read more and subscribe to VIA at a special launch price (available only for the first 100 subscribers). Also, if you wish to check out the March 2025 VIA issue before deciding to rejoin, click here to download.

The Price of Freedom

There’s something uniquely tormenting about looking back at a decision you made years ago, one that you made with good intentions and maybe even a little excitement, and realising that today, you’d choose differently.

I’d been wrestling with that feeling a year ago, every time I entered an apartment I bought in 2018. It was my second apartment in the same building, just a floor below the first one where we lived. At the time, it seemed like a sensible and exciting step. Our kids were growing up, space was always tight in Mumbai’s famously matchbox-sized homes, and I imagined this second apartment as a seamless extension of our current one. It had a beautiful view too: a big garden and a hill in the distance, which is a rare sight of calm in this noisy and cluttered city.

[Read more…] about The Price of Freedom