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2014 – The Year of Inversion

Happy New Year to all reading this blog!

Here is a quick thought on the year ahead.

At Safal Niveshak, 2014 will be a year of inversion of the traditional dictum – “What doesn’t kill you, makes you stronger”.

Instead, this year, the motto will be – “What doesn’t make you stronger will kill you”.

I dedicate this year to Charlie Munger and his thought – “All I want to know is where I’m going to die so I’ll never go there.”

This implies that in 2014, we will discuss ideas –

Less of how to earn great returns, and more on how to avoid permanent capital loss;
Less on how to pick the great stocks, and more on how to avoid the dangerous ones;
Less on things to do for investing success, and more on things to avoid for investing failure.

My Biggest Investing Mistake of 2013

“A life spent making mistakes is not only more honorable but more useful than a life spent doing nothing.” ~ George Bernard Shaw

A wise man once said that a person who doesn’t make any mistakes in stock market investing is someone who has never bought a stock.

For most of us investors, however, we are left with a lot of regrets come year end…

Regrets like…

I should have bought this stock a few months ago!
I should have sold this stock a few months ago!
Why did I sell this stock!
Why didn’t I buy that stock!
I made so many mistakes this year!

Needless to say, mistakes lead to resentments, resentments make you miserable, and being miserable is always painful.

When I look back at my mistakes this year, I see one that was really up there.

My 2014 Wish for You – Be Miserable

“Why are you in such a sad mood, Ravi?” I asked my friend as he visited us with his family this Christmas.

“You should see my stock portfolio Vishal!”

“Why, what happened?”

“Oh, it’s up just 30% this year!”

“30%! And you are still sad?”

“Yeah, because this could have been more than 30% had I not missed a few amazing stocks like…”

“Like?”

“Like Mindtree that is up 120% in the last one year, Cera Sanitaryware that is up 90%, Eicher that is up 80%, Aurobindo Pharma that is up 105%…and then there are the ones like Relaxo and Ashiana Housing, that are up 100% since April.

Is this Newspaper Stock Worth Owning?

Statutory Warning: This report may cause a reaction, and acting on it can be injurious to your wealth.

Let me be upfront here. Across all my Workshops and other interactions with Safal Niveshak tribesmen, I have maintained my stance on the futility of reading newspapers, especially to get your investing ideas.

My stance is that the more you read newspapers, the less you would know because everyone is looking at the same things with similar pair of eyes. Moreover, newspapers create recency bias, which is such a destructive force when it comes to making investment decisions.

So I have been happy to know all this while that newspaper is a dying industry.

Even Warren Buffett has mentioned this in the past that newspapers have lost a notch in their economic attractiveness from the days when they appeared to have a bullet-proof franchise. Over time, he expects the competitive strength of newspapers to gradually erode.

Anyways, given the price wars being fought by top newspapers in cities, it surely seems that circulation is under pressure. After all, everyone’s getting information online nowadays.

A Quiz to Test Your Financial Intelligence

Finance Intelligence Quiz

[WpProQuiz 10]

If you cannot see the Quiz above, open this post on Safal Niveshak’s website and then participate.

Don’t worry if you score low, for a truly humble acknowledgment of ignorance is the first step to wisdom. 🙂

All the best!

The Devil Lies Within

A few random searches on Google brought me to these…

I posted the first image on Safal Niveshak’s Facebook and Twitter pages and got a flurry of replies…

I expected people to bash the forecaster in their responses, and so they did!

Why I Stopped Trying to Change Others

I often receive emails from readers asking how I can help them change their financial lives, change how they manage their money, change how they make their investment decisions…basically change how they behave with money.

Then, someone recently wrote to me…

I don’t believe what you write makes sense for people, as there is nothing called as long term investing. You can only make money in the stock market in the short term because, as Keynes said, in the long term everyone is dead.

So your effort of changing how I, or anyone else, invest seems an exercise in futility.

You see, when people ask me how I can help ‘change’ them, or when this gentlemen wrote how my efforts to ‘change’ people is futile, I assume they are talking about modifying their thinking, attitudes, habits, beliefs, behaviours and thus outcomes.

———- Art of Investing Workshop in Bangalore & Chennai ———
Safal Niveshak’s Investing Workshop travels to Bangalore (18th Jan. 2014) and Chennai (19th Jan.). If you are interested to attend, please register here.
———————————————————————————————–

As I have realized over the years, from my experience and that of others, trying to change another person is generally an exercise in futility and frustration.

So while I disagree to what this gentleman who sent me the above mail says about long term investing, I agree to him when he says that the idea of ‘changing’ people is futile.

But I have known this fact ever since I started the Safal Niveshak initiative.

My Ode to A Great Teacher

“Okay, so despite all my requests to stay over for some more time, you have finally decided to call it quits?”

“What do I do, my dear Vishal, I was longing to live a life much more peaceful than I had done all these years, and thus I had to go.”

“Yes, yes, I understand that…but you see, I can’t say how easy or difficult it would be for me to live with the thought that you are not anymore by my side.

“But you see, I’ve come to terms with the fact that I will never see you again. You have been an inspiration for me, one of the greatest teachers I ever had, and now it would be incredibly difficult to reconcile my desire to see you again, living and speaking, hale and hearty.”

“I do not feel happy leaving this place as well, but you see dear Vishal, there’s no other path I could have chosen.

“And by the way, I am already leaving with you a lot of my memories and thoughts that would stand by your side whenever you need them.”

“Yeah, I know that. I know how you have inspired me to make a difference in others’ lives, and stand up to the challenges.

10 Simple Rules that Brought Me Financial Nirvana

I was in Ahmedabad last week for my Art of Investing Workshop (here’s the proof), and met a few young executives – in their mid 30s – who had questions about how I have managed my own financial life so well so far.

A couple of them were, in fact, amazed to hear my story and told me that I have been an exception.

“That’s not true!” I told them. “I have not done anything special in my financial life that anyone else cannot do.”

In fact, whatever I have done to bring myself to a stage of financial nirvana – if I may use that term – I have done with the help of some simple rules on how I treated my money over the years.

Now, while I am too young to dispel any life-changing advice on “how to be a financial rockstar” or “how to remove all financial worries from you life”, I am happy to share below 10 rules that have changed my life for the better over the past few years, and how these can also benefit anyone who practices them with discipline and integrity.

Here are those 10 rules.

The Value of Saving and Investing Money

“Nice to meet you. Just hold on for a second. I need to send an SMS to my husband.”

My cousin and I stood there waiting. The girl, a manager with a private sector bank, busily tapped out a text message on her new iPhone.

She was pretty slow with the typing, but we knew what was going on.

She was just showing off her new Rs 30,000 iPhone – hot stuff for Alwar, a small town in Rajasthan where I grew up and which has a relatively middle class population.

We had seen her arrive to the bank with her husband who drove a shiny black and modified SUV.

She and her husband were young… probably in their early thirties. As I came to know from her, he was a real estate broker in the town. Even though their income must be down in a weak housing and job market, their spending didn’t reflect the crisis.

“What’s going on here?” I asked my cousin who was a local.