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The J-Curve Model of Thinking, Living, and Investing

My friend Ravi came home for lunch last weekend. He looked dejected.

“It’s a bull market, Ravi!” I said trying to cheer him up, but he was in no mood to give away his dejection.

“I’m nearing forty, Vishal, and that makes me depressed.”

“Why Ravi? You should be happy that you’ve already left your dumb forty years behind!” I said jokingly.

“Be serious, Vishal! I mean, forty years have passed and it seems I have not achieved much in life. My salary is good but not great, I am travelling long hours every day for my job, my investment portfolio size is still a far cry from what I want to retire with, my stocks are doing well but not as well like what my other friends’ stocks are doing, and my dream of writing a bestseller novel is still a dream.”

“Wow! And you are nearing forty!” I said with a smile.

“You don’t have to remind me that!” Ravi replied with a smirk.

“Ravi, how much would you rate your life so far on a scale of one to ten?”

“Maybe, a five!” he said.

“Which is normal,” I said.

“Normal? Five on a scale of one to ten, after forty years, and with maybe just twenty or thirty more remaining? You call this normal?”

I pulled out a piece of paper and drew this chart.

J-Curve - Safal Niveshak

“Look at this, Ravi.”

“It looks like a hockey stick,” he said.

“Perfect, you got that right. It’s called the J-Curve, and it’s how a lot of things move in our lives, work, and investing.”


“Yes, my dear friend. I’m sure you have heard of Elon Musk. Have you?”

“Oh, of course!” he replied. “That superstar CEO who has shot into limelight with his work on electric cars and space rockets. Everyone knows about him!”

“Right Ravi,” I said. “Everyone now knows who Elon Musk is and what work he does. In fact, it’s easy to consider Mr. Musk and his rise in space, electric cars, and solar power as ridiculously rapid. But that’s not the case at all. Not many would know that SpaceX was founded in June 2002, and Tesla in July 2003…that’s around 14-15 years back.”

“Oh! I thought these were very new companies…like just five-six years old.”

“No dear!” I said. “While we are seeing a huge acceleration in what these companies can do, these have not been overnight successes. It’s only that they have become better (and rapidly now) with time. In other words, what we are really seeing with Mr. Musk’s businesses are the returns on the far-right side of the J-curve. And so is the case with Jeff Bezos’ Amazon. We now know Amazon so well, but it has been in making since 1994…”

“…when I was just 16 years old? Wow!” Ravi interrupted.

“Yes, when you first told me about your dream of writing a bestseller novel!”

“You are a sadist, Vishal!”

“Oh, don’t feel bad, my friend. I wish to cheer you up…and tell you that what you are going through is what is called a mid-life crisis…and which is a very normal way of thinking at this stage of life.”

J-Curve - Mid-Life Crisis - Safal Niveshak

“So can I say that I am at that deepest point of the J-curve now?”

“Yes, it seems so. In fact, scientists have found that we start on the left of the J-curve around age 18 when we are generally feeling pretty good about life. But as we leave the freedom and creativity of childhood and venture out into the real world, our level of happiness drops.”

“I know because I am living this J-curve!” Ravi exclaimed.

“Almost all of us live such a life, Ravi. So please don’t get depressed. In fact, people start out in life certain that they’re going to end up like Sachin Tendulkar, Priyanka Chopra, or win the Nobel Prize for Peace. And then, after a few years, they discover it’s quite tough out there – not just in their careers, but in life. Unsurprisingly, their happiness drops.”

“I completely agree with that, and that makes me even more depressed!”

“Don’t be, Ravi, because the good news is that scientists have also found out that the unhappiness phase does not last long. In fact, like the J-curve falls steadily and then rises again, most people’s lives generally trough at around the early forties. Most of us then grow steadily happier as we get older, with those in their sixties expressing the highest satisfaction levels of all – as long, that is, as they stay healthy.”

“Well, Vishal, it makes me happy to know that I am at the deep end of the J-curve and that my happiness is only going to rise from here on.”

“That’s one way to look at it,” I said. “Another way is to realize that you already are blessed with so many good things in life – like a well-paying job, good food to eat, a healthy and loving family, and your own house – that you must not be feeling dejected in the first place.”

“I think you are right, Vishal. Having a friend like you also makes me happy.”

“The feeling is mutual, Ravi.”

“By the way, Vishal, you had said sometime back that the J-curve also applies to investing. Here, are you talking about the back-ended nature of compounding?”

J-Curve - Investing and Compounding - Safal Niveshak

“You got it, Ravi. The J-curve signifies the accelerated payoff from owning good businesses you bought in the past, when you own them for the long term. Especially when you are sensible with your money and practice true value investing, you may sometimes underperform others following momentum strategies etc. in a rising market. But, over time, it has been proven that buying good businesses with sufficient margin of safety, and owing them till they remain good, is a stress-free way of creating great wealth. In short, the J-curve also works when it comes to investing well and in high-quality businesses.”

“Point taken, Vishal. But what about companies that are passing through bad times and maybe running negative cash flows as of now, but may be investing for a good future? Would a J-curve thinking work there too?”

“That’s a wonderful question, Ravi. And I have myself thought about it several times. I think in most cases, if the business has displayed strength in the past and is now in an investment mode and thus running negative cash flows, or is passing through a bad phase maybe because of an economy-wide slowdown, it pays to look at them through the lens of the J-curve. But you must ensure that the business has the capacity to suffer these bad times, has a long runway of growth, and then you buy it with sufficient margin of safety in case the curve doesn’t become a J, and never picks up after falling off the initial cliff.”

“Margin of safety seems to be your favourite term in investing, right Vishal?”

“Always, Ravi. And not just in investing. I live this principle in my daily life too. Like Charlie Munger suggests, I try to find out places where I may die and then I try not to go there. That’s margin of safety in practice, isn’t it?”

“Of course it is, Vishal. And when things are difficult and we wonder if we have done the right thing, it might be useful to visualize being at the bottom of the J-curve. Right?”

“Yes, Ravi! And if we persevere, things get better, and often, they get better than they were before.”

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.


  1. R K Chandrashekar says:

    Hi Vishal and Anshul
    We are on a 3 months holiday in UK amongst siblings, nephew, niece and their families- Best period of the J curve perhaps,😊.
    Wishing to share this with fellow tribe members.

    Did you know that at Harvard, one of the most prestigious universities in the world, the most popular and successful course teaches you how to learn to be happier?__ The Positive Psychology class taught by Ben Shahar attracts 1400 students per semester and 20% of Harvard graduates take this elective course. According to Ben Shahar, the class – which focuses on happiness, self-esteem and motivation – gives students the tools to succeed and face life with more joy._This 35-year-old teacher, considered by some to be “the happiness guru”, highlights in his class 14 key tips for improving the quality of our personal status and contributing to a positive life:

    🚩Tip 1.
    * Thank God for everything you have: * Write down 10 things you have in your life that give you happiness. Focus on the good things!

    🚩Tip 2.
    * Practice physical activity * Experts say exercising helps improve mood. 30 minutes of exercise is the best antidote against sadness and stress.

    🚩Tip 3.
    * Breakfast: * Some people miss breakfast for lack of time or not to get fat. Studies show that breakfast gives you energy, helps you think and perform your activities successfully.

    🚩Tip 4.
    * Assertive *: Ask what you want and say what you think. Being assertive helps improve your self-esteem. Being left and remaining silent creates sadness and hopelessness.

    🚩Tip 5.
    * Spend your money on experiences..a study found that 75% of people felt happier when they invested their money in travel, courses and classes; While only the rest said they felt happier when buying things.

    🚩Tip 6.
    * Face your challenges *: Studies show that the more you postpone something, the more anxiety and tension you generate. Write short weekly lists of tasks and complete them.

    🚩Tip 7.
    * Put everywhere nice memories, phrases and photos of your loved ones *: Fill your fridge, your computer, your desk, your room, YOUR LIFE of beautiful memories.

    🚩Tip 8.
    * Always greet and be nice to other people *: More than 100 inquiries state that just smiling changes the mood.

    🚩Tip 9.
    * Wear comfortable shoes *: If your feet hurt you, you become moody, says Dr. Keinth Wapner, President of the American Orthopedics Association.

    🚩Tip 10.
    * Take care of your posture *: Walk straight with your shoulders slightly backwards and the front view helps to maintain a good mood.

    🚩Tip 11.
    * Listen to music * (Praise God): It is proven that listening to music awakens you to sing, this will make your life happy.

    🚩Tip 12.
    * What you eat has an impact on your mood *:- Do not skip meals, eat lightly every 3 to 4 hours and keep glucose levels stable.- Avoid excess white flour and sugar.- Eat everything! Healthy- Vary your food.

    🚩Tip 13.
    * Take care of yourself and feel attractive *:70% of people say they feel happier when they think they look good.

    🚩Tip 14.
    * Fervently believe in God *: With him nothing is impossible! Happiness is like a remote control, we lose it every time, we go crazy looking for it and many times without knowing it, we are sitting on top of it …

  2. Awesome post, Vishal. A timely reminder for us all. When we step into something new, our excitement is high. Then it wanes when we witness slow progress. But consistency in practice leads to a sudden spike in our performance.

    This article reminds me of 2 quotes:

    “It took me 17 years and 114 days to become an overnight success.” – Lionel Messi

    “Every job we see, even the most glamorous one, is boring 95% of the times.” – Darren Hardy


  3. Shivashankrappa Balawat says:

    Thank you Chandrashekhar for sharing 14 points of Ben Shahar.

  4. Good afternoon Vishal!
    the above reason for greeting afternoon is because…
    … I live in United States and I am writing this message
    during morning time.
    Long follower of your posts.It reminds me of the book from
    George.S.Clayson ” The Richest man in Babylon”where one
    of the character Arkad says to his friends Bansir and Kobbe that
    hasn’t our wise teacher taught us that learning are of two kinds
    The one kind the things we learned and knew and the other being the training that taught us how to find what we don’t know.

    So for me you are my Second Teacher as a path to reach a mile of success!
    My Manager Tony Collins used to say” Fast nickles are better than slow quarters”
    This motto was grained in my retail business which I used to own back in a day
    And then i walked out of the business because I was minor partner and there were
    too many hands in a cookie jar. But life moves and one thing I was keen reader of any positive articles about
    American Economy and how this country is generating money from thin air and what value America bring to their people in terms of monetary gain to support the fiscal policy which are the two divers for economic growth.
    But reading was my forte since I was in India and the only subject
    I Like was English the other subjects would give me frustration and agony. So I said to myself “Let me master skills of English Language” and here I am, But life is Peachy everyday in here. I work for Amazon on a shipping Dock in New Jersey and me and my coworkers almost everyday we say that “Another day Another dollar” and also “This job pays my bills, food and shelter, This to us is that we are fortunate to God that we have an opportunity to open our eyes, can work, and take care of our family.
    Lastly sorry for writing this long message because I am old schooler from 60’s and 70’s where there was typewriter instead of keyboard, no cell phones, rotary phone if you can afford at that time? but long story short your articles gleaned into the insights of a true nugget which shines forever. So to me you are a bright star who brightens my day giving me yardstick to reach with small steps to my never ending journey of success. By the way your cause to uplift the kids teaching “Value Investing” is one of the noble and Humanitarian work which cannot be repaid with money, but with respect.
    Have a Wonderful Evening!


  1. […] fast. The stock market is often considered a lottery ticket for many. I instantly recollected The J-Curve Model of Thinking, Living, and Investing by Vishal Khandelwal beautifully explained with an excellent example of a mid-life crisis. Rich […]

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