Safal Niveshak’s 2016 Annual Letter to Tribe Members

Dear Tribe Member,

Trust you are doing great.

Here is a brief update on what transpired during 2016. It was another tremendous year for Safal Niveshak. The tribe has crossed 26,000 members. Our Twitter count has crossed 17,500 followers. We conducted five workshops during the year, meeting 120+ tribe members in the process.

The Mastermind Value Investing Course student count increased by 30%, while our premium newsletter – Value Investing Almanack (VIA) – which is about to complete two years, gained 25% new members, and has continued to receive some inspiring reviews from its subscribers. During the year, as part of the VIA, we interviewed a few wonderful value investors including Rajeev Thakkar, Jason Zweig, Samit Vartak, Kuntal Shah, and John Huber.

The idea to launch VIA in 2015 came from the need we felt of a detailed value investing newsletter in the Indian context, which had deep insights on the subject, business analysis, and interviews with practitioners of the art. We had always missed such a product in India, and could not find a better way to get it than to create it ourselves. The journey over the past two years of launching VIA has been inspiring for the breadth and depth of reading and learning we ourselves have done to bring our subscribers high quality content.

Anyways, in 2016, we also launched our first comprehensive e-book titled Mental Models, Investing, and You. This was just the first part of our collection of mental models notes we have written on Safal Niveshak so far (the second part releases in 2017), and received great reviews from readers. Despite our offer to people to get the e-book for free or pay as much as they wished, more than 850 people paid up, which was a much higher count than what we had expected.

Another launch for us in 2016 was Stream – a weekly collection of some great stuff we read on the Internet and in books on varied topics like money, investing, business, economics, thinking, human behaviour, and of course, life. This newsletter has also received a great response from readers.

Looking Back and Ahead
Safal Niveshak will complete six years in July 2017, and this initiative has evolved beyond my imagination from the time I posted my first blog post in July 2011 and when I conducted my first workshop on April 2012. While we have launched several premium/paid content like Mastermind and VIA since then, what we write for free on Safal Niveshak remains our biggest focus area, simply because that is what impacts the lives of most people connected to this initiative.

A vast majority of content on Safal Niveshak will remain free forever, and you should only expect an improvement in the variety and quality of the same as we move forward. As far as premium content is concerned, apart from keeping our homes running, it helps us keep the website free of any external advertising revenue and also helps us constantly upgrade and improve the free areas of the site. So our incentives are 100% aligned to the work we do on Safal Niveshak, and nothing else.

Amazon’s Jeff Bezos said this in an interview in 2011 (emphasis mine) –

If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue.

In some cases, things are inevitable. The hard part is that you don’t know how long it might take, but you know it will happen if you’re patient enough.

What a wonderful and sustainable moat this is – long-term thinking. Whether you are an entrepreneur or an investor, by thinking and acting long-term, you can create a wonderful proposition for the society at large (as an entrepreneur), and great wealth for yourself (as an investor).

This is exactly our thought process as we work towards building Safal Niveshak into a greater cause going forward. There are several ways in this business to make a lot of money in the short term – and we see a lot of people already doing that. But our horizons are pretty long and, more than that, we take our integrity and your long-term interests very seriously.

As a business philosophy, we live, breathe, and practice what Charlie Munger so often says – “Tell me where I’m going to die, so I’ll never go there.” This will continue to be our motto in 2017 and beyond too.

Best Posts of 2016
Here is a list of our best posts from 2016, based on the number of reads and comments –

• The Wisdom of Intelligent Investors (Special E-Book)
• 3 Iron Rules of Life and Investing
• How I Missed a 10-Bagger, and Why I’m Proud of That
• Why You Must Not Quit Your Job to Become a Full-Time Investor
• Value Investor Interview: Huzaifa Husain
• Latticework of Mental Models

Goals for 2017
We entered 2016 with the following three goals –

• Improving the quality of content on Safal Niveshak – both free posts and premium ones (Mastermind and VIA) – This is always work-in-progress. But as seen from user feedback, we managed to slightly improve the quality of our content in 2016. Of course, a lot more is desired in 2017.
• Increasing the breadth of content by getting deeper into annual report analysis, financial statement analysis, and industry analysis – Honestly, not much improvement on this front, so aim in 2017 is to focus more here.
• Improving the breadth of content delivery by adding audio and video content – Started with videos on our mental models series. Work is in progress on converting the free value investing course into videos and audios too. Watch out for much action on this front in 2017.

Apart from working more and better on the above-mentioned goals, one incremental thing we wish to focus on in 2017 is to develop more content for youngsters, both in areas of investing and thinking/behaviour/learning. I have lectured at a couple of management colleges in the past two years, and have also addressed a couple more group of students informally. These guys are passionate, and are willing to learn and re-mold their minds…a quality most of us adults lack. Plus, what they are being taught in business schools about investing doesn’t work in real life. And plus, nobody in school teaches them about lifelong learning and human behaviour. So, there’s a great opportunity to do all this, I believe.

As we get into 2017, we welcome your suggestions in the Comments section of this post on what you would like us to do as far as content or a new initiative from Safal Niveshak is concerned.

Investing in 2017
As we look back to 2016, and especially at what transpired in the stock market, we remember this quote from Richard Feynman – “The first principle is that you must not fool yourself – and you are the easiest person to fool.”

Like 2015, or every year before that, there were several occasions in 2016 when investors were found fooling themselves. Whether it was “positioning” their portfolios for the post-Brexit world (nothing much happened here), or predicting with great certainty how Hillary Clinton would sail through to become the next US President (she didn’t become the President), or predicting how the stock market would crash if Donald Trump actually came to power (the stock market didn’t really crash), speculators and investors alike were left with a lot of soul-searching moments in 2016.

Then, specific to India, all targets of the BSE-Sensex at 30,000 or 32,000, or 40,000 failed, yet again. The index is, actually, set to end almost at last year’s close of 26,100, and even 2014’s close of around 27,000. A special mention here for all those people who were betting heavily on the NBFC and MFI sectors in 2016, and were willing to pay any price to get onto this “next big opportunity.” Demonetization hurt them big time. But not many are willing to look within and blame their aggressiveness and overconfidence in overpaying and buying into this “hot” theme. Demonetization just compounded their troubles. A textbook lesson to be learned here (again) is that the probability of getting burned increases as things get heated in the stock market (like it happened with the NBFC and MFI sector in 2016). And another lesson to be learned here is that despite this first lesson that people learn again and again, they continue to play for things to get even hotter, and then ultimately do get burned.

Another lesson that emerged during the closing stages of the year was that everyone becomes an expert when he or she thinks that everyone else isn’t. Consider demonetization. We see a lot of jokes floating on the Internet how India has seen a massive increase in the number of economists/experts after demonetization was announced. And there is a grain of truth in such jokes, because everywhere we go, we find people sharing their expert views on how demonetization would play out in the stock market. So everyone seems to know something about this event and its impact, and nobody seems to know nothing.

“The only true wisdom is in knowing you know nothing,” said Socrates. And only if you take this to heart – that you know nothing – you would be open to reading, listening, and learning more. This is one big lesson we take into 2017 – to be open to read, listen, and learn even more than we did in 2016. There is no point in predicting the future, and especially of things like demonetization that most of us don’t understand much about. But it’s a great idea to develop the ability and strength (and of your portfolios) to deal with such unprecedented events and their evolutionary impacts.

As we enter the new year 2017, we remind ourselves that the wealth we create from stock investing is a loan, not a gift, from the market. And thus we must behave judiciously. Just a few bad decisions combined with a few months of bad market can wipe away all the gains we may have earned over several years of bull markets.

We also remind ourselves that, before committing any new money to stocks in 2017, we must weigh not only the tempting probabilities of being right, but the serious consequences of being wrong.

Finally, we remind ourselves that we can never know the future, and especially when it seems most certain.

Before we close, let us share with you the Serenity Prayer that has helped us a lot in facing our personal, professional, and investing turmoils. We are sure if you keep this prayer close to your mind and heart, it will help you face your own turmoils well, including those related to your investing.

The Serenity Prayer

God, grant me the serenity to accept the things I cannot change,
Courage to change the things I can,
And wisdom to know the difference.

~ Reinhold Niebuhr

We wish you a happy, healthy, peaceful, and sane 2017.

We are lucky to have you as a tribe member.

With respect,
Vishal & Anshul

P.S. Best Books We Read in 2016 – Here is a list of the best books we read in 2016. Note that just one in the list is related to investing – All I Want To Know – and that too distantly. 🙂

• Breath by Breath by Larry Rosenberg
  Explores the ways to achieve freedom from suffering, through means that are immediately within our grasp — literally as close to us as our own breath.
• Meditations by Marcus Aurelius
  Series of personal writings by the Roman Emperor Marcus Aurelius, recording his private notes to himself and ideas on Stoic philosophy.
• A Book of Simple Living by Ruskin Bond
  Gift of beauty and wisdom from India’s most loved, and most understated, writer.
• The Daily Stoic by Ryan Holiday
  366 days of Stoic insights and exercises, featuring all-new translations from the Emperor Marcus Aurelius, the playwright Seneca, or slave-turned-philosopher Epictetus.
• When Breath Becomes Air by Paul Kalanithi
  Life-affirming reflection on the challenge of facing death and on the relationship between doctor and patient, from a brilliant writer who became both.
• Shoe Dog by Phil Knight
  Inside story of Nike’s early days as a fearless start-up and its evolution into one of the world’s most iconic, game-changing, and profitable brands.
• Ego Is The Enemy by Ryan Holiday
  Practical and inspiring philosophy exploring a powerful concept that runs back centuries, across borders and schools of thought: Ego.
• All I Want To Know Is Where I’m Going To Die So I’ll Never Go There by Peter Bevelin
  Brilliant story of a fictitious seeker on how he learns to make better decisions from a fictitious librarian, and Warren Buffett and Charles Munger.
• The Art of Learning by Josh Waitzkin
  Remarkable story of personal achievement of a chess and martial arts champion who shares the principles of learning and performance that propelled him to the top.
• Homo Deus by Yuval Noah Harari
  Explores the projects, dreams, and nightmares that will shape the twenty-first century. A fascinating thought experiment about human kind’s next stage of evolution.
• Deep Work by Cal Newport
  Presents a strong argument about the need of deep work and gives numerous hacks to cultivate and protect that skill.
• Nobody Wants to Read Your Sh*t by Steven Pressfield
  Superb ideas to take your writing skills to new level.

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