Archives for 2020

An Unexamined Life

Despite being imaginary, some stories shake you up. They are unsettling because you wonder — what if this story is about me?

This is one such story.

The local goons were causing a nuisance for a shopkeeper. They would spray-paint abusive and derogatory graffiti all over his store window.

So the shopkeeper hatched a plan. The next day, he waited until the goons finished their dirty work and then he paid them Rs 1000 to thank them for their effort. The following day, he thanked them again but only paid Rs 500 this time. He continued to pay them to deface his property but the amount kept decreasing. Soon they were getting only Rs 10.

They stopped coming. Why bother doing all that work to abuse the shopkeeper for so little money?

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All That Matters

Here are the best things I read and thought about today –

Morgan Housel continues to amaze, and here is his latest post on the three sides of risk. In the post, Morgan takes us 20 years back to his late teens and shares a tragic skiing incident that took away the lives of two of his best friends and ski partners, and how he survived by way of a fluke decision he had put no thought into.

Talking about how that incident changed Morgan’s life, he writes –

My risk tolerance plunged after Brendan and Bryan died. I broke my back skiing (no nerve damage) a few months later, which crushed it even more. I haven’t skied much since. Maybe ten times in the last 19 years. If I’m honest, it scares me.

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Are You Betting on a V-Shaped Recovery in Stock Market?

Here are the best things I read and thought about today –

“Have the record number of investors in the stock market lost their minds?” asks The New Yorker, given how investors appear persuaded that the markets are headed for a “V”-shaped recovery even as history suggests a more complicated story –

Stocks don’t always rebound in a “V” shape. During the last lengthy bear market, which accompanied the Great Recession, stocks prices started falling in September, 2007, and didn’t bottom out until February, 2009, seventeen months later. During the Great Depression, in the nineteen-thirties, the bear market lasted even longer. It began with the Wall Street crash of October, 1929, and lasted until the middle of 1932; by then, the market was down about eighty per cent from its pre-crash peak. Stocks didn’t hit new highs until the nineteen-fifties.

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The “Rashomon Filter” to Make Good Investment Decisions

Heard of the Rashomon effect?

It is a term related to the unreliability of eyewitnesses. It describes a situation in which an event is given contradictory interpretations or descriptions by the individuals involved.

The effect is named after Akira Kurosawa’s 1950 film by the same name ― Rashomon. The story revolves around a murder described in four subjective, alternative, self-serving, and contradictory ways by four witnesses.

Each of the characters relate the incidents as a contradiction of the other, but they describe them in such a convincing manner that the audience tends to believe them all.

How to Fail at Almost Everything and Still Win Big

Here is some stuff I am reading and thinking about this weekend…

Book I’m Reading – How to Fail at Almost Everything and…
If you don’t know who Scott Adams is, odds are high that you would give a pass to a book with such a cheesy and hackneyed title. But if you did that it would be a huge loss. Scott’s How to Fail at Almost Everything and Still Win Big is one of my all-time personal favourites and I can vouch for the tremendous utility of his methods.

You Lost Your Job, Now What?

My cousin, age 40, married, with two kids, working with a Delhi-based start-up at a decent seven-digit salary, just lost his job!

With no cash flow to sustain operations owing to the Covid-19 pandemic and its impact on the economy, the start-up is on the verge of closing shop. To say the least, my cousin was unprepared for this.

We have been more like great friends over the years, and so he called seeking my advice. What follows below is part of the detailed email (edited for personal stuff) I sent him about how he can deal with the sudden loss of income and livelihood, and how he may move forward.

Oh, EBITDAC!

Before I share the best things I am reading and thinking about today, here’s a request.

If you’ve been enjoying the newsletter, please share it with friends on WhatsApp, Twitter, or just send them here.

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Is Value Investing Dead?

Newspaper headline reads – “Modi’s ₹20 trillion package: What does it mean for stock markets?” Reminds me of a Hindi idiom – गाँव बसा नहीं लुटेरे पहले आ गए (Translation: The village is still not thriving, but the robbers have already come).

The first part of the article reads – “Indian equity markets rallied in early trade on Wednesday as the size of the economic stimulus package announced by Prime Minister Narendra Modi is significantly higher than the Street’s expectations.” Well, after everything ‘unexpected’ that has happened over the past few months with the economy, businesses, markets and in people’s livelihoods, we are still playing the expectations game? Ha!

No One Has Any Idea

Based on requests from people loving my Saturday posts, I’m experimenting to be more regular in sharing stuff I’m reading and thinking about, in bits like pieces. Let me know if you find this exercise useful, so I may carry on.

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Mamba Mentality and How to Win at the Stock Investing Game

I have a confession. I have never been crazy about basketball. I played the game in school, but my body was too frail for the 625-gram ball to find any meaning in my life, like cricket and football did.

It was this lack of craziness that the only superstars from the game I ever knew of were Michael Jordan and Magic Johnson, also because the names sounded similar.

It was early this year that I first heard about another of the game’s legends, Kobe Bryant, and because of the news of his demise in an air crash. Then, the more I read and saw of this man just led me to feel an immense amount of respect for his basketball prowess and the efforts he made over the years to reach the pinnacle.

As I read about Bryant, I realized that life for him was not free of controversies. The worst came in 2003 when he, at the top of his career, was charged with sexual assault. He proclaimed himself innocent and the charges were later dropped. Bryant and his accuser reached a civil settlement, and his reputation was badly tainted.