I wish all tribe members of Safal Niveshak a very happy Vijayadasami or Dussehra. As per Hindu tradition, today marks the victory of Goddess Durga over the demon Mahishasura. Today also marks the victory of Lord Rama over demon Ravana.
Consider Ravana. He is depicted and described as having ten heads and as a follower of Shiva. He is a great scholar, a capable ruler and a maestro of the veena, but someone who wished to overpower the devas. His ten heads represent his knowledge of the six shastras and the four Vedas.
A negative interpretation of Ravana’s ten heads are the ten emotions or senses in humans –
- Kama (Lust),
- Krodha (Anger),
- Moha (Delusion),
- Lobha (Greed),
- Mada (Pride),
- Matsar (Envy),
- Manas (Mind),
- Buddhi (Intellect),
- Chitta (Will), and
- Ahamkara (Ego)
When it comes to investing, some of these emotions stand in between the investor and his long-term success.
As the story of Ravana depicts, the mind tends to shun all things good for our life and seek all things bad for our life. To attain wisdom, one of the most important things we must do is witness the tricks of the mind, and avoid playing the wrong hand as much as possible.
In the illustration that follows, I have tried to depict the ten emotions, or the ten demons, or the ten tricks of our minds, when it comes to investing. Print it, paste it on your work desk, and look at it often.
No investor can claim to master or kill these demons, but a knowledge of these residing within you is, I believe, pretty helpful.
Click on the image to open it in large size
Investing or otherwise, we all have demons inside of us. It’s our choice how many of them we feed, and how often.
The idea is to know and accept that they exist, and then learn to tame them before they eat us and our investment returns.
What do you say? Which of these demons do you feed most often? Share your thoughts in the Comments section of this post.
Very innovative style of multidisciplinary thinking sir…
Your perspective towards investing is different and unique.
Thanks Keshav!
I have lost out because of fear. I sold a scrip because I thought I would lose money, and it rose 500% in 4 years after that. I’ve experienced herding and greed too, though thankfully haven’t suffered a lot because of those demons.
Currently am in the phase of investing for the amount of time which is Warren Buffett’s favorite – forever. Reminded of the Hero Honda slogan, I think “Fill it. Shut it. Forget it.” So my mantra is for money in the stock market is, “Invest It. Confirm it. Forget it.”
Which demons have troubled you the most, Vishal?
I will start implementing this in my day to day life. Thanks for creating such a creativity thought for us…. Thanks Vishal
Thanks Manish!
Hi Vishal, I daily check your website before reading any other sites. It becomes a habit to read your postings and I must appreciate your hard work for that. Thanks for all your efforts for making novice investors like me to develop knowledge on investing, mental models and behavioural science. I am lucky that i came to know your website and it is a knowledge ocean.
Thanks,
Srinivasan AR
Thanks for your kind words, Mr. Srinivasan! Regards.
Special thanks to you Mr. Vishal and your team..to tell you frankly I have a great admiration for Mr Parag Parikh.. but after his demise I completely lost hope that someone can actually guide an investor and teach about the emotions part of investing…but In you i see a lot of similarities and I make it a point to read all your articles.. thanking you once again…all the best wishes of Dusshera to you and your and also your team
Thanks for your kind words, Jiten…though we are far lower down from the high standards Mr. Parag Parikh has set. Regards.
Very useful. Thank you Vishal.
Interesting way of depicting concentration as gluttony. This has been my vice
Dear Vishal
I have stopped commenting because what you write is simply out of the ordinary and I have nothing more to add. Period. They are like wine, getting better by the years.😁. My demon has been gluttony- at one point holding on to 50+ stocks. I could be excused since it all began from 1978😂. I have now brought it down to 30 and yes the top 15 make 80% of the folio. It still needs a hair cut. 😀. I have sort of detached myself from the vagaries of the stock market. My sincere advice to fellow tribesmen is to do your own homework, buy great companies at reasonable price, hold for the very long term and yes don’t fall in love with them.. Put away your smartphones and spend quality time with your dear ones, particularly the oldies like me😂. It is never too late and don’t regret later. Wish you all a very happy Vijayadashmi.
Wishing you too very Happy Vijay Dashmi.
One request, do come up with some techniques on emotional controls.
Whatever you advise and recommendations you provide are good to read but difficult to follow due to lack of self emotional controls.
Or suggest some techniques to hedgr our portfolios. I do use some portfolio hedging techniques but not sure whether they are proven ones.
Would appreciate a reaponse.
Regards
Amit
Dear Vishal, A Very Happy Vijaya Dashami. As always loved reading this article. Thank you for all your efforts to keep us “the tribe members” aware and awake. My first reaction to this article is that I am advised to be fearful of all these 10 demons. But then question comes is how to follow another rule which says Be greedy when others are fearful and Be fearful when others are greedy ? An answer might be to doing correct valuation. Am I right ? Recently got know the valuation done for Indusind Bank & Bharat Financial (Earlier SKS Micro ) for deciding their merger exchange ratio. I suggest you see that if you have not yet. Two different and very capable valuation firm did independent valuation for both the companies. The ratio was exactly matching ( 1 : 0.693 ) but one firm does valuation based on Discounted free cash flow method and gets Rs. 1900 for Indusind and another gets a value Rs. 2156 by Earning capitalization value method. There is also market price method valuation which gives very different values. So, what should I understand from that ? So far greed has only made me loose in profit and fear has also made me leave money on table. As you say no investor has mastered these demons and neither able to kill them but your tribe in which I am also a member strives to invest in stocks and not in fixed deposits or mutual fund…Thank you for being accessible to a lay man or ordinary investor like me. May God Bless Us all.
Vishal Khataria is right in my point of view. I think “Fill it. Shut it. Forget it. And he said very well about investing that “Invest It. Confirm it. Forget it.”
Overall your post is good.
Brilliantly put together all the negative emotions that investors do have.
Great said