Blog on Value Investing | Safal Niveshak

My Wife Proves Again Why I’m An Emotional Fool

Consumerism for Beginners “Gold prices are on a rise, so let’s buy some jewellery before it gets even expensive!” my wife woke me up showing me the Sunday newspaper.

“Bad start to the day!” I mumbled under my breath.

“Did you say something?” she asked.

“Nah…nothing dear!” I exclaimed.

“You women have nothing on your mind other than shopping?” I asked bravely.

“What do you know about a woman’s mind?” she asked.

“Well…nothing!” I told the world’s harshest truth.

“See, there’s something that we love more than what we shop for.”

What! Are You Exiting the Stock Markets?

I was surprised to read a report in the India Today magazine yesterday which suggested that small investors are fast exiting the stock markets.

One reason for my surprise (and sadness) was to think about the future of Safal Niveshak.

After all, if small investors stop investing in stocks, who would read my daily rants on sensible, long-term investing?

But a bigger reason for the surprise came when I read this…

Most retail investors have lost faith in the capital market…Investors are exiting because there has been no capital protection in India.

Then I read this…

Investors are fast losing confidence in the capital market and unless Securities and Exchange Board of India (Sebi) brings in radical reforms, they would hardly return.

Now my question is – who was worried about “capital protection” during the heydays of 2004 to 2007 when everything they touched turned to gold?

30 Excuses That Prevent You from Investing Success

Be honest. How often do you sabotage yourself in your investing journey?

You trick yourself into thinking that keeping up with stock market news, and reading the latest “10 secrets to become a successful investor” post on Safal Niveshak is “working”.

You know better, but some part of you believes that simply reading the article will help you move forward.

That having a deep understanding of the stock markets and how humans behave when it comes to investing will position you better when the ‘right time to invest’ arrives.

But that ‘right’ time never comes.

My Observations on How North Indians Look at Money & Investing

I recently went on a trip to North India – Delhi and Rajasthan – where I observed some interesting habits people had with respect to handling their money and investing.

Of course, some of these habits/attitudes aren’t particular to the North Indians, but these still give interesting insights into the money behaviour of that lot (and I’m one of them myself).

So here are some of my observations on how North Indians generally look at money and investing…

Money has to be earned at all costs, because the need to spend on lavish parties, expensive clothes and cars, and impress others at family functions is on a rise.
Stock markets are considered some sort of a scam where you will ‘always’ lose money.
Despite the above belief, CNBC remains the first channel to be watched every morning.
Gold and property are considered safer investments than stocks.
People don’t invest with a plan. They ‘just’ invest whenever they have money.
People are more worried about what’s happening in politics than in the economy.
Like their driving, people are highly overconfident about their investing skills.
Not many are bothered about investing education, or blogs like Safal Niveshak. 🙁
Most believe that they ‘knew’ about the 2008 crisis (only that they did nothing about it).
Food occupies a greater mind share than money (the few centimeters I’ve added to my waistline is a proof). 🙂

One more important thing I noticed among people out there is, however rash they are in their driving and investing, they care a lot about the future of their dependents and thus save a lot of money (in gold, property, and stocks).

Anyways, I now invite all my North Indian readers to accept or negate these observations.

Also, all my readers from other parts of India and the world are welcome to add their observations about the way people in their regions treat money and investing. This will be an interesting exercise.

How to Avoid Your Worst Enemy as a Stock Market Investor

If you have been a member of the Safal Niveshak tribe for long, you know our hottest topic of discussion here. It is how various aspects of human behaviour influence investing.

As we have discussed at times, we are often our worst enemy when it comes to investing our hard-earned money.

An understanding of how vulnerable we are to our own psychology can help us avoid the stupid investor delusions that can screw up our financial security.

There is an old adage about the game of poker: If you sit down at the table and can’t figure out who the sucker is, get up and leave because it’s you.

These insights about investor psychology can keep you from being the easy prey.

Burton Malkiel, in his investing masterpiece, A Random Walk Down Wall Street, cites the study done by Charles Ellis, a longtime observer of stock markets and author of another brilliant investing book Winning The Loser’s Game.

The Art of Stock Picking, by Charlie Munger

Charlie Munger Some call him Warren Buffett’s alter ego. Some know him as Buffett’s quirky business partner.

But whatever you may call him, Charlie Munger is ‘the’ original thinker and the silent man behind the success of Buffett’s investment company Berkshire Hathaway.

Ask people about Berkshire Hathaway, and most will tell you that it’s Warren Buffett’s company, which is true as far as it goes.

But those in the know recognize that Berkshire’s success is actually the product of a tag-team effort by Buffett and Munger.

Munger’s book, Poor Charlie’s Almanack, is one of my most prized possessions.

It collects his speeches and musings, including his intriguing thoughts on the several tendencies that lead us humans to make really bad decisions.

A Value Investing Course You Won’t Want to Miss (And It’s Free!)

Something tells me you are smarter than most self-proclaimed stock market experts and others looking to invest in the stock markets.

Something tells me that you are not interested in ‘get rich quick’ schemes or ‘hot stocks’ that promise fast money from the stock markets.

You are not looking for a magical idea that involves no work, no time, and no sense on your part.

And you also realise that you don’t have to be Einstein to become a sensible, intelligent, and successful stock market investor.

So, you are smart. It’s only that you need to realise this truth and believe in yourself.

And with a view to create this belief in you, I invite you to join (if you haven’t joined already) my Free 20-lesson course in investing…

Value Investing for Smart People
Value Investing for Smart People is a simple and systematic way to understand and implement the time-tested principles of value investing (the most sensible way of investing) to create wealth from stocks.

It’s a 20-lesson course on value investing strategies that have helped the world’s best investors amass huge wealth from the stock markets.

Here are 5 key questions the course will help you answer…

Why you don’t have to be a genius to become a successful investor?
How to use ‘investment checklists’ to identify good stocks?
Why your stocks will never make you rich?
How to insure your investments with a ‘margin of safety’?
When to sell a stock?

Despite the immense value that this course carries and the invaluable investing insights that you will learn from it, I have kept it FREE.

Yes, you read that right! Value Investing for Smart People is a free 20-lesson course on value investing techniques that will be delivered to you via email once you sign up for it.

And why is it free? Simply because this is your first step into the amazing world of value investing, and I want you to take this step hassle-free and without any reservations.

So come, sign up for Value Investing for Smart People.

3 Surprising Reasons People Give Up Investing in Stocks

If you are a stock market investor, no wonder you think the game is rigged against you.

You believe the financial services industry is a racket, and the stock market is a game reserved only for the chosen few.

You also believe that the stock market experts appearing on business channels and other financial media try to lure you into stock advice that only serves their selfish interests.

But despite these truths – yes what your believe is true – there is no other asset class that has provided better long-term returns to investors than equities.

So I feel sad whenever people, after facing a loss on their stock investments, or after going through a short-term correction, or after getting duped by a greedy advisor, leave investing.

In fact, here are the three most common reasons I’ve heard over the years from people who’ve thought about completely exiting the stock markets.

10 Graphs on 10-Year Performance of Indian Companies

The last decade has seen a dream run for Indian companies. Helped by fast growth of the Indian economy and supported by higher consumer and industrial spending, companies have seen their businesses grow by leaps and bounds.

However, has this growth filtered across all parameters that make companies ‘good’?

And have the shareholders benefited from this growth?

Here are 10 graphs that show the combined performance of India’s leading companies (BSE-200, excluding banks and financial institutions) over the past 10 years. This will provide some answers to the questions above.

1. Sales: This has been one of the two most promising charts, the other being the next one. As I mentioned above, Indian companies have benefited from economic growth and rising spending. This has led to higher sales year after year, except a slight lull in FY10 that was due to a widespread economic slowdown.

Why Warren Buffett Would Love to Be In Your Place

Warren Buffett He’s been called the best investor of all time. In multiplying every dollar invested in 1964 by a massive 490,409 times over a 46 year period, Buffett has left every investor aside in the investing game.

However, despite such an enviable track record and so much wealth, there is one reason Buffett envies you – the small investor – a lot!

Yes, that’s true…and Buffett has himself claimed this time and again.

You still don’t believe me?

Well, here is what Buffett said in a Business Week interview in 1999…

If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then.

It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.

The universe I can’t play in i.e., small companies has become more attractive than the universe I can play in, that of large companies. I have to look for elephants. It may be that the elephants are not as attractive as the mosquitoes. But that is the universe I must live in.