Safal Niveshak

Wit. Wisdom. Value Investing.

Investing Isn’t Risky. Not Investing Is.

“I don’t invest in stocks. I find investing too risky!”

This is a common statement I have heard from many of my college friends who are yet to start investing. They feel they are better off without investing in stock market, and staying with the safety of bonds, and (mis-sold) insurance cum investment products like ULIPs.

It really amazes me when such educated people think that investing in stock market is risky.

This is especially when they are already taking much bigger risks by listening to their greedy advisors and wasting their money on financial products that are never going to make them any money!
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God Save The World…And The Investors

Imagine being father to a daughter who’s just cleared her entrance exam to get into the country’s best engineering college.

You are elated, and proud as your daughter would be your family’s first engineer, and that too from a coveted college.

Then you get the news that the college has decided to do a re-test for students who failed to qualify, and that the selection process would be done again.

Would that disturb you?

Now, what if you come to know that the re-test has been forced by a few politicians whose sons and relatives failed to qualify?

What justifies a re-test of those who could not qualify? How can the college support those who failed to clear the hurdle to get a place in it?
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Conversation with Charlie Munger

Some call him Warren Buffett’s alter ego. Some know him as Buffett’s quirky business partner. But whatever he is called, 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.

The small talk between Buffett and Munger during Berkshire annual general meeting has become folklore.
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Why Most Investors Don’t Succeed in the Stock Market

“First, expect to be wrong in the stock market.”

My friend Ravi had a puzzled look on his face. He asked me, “What are you saying Vishal? One has to always be right to survive in the stock market. And you want me to expect to be wrong?”

Ravi isn’t an exceptional case. I have seen so many other investors amazed when I ask them to expect to be wrong in the stock market.

You see, one of the most important traits of successful investors is that they recognize the frequency with which they can get ‘clean bowled’ – and thus they have a plan in place to deal with such situations.

This is the first lesson most new investors fail to digest, and thus neglect.
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“Just cheer up… it’s not so bad out here.”

These are the words of Philip Lynch, the chief executive officer of Nomura Asia Holding, who talked to Economic Times.

India is the ‘place to be’ for long-term investors, believes Lynch. “Just cheer up… it’s not so bad out here,” is his advice. As he says:

“Not everything is bad… to list a few positives, corporates are in good shape, leverage is low and corporate cash balances are high. I don’t think governments will allow asset prices to decline beyond a point. Quantitative easing might be coming to an end, but governments will make sure there is enough liquidity and fiscal support. I am not saying that next year or year after that will be particularly smooth sailing for Asian countries. But then, if you want long-term opportunities, Asia, in general, and India, in particular, are the places to be.”

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Are You a Stock or a Bond?

No, there isn’t a mistake in the above headline. I am not asking whether you own stocks or bonds.

What I am asking here is – Are ‘YOU’ a stock or a bond?

This is the very first question you must answer before you get down to investing in the stock markets. But before that, you must be very clear about these two basic questions:

  • What is a stock?
  • What is a bond?

A stock is a share in a company, and thus its performance is dependent on how the company’s business does.

In short, a stock’s future performance is unpredictable. This is because it is backed by a company that has inconsistent earnings (in most cases) and subsequently inconsistent performance.
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You’re fighting a losing game

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

No wonder you think the financial services industry is a racket, and the stock market is a game reserved only for the chosen few.

No wonder you think the stock market experts appearing on business channels try to lure you into stock advice that can serve their own vested interest.

You didn’t need the recent stock market crisis to tell you that. However, what you may not realise is just how devastating dishonest and biased stock market advice can be to your long-term wealth.

Before it gets too late, you need to rail against this deep-rooted systemic injustice.

I propose a simple solution…
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