The Money Game by Adam Smith (pseudonym used by George Goodman), first published in 1968, is a timeless classic on investing and human behaviour.

It is a witty book wherein the author shares his insights on the irrationality with which most of us make our investment decisions. He also shatters common myths and misconceptions, revealing why nothing works all the time and illustrating how greed and fear fuel the market.

As I was re-reading the book, I came across this passage that details the dangers of trying to earn a lot of money to be able to achieve a certain level of happiness and peace in our lives. It is as relevant today as it was when the book was written 50+ years back.

It has been my fate to know people who have made considerable amounts of money, sometimes millions, in the market.

[One of them] had a very good point when he said the end object of investment ought to be serenity.

Now if you think making a million dollars will give you serenity, there are two things you can do. One is to find a good head doctor and see if you can discover why you think a million dollars will give you this serenity. This will involve lying on a couch, remembering dreams, talking about your mother, and paying forty dollars an hour.

If your course is successful, you will realise that you do not want a million dollars but something else which the million dollars represents to you, such as love, potency, mother, or what have you.

Released, you can go off about your business and not worry anymore, and you will be poorer only by the number of hours you spent in accomplishing this times forty dollars.

The other thing you can do is to go ahead and make the million dollars and be serene. Then you will have both a million dollars and serenity, and you do not have to deduct the number of hours times forty dollars unless you feel guilty about making it.

It seems simple, and there is indeed a catch.

What do you do with the million dollars arrives and serenity does not?

Aha, you say, you will worry about that when you get to it, you are sure you can handle it. Perhaps you can.

Money, contrary to popular myth, does help people more than its spoils them, simply because it opens up more options.

The danger is that when you have your million, you then want two, because you have a button saying I Am A Millionaire and that is who you are, and there are, all of a sudden – as you will notice – so many people with buttons saying I Am A Double Millionaire.

The core idea of Mr. Goodman’s book is that money game is about the players, not the rules or the features of the board. And so how we play the game matters much more than how the game is stacked.

Some books never lose their relevance, no matter how old. The Money Game is one of them.

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Here are few things I thought were worth sharing with you:

• An Investor’s Spam Filter (Anand Sridharan)
• Risk and Return in the Stock Market Are Not Evenly Distributed (Ben Carlson)
• Preparing Your Mind for Uncertain Times (The Atlantic)
• My Son Is Looking to Me for Answers—And I Don’t Have Them Anymore (Uri Friedman)
• Your Financial Portfolio and Japanese Principles (Fortune)

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That’s about it from me for today.

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Stay safe.

Regards,
Vishal

I recently made a pocket-zine for my kids that contained some lessons on living a good life.

They loved holding and reading it as much as I loved creating it.

Well, call it a positive feedback loop, that zine has led me to create one more. This time on the most important things in personal finance.

I call it – Personal Finance for Smart People: A Pocket Guide for Wealthier Life.

Click here to download the PDF version.

Please note that personal finance is, well, personal. So, it is OK if you reject all the ideas in this zine. See these ideas in context of your own financial goals and circumstances.

Anyways, while this zine is completely free, it is not cheap. If you wish to show your support, please forward it to someone who may benefit from it.

You may share it on WhatsApp, Twitter, LinkedIn, or just email them the link to this post.

If you are seeing this newsletter for the first time, you may subscribe here.

Stay safe.

Regards,
Vishal

Here are few things I thought were worth sharing with you:

• Long term investing is a good idea. Forced long term investing is not. When your premise does not work out, or you no longer believe in a stock, you must sell, even if it means a loss. A lot of investors hold on to bad stocks just to get their “money back.” This, I believe, is one of the biggest reasons to lose money in stocks. Remember that the deeper you fall with bad stocks, the more you must gain back to get your money back. And it is often a bad idea to try to get your money back the exact way you lost it.
  
  When it comes to losing stocks in your portfolio, always remember the first law of holes – If you find yourself in a hole, stop digging.
   

• From the archives: Zoom Out, Baby, Zoom Out –
  

  Much of the time, in life and in investing, we would be better off zooming out than zooming in. Rather than being ticker watchers of our own lives, and rather than zooming in and magnifying and thus worrying about the daily volatility in our stocks, we would be better off thinking about our lives and investments as pale dots that are just specks on the canvas of eternity. Within this, if we keep doing our work well, the daily motions and volatility that we pass by must not worry us therefore.

• We must be antifragile, writes The Daily Stoic –
  

  The world is a cruel and random place. Our plans are dashed. Our systems are broken. People we love die. We lose what we have built and what we have so carefully saved and invested.

  So much of what happens is out of our control: Pandemics. The markets. Supply chains. World leaders. What our neighbors do. We are drafted to fight in wars, to bear huge tax or familial burdens. We are forced to admit defeat about the thing we wanted to win so badly.

  This hurts. There’s no denying that.

  A Stoic heals by focusing on what they can control: Their response. The repairing. The learning of the lessons. Preparing for the future. It is in this that we become, as Nassim Taleb has said in his wonderful book by the same name, antifragile. We become better because of what we went through, better than if we had resisted and never been broken in the first place.

• Many theories have been floated about a farm economy-fuelled revival. Those hopes are unrealistic –
  

  …it is worth remembering that the share of agriculture in the Indian economy has been falling over the years. It had stood at 54.1% of the economy back in 1960-61 and has come down to 13.4% in 2019-20. The question is: How can a sector, which is anywhere between one-seventh and one eight of the overall economy, revive the country’s economic fortunes?

• How bicycles transformed our world. Coronavirus has sparked a two-wheeled transport boom in many parts of the globe. But this isn’t the first time bicycles have been the hottest machines on the market.
   

• Why Microsoft wants Tiktok? It’s the data, stupid!
   

• Seth Godin writes on the two kinds of decisions worth focusing on –
  

  HARD ONES because you know that whatever you choose is possibly the wrong path. Hard decisions are hard because you have competing priorities. Hard decisions that happen often are probably a sign that the system you’re relying on isn’t stable, which means that the thing you did last time might not be the thing you want to do this time.

  EASY ONES because it probably means that you’ve got a habit going. And an unexamined habit can easily become a rut, a trap that leads to digging yourself deeper over time.

• Read this resignation letter by Ariana Pekary from MSNBC. It documents the complete breakdown of our information supply chain due to bad incentives. For media corporations, truth no longer matters. Only popularity does, in the form of ratings and clicks.
   

• I have been writing screenshot-sized posts and book reviews recently. You may find all of them here.
   

• Books: I am reading Scott Young’s Ultralearning, which offers powerful ideas on learning anything deeply and quickly, without teachers or budget-busting tuition costs. Also re-reading Jason Fried’s Rework that shows a better, faster, easier way to succeed in business, and Dale Carnegie’s How to Win Friends and Influence People, which is about changing how the world views and treats you by changing your own behaviour.
   

• Meditation: The meaning of life is just to be alive. It is so plain and so obvious and so simple. And yet, everybody rushes around in a great panic as if it were necessary to achieve something beyond themselves. ~ Alan Watts

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That’s about it from me for today.

If you liked this post, please share with others on WhatsApp, Twitter, LinkedIn, or just email them the link to this post.

If you are seeing this newsletter for the first time, you may subscribe here.

Stay safe.

Regards,
Vishal

Warren Buffett’s formula for becoming smarter in life and investing is simple – “Read. A lot.”

“I just sit in my office and read all day,” he is often quoted to have said this.

I have seen a lot of investors, including myself, take this advice seriously. Though I don’t read all day, reading books – and a lot of them – seems a great way to build my learning.

My bond with books has grown so stronger over the years that now, just holding a book in my hands makes me feels smarter. 🙂

I don’t have a name for this bias, but our mind plays this funny trick with us often. Just after we buy a book, or pay for an education, we “feel” we have learned what lies inside it.

That is probably the reason most people I meet in my investing workshops want to get my recommendation for the best investing books to buy. We all feel smarter just by owning these books.

But the question is – Can you really become a smarter investor just by reading all these books, blogs, and other resources out there?

Is there something else you need more to become educated and smarter as an investor?

[Read more…] about The Right Kind of Investing Education

Why is this post so small? I have long been thinking of writing short posts, for multiple reasons. One, brevity makes me think harder as I must cut through the clutter and write only what is essential. Two, with considerably reduced attention spans, I risk losing your attention with long posts. Three, it makes my writing task easier. And so, here I am. Starting today, I am experimenting with writing posts that can fit into a mobile screenshot. I got this idea from here.

So, here is my first post that you may download as a screenshot. This should also help you save all my “screenshot posts” without the need to print them (maybe, use them as mobile flash cards), and also share with your friends etc.

[Read more…] about Stock Prices: Information or Influence?