Investing Behaviour

A Fundoo Professor Called Sanjay Bakshi

In my preparation for the upcoming interview of Prof. Sanjay Bakshi (this Sunday), I was reading through a few of his past articles and lectures, when a thought struck my mind.

A lot of Safal Niveshak tribesmen still do not know much about Prof. Bakshi and his vast investment insights, except for his interview that I carried in 2012.

As such, I have created a special page on the website dedicated to Prof (after due permission from him), who is one of the best minds in India in the fields of Value Investing and Behavioral Finance.

This page is a collection of my best picks from among his vast writings that are available on his blog as well.

Start by reading about Prof. Bakshi’s life story. Then read through some of his best posts (as per me) I have listed on the page.

I’m sure you will benefit a lot from them in your efforts of becoming a sensible, long-term investor.

Reading Prof. Bakshi has been an important step in my work-in-progress of becoming what Charlie Munger calls a ‘learning machine’. I’m sure it won’t be any different for you.

P.S. This page has been created after due permission from Prof. Bakshi.

Warren Buffett’s Age-Old Secret on How to Get Rich

Have you ever wondered why we are willing to hold on to our real estate investments for years even as we trade in and out of stocks?

So, we may buy and/or sell just 1-2 properties in our lifetimes, but the count of stocks we move in and move out of runs into 100s.

Of course the size of the investment plus ability to liquidate (buy and sell) is one factor. But the most important factor that is at work here is – Stocks provide you minute-to-minute valuations for your holdings, whereas you don’t see quotations for your real estate holdings so frequently.

When it comes to stocks, Ben Graham’s mentally-ill fellow Mr. Market comes to you daily and quotes a random price that causes you to behave irrationally.

“Don’t just sit there, do something!” he shouts at you daily, and you gladly take his advice and buy stocks when he quotes a high price and sell when he quotes a lower price.

Do You Own the Stock or Does The Stock Own You?

That successful investing is more a matter of a strong heart than a strong mind is something I have repeated innumerable times on Safal Niveshak.

Of course, succeeding as an investor requires a strong mind – the ability to study and identify the good and great businesses while avoiding the gruesome.

But what you need is a stronger heart so as to keep your emotions at bay and behaviour in check, especially when stocks plunge – or soar.

I met a friend yesterday who has multiplied his money 8x in Symphony Ltd. in less than four years. Prior to that, I met a relative few weeks back who has grown his money in Bajaj Finance 6x in less than 5 years.

Surprisingly, instead of being happy about their stupendous gains in these stocks, these people were suffering from a peculiar fear.

In fact, I must not term their fear as surprising or peculiar because this is the exact emotion I have gone through a few times in my own investing life.

Like when I was sitting on a 5x gain in Page Industries in January 2011 and 7x in KPIT Technologies in October 2013.

How to Lose Big Money in 2014

“All men’s miseries derive from not being able to sit in a quiet room alone.” ~ Blaise Pascal

One of the many investing mistakes I made during the early part of my investing career was to be rash with cash.

Any extra cash I ever had was immediately invested in the stock market. Cash in bank was considered a wasted opportunity and every chance to “let-me-buy-stocks-now” was grabbed upon.

In the pre-2008 period, I invested a lot of the cash while keeping my eye on stock prices that were rising incessantly.

I see a lot of investors making a similar mistake now.

After getting frustrated by the way stock prices have performed over the past few years, any stock market rise is first disbelieved and then when prices rise further, people jump in so as to not miss out on any further rise.

2014 – The Year of Inversion

Happy New Year to all reading this blog!

Here is a quick thought on the year ahead.

At Safal Niveshak, 2014 will be a year of inversion of the traditional dictum – “What doesn’t kill you, makes you stronger”.

Instead, this year, the motto will be – “What doesn’t make you stronger will kill you”.

I dedicate this year to Charlie Munger and his thought – “All I want to know is where I’m going to die so I’ll never go there.”

This implies that in 2014, we will discuss ideas –

Less of how to earn great returns, and more on how to avoid permanent capital loss;
Less on how to pick the great stocks, and more on how to avoid the dangerous ones;
Less on things to do for investing success, and more on things to avoid for investing failure.

My 2014 Wish for You – Be Miserable

“Why are you in such a sad mood, Ravi?” I asked my friend as he visited us with his family this Christmas.

“You should see my stock portfolio Vishal!”

“Why, what happened?”

“Oh, it’s up just 30% this year!”

“30%! And you are still sad?”

“Yeah, because this could have been more than 30% had I not missed a few amazing stocks like…”

“Like?”

“Like Mindtree that is up 120% in the last one year, Cera Sanitaryware that is up 90%, Eicher that is up 80%, Aurobindo Pharma that is up 105%…and then there are the ones like Relaxo and Ashiana Housing, that are up 100% since April.

The Devil Lies Within

A few random searches on Google brought me to these…

I posted the first image on Safal Niveshak’s Facebook and Twitter pages and got a flurry of replies…

I expected people to bash the forecaster in their responses, and so they did!

One Small Step Can Change Your Life

We live and we learn to take
One step at a time
There’s no need to rush
It’s like learning to fly
Or falling in love
It’s gonna happen when it’s
Supposed to happen and we
Find the reasons why
One step at a time

When you can’t wait any longer
But there’s no end in sight
when you need to find the strength
It’s your faith that makes you stronger
The only way you get there
Is one step at a time.

~ One Step at a Time (Jordin Sparks)

Every path to success has been littered with doubt, fear, and uncertainty, as well as persistence, calculated risks and repeated action.

The difference between someone who fails and someone who succeeds is the courage to act, repeatedly.

7 Life-Saving Lessons on Investing from a Happy Marriage

Happy marriage Disclaimer: Some ideas discussed in this post may not be applicable to the author. 🙂

As I complete 10 years of my marriage, I can say that a marriage, no matter how good, can be made better.

My experience also tells me that a good marriage has some basic qualities. One, for instance, is that both partners are fully devoted to the relationship. They are willing to invest time and energy to make it grow and flourish.

They also communicate effectively with each other and know how to resolve their differences.

And they learn to be flexible with each other’s behaviour and choices.

You see, there is no right way to be married. Many marriages just work out great. However, there is a wrong way to be married. And it is when you don’t invest in the relationship.

Anyways, a happy marriage can serve a very good example for an investor in stock markets.

5 Things to Avoid in the Current Stock Market

When I thought of writing this post, the BSE-Sensex had just touched its all-time high level of nearly 21,300.

But as I was giving the final touches to this post, newspaper headlines read “Sensex posts worst week in three months”.

As I read now, the bulls are predicting that the worst is behind us, while the bears are advising taking money off the table.

Before my mind goes numb seeing and hearing the noise all around, let me share with you 5 things I think you can safely avoid in the current market.

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