Safal Niveshak

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Who Else Wants to Beat The Market?

When you invest your money with a mutual fund, you don’t normally think in terms of losing money.

All you want is to make money. And this must be your fund manager’s goal as well, or so you may think.

But if you read most mutual fund advertisements and what fund managers boast about on business channels and in newspaper interviews, their ultimate goal is to ‘beat the market’.

In fact, the entire mutual fund industry seems to have conspired against the small investor by pitching him nothing but this – “Give me your money, and I’ll help you beat the market!”
[Read more…] about Who Else Wants to Beat The Market?

Only One Thing Matters When Investing in a Company

That you must identify good businesses and invest in them for the long term to become a successful investor is what we discussed yesterday.

The most obvious question you might have now is – “How do I know which businesses are good?”

Well, there are several rules that successful investors like Warren Buffett follow to separate good businesses from the bad ones.

But the one rule that stands tall amongst them is… [Read more…] about Only One Thing Matters When Investing in a Company

Know Where to ‘Bang’ To Become a Successful Investor

A plumber was called to fix a pipe. After completing the task, he turned to the house-owner and said, “That’ll be a hundred rupees.”

“What?” the owner replied, “A hundred rupees for just banging on the pipe? That’s too much!”

“Banging on the pipe is only five rupees, sir. Knowing where to bang – that’s ninety-five.”

Well, in stock market investing, knowing where to ‘bang’ – finding the right stocks to invest – is the secret to your fortune.
[Read more…] about Know Where to ‘Bang’ To Become a Successful Investor

Safal Niveshak Weekly Wrap

The times are highly uncertain if you are a stock market investor. While global and Indian stock markets are showing occasional bouts of euphoria, we at Safal Niveshak believe these are going to be short-lived.

The western economies are not doing well. And the Indian economy isn’t showing positive signs as well. Inflation remains high and rising interest rates are choking the growth of businesses.

Amidst all this, there is a flurry of predictions from stock market experts – on topics ranging from depression in the west, inflation in India, movement of stock markets next week, and performance of derivatives market this coming Friday.
[Read more…] about Safal Niveshak Weekly Wrap

‘Sunk cost’ madness on a massive scale

We learnt yesterday how the sunk cost fallacy leads investors to throw good money after bad.

Well, here’s what I read in a leading business daily that talks about the impending financial crisis in the western world:

“An apocalyptic Lehman-style moment seems unlikely right now, because US legislators will likely come to some sort of a deal that will allow the federal government to resume borrowing, while Europe has invested too much in the integration project to let things collapse in the first episode of stress.”

Note the words – “invested too much…to let things collapse”.

Now, this is a case of ‘sunk cost fallacy’ on a massive scale.

Pity the poor taxpayer!

What’s Your 12-month Target for the Sensex?

Have you ever wondered why the anchors and the stock market experts on business channels make so many predictions day in and day out? And why they are so happy to make these predictions?

Or what gives you a natural high while predicting the future of the stock markets, or stocks you hold or are about to buy?

Neuroscientists lay the blame on ‘dopamine’ – a chemical in our brains that helps us figure out how to take actions that will result in rewards at the right time.

It’s the release of dopamine in our brains that gives us that high to make the next prediction, and the next one.

It gives us the pleasure of expecting our predictions to turn out true in the future. Like the pleasure you’d derive from predicting the Sensex over the next 12 months, and also expecting your call to turn out true!
[Read more…] about What’s Your 12-month Target for the Sensex?

Are You a Frog in Boiling Water?

One man who has had a deep impact on my thinking as an investor is Charlie Munger, Warren Buffett’s partner at Berkshire Hathaway.

I’ve read a lot about Charlie over the years. Among his writings and speeches that have impressed me the most is the speech that he gave at the Harvard Law School in 1995.

The speech was titled ‘The Psychology of Human Misjudgment’, and it contained his views on human behavior and how we misjudge events to make poor decisions in our daily and investing lives.
[Read more…] about Are You a Frog in Boiling Water?

“I can’t make money from stocks. I am not an expert.”

“You know Vishal. I have been investing in the stock markets for the past one year. And one thing I have realised is that if you are not an expert, you can’t make money from stocks.

“You have to be ‘in’ the market, and have to be very smart to become a successful investor. What’s your take on this?”

“Are you finished, Ravi?” I asked my friend who had till now given me a long sermon on how he lost a lot of money in stocks in the past 12 months, and why he thought the markets are only for people who are financially very savvy – Ravi calls them ‘smart investors’ – like analysts, fund manager, or brokers.

What Ravi was complaining about was not something new to my ears. I had heard such reasoning earlier as well, especially from people who had lost a bundle in the stock markets.
[Read more…] about “I can’t make money from stocks. I am not an expert.”

Safal Niveshak Weekly Wrap

The first working week of Safal Niveshak comes to an end. Thank you all for your support. Hope you liked what you saw here during the week.

If yes, I’ll ensure that you continue to like what I write here in the future. And if not, I promise to make it a better experience for you going forward.

Anyways, here’s a wrap up of what happened this week on Safal Niveshak.
[Read more…] about Safal Niveshak Weekly Wrap