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I was on ET Now yesterday to share my thoughts on investing in 2017 and 2018. While I managed to duck their questions on specific stocks, you can see the nervousness on my face even when I talk about a few old names. š
Here is the video of the chat (click here if you are not able to watch the video below) –
Here are some notes from my talk that I prepared just to make the task a bit easier for you –
[Read more…] about My Thoughts on Investing in 2017, 2018, and Beyond (Video)
Tom Watson [the founder of IBM] said ā āIām no genius. Iām smart in spots and I stay around those spots.ā
Charlie Munger and Warren Buffett define these spots where you are smart as your ‘circle of competence’ – the area beyond which you must not venture out if you were to make effective, profitable investment decisions.
I have talked about the circle of competence numerous times in my posts and presentations. But if you still have doubts on this concept, its relevance, the dangers of not adhering to it, when do you know something is within your circle, and how to grow that circle, here is an illustration that, to the best of my knowledge, may help you with the answers.
P.S. You may read a detailed explanation on ‘circle of competence’ here.
Lifeās passing by too fast, or so it seems. I complete 39 years in my present state of existence today. Thatās 14,245 days or around 57% of the average life expectancy of an Indian male.
While spiritualists would want me to believe that I have existed from anadi (before the beginning of cosmos), and will exist till ananta (infinity), I see thirty-nine years as a good enough time to find some meaning in oneās life. At least, my rapidly greying hair and receding hairline help me realize that.
Now, while it amazes me that Iāve been around that long ā I feel like Iāve barely begun.
Iām not usually one to make a big deal about my birthday, but as always, it has given me an opportunity to reflect.
So, like I have done over the past three years ā see here, here, and here ā let me share one of the key life lessons that have guided my life over the years, and two small but wonderful books that have brought this lesson to fore every time I have read them, including when I read them this year.
If you don’t know who Charlie Munger is, then here’s a quick introduction. He’s a billionaire and he’s 93 years old. He’s not the oldest and he is not the wealthiest but when it comes to being the “oldest billionaire”, he doesn’t have any competition.
In other words, he has the two most coveted things in this world – wealth and a long life.
His advice to us – minimize stupidity. Remarkably simple, isn’t it?
The most effective way to follow Charlie’s advice is to learn from othersā mistakes. Thatās where books come into the picture. Theyāre the best source of vicarious knowledge.
When humans first discovered that they could persist their words and other information in physical form, it was revolutionary.Ā AccordingĀ to some historians, between the years 3500 BC and 3000 BC, ancient Sumerians from Mesopotamia civilization invented the first system for storing and processing information outside their brains.
In the timescale of millions of years of human evolution, this invention is pretty recent one. Irrespective of how trivial the ability to read/write sounds, it was nothing less than a disrupting technology when it came out. Probably thousands of talented Sumerians, who were employed for memorizing information, lost their jobs.
You don’t have to teach an infant how to swallow liquid or give walking lessons to a toddler. These skills are built into the human genome. But reading isn’t part of our DNA.
I recently had the opportunity to get interviewed by Paisa Vaisa, an audio show/podcast based on topics around money, investing, and personal finance.
In the interview, I discuss my background, what got me to the stock market, thoughts on value investing, buying and selling stocks, core rules of personal finance, and my way of living a prosperous life without the paycheque.
I thought you might be interested in hearing me out (my kids did, for the first time). š
Here are the links to the podcast (around 15 minutes each) –
Thanks for listening!
Yesterday when I logged into my Facebook account, it showed a picture I had posted six years back. In the frame, I was having lunch with an old school friend.
It brought a smile on my face.
Interestingly, I had completely forgotten about the lunch. I just couldnāt remember being present when that picture was taken. My brain had conveniently erased that incident from memory.
I am sure it happens to others too. Also, Facebook knows it, so they introduced this feature. Bringing back those lost memories creates a pleasant experience which isnāt much different from the one when you find money in your old pant pockets.
How would it be if we never forgot anything? Why does our brain choose to remember something and spaces out on others? Is there an evolutionary reason behind this behavioural quirk? Letās explore these questions today.
[Read more…] about Latticework of Mental Models: Manufactured Memories
If you aren’t in Chennai or Kolkata, you may skip reading this post.
If you are still reading, this is to announce our upcoming Value Investing Workshop and Camp Millionaire (money workshop for kids) in Chennai and Kolkata.
For the uninitiated, Camp Millionaire is our game and activity-based financial education program for children of age group 8 to 14 years. Kids will learn how to make, manage, multiply and donate their money wisely first hand in this day-long program and they will have fun doing it.
The main objective of this program is to provide a stimulating, fun-filled, learning environment where kids can feel safe exploring and learning the various principles, ideas, and skills needed to create a financially successful and responsible life.
The Chennai session of Camp Millionaire is on Saturday, 18th November. The Kolkata session is on Saturday, 2nd December.
Click here to know more about and register for any of these Camp Millionaire sessions.
As for our Value Investing Workshop, it’s a one-day session where I teach the most important principles and practices of value investing and move through an entire structure and process of picking up high-quality stocks using these principles.
Apart from teaching the process of picking the right kind of businesses using the rules of value investing, the Workshop also covers the core ideas in Behavioural Finance ā how cognitive biases hurt our investment returns and steps an investor must take to minimize the mistakes on this account.
Overall, I have sifted through a mountain of amazing books, documents, lectures, plus my experiences in investing to bring to the table the most important practical ideas in becoming a sensible, successful, long-term investor.
The Chennai session of Value Investing Workshop is on Sunday, 19th November. The Kolkata session is on Sunday, 3rd December.
Click here to know more about and register for any of these Value Investing workshops.
Email me at vishal[at]safalniveshak[dot]com if you have any questions around these workshops.
Note: This interview was originally published in the April 2017 issue of our premium newsletter ā Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.
I sincerely believe in what Charlie Munger often says about envy, that it is a really stupid sin because it’s the only one you could never possibly have any fun at. I am lucky to have stayed away from this sin as far as investing and other aspects of life are concerned.
But if there is one, and just one, person who arouses this sin in me every time I read him is…Morgan Housel. And it’s for the simplicity of his thoughts that he puts across through his powerful writings. I have tried to emulate Morgan several times in my writing endeavor, but he raises the bar each time he publishes something new, more simple yet more powerful.
Morgan’s posts at The Collaborative Fund, where he is currently a partner, have been a great source of learning for me. I have also read him for years at his earlier stints at The Motley Fool and The Wall Street Journal.
Morgan is a two-time winner of the Best in Business award from the Society of American Business Editors and Writers and a two-time finalist for the Gerald Loeb Award for Distinguished Business and Financial Journalism. He was selected by the Columbia Journalism Review for the Best Business Writing 2012 anthology. In 2013, he was a finalist for the Scripps Howard Award.
In this interview, Morgan shared with me his simple investing thought process, what gets most people into trouble in investing, and the people who have inspired him the most in his journey.
Let’s get started right here.
We are in a bull market, without doubt.
The index made up of subscribers to my investment newsletter The Safal Niveshak Post (let’s call it ‘SN Index’) has outperformed the BSE-Sensex and has crossed the critical resistance level of 36,000. The CAGR of this index over the past six years since it was launched has been 475%! This is given that it started with a base value of 1 (one) subscriber, which was me (see how good looking CAGRs are created!).
Anyways, given the buoyancy in the broader markets over the past few months, handsome gains have also been seen in the SN Index in recent times. Just over the past twelve months, the index has moved from 25,000 to 36,000 compared to the BSE-Sensex that has managed a rise from 28,000 to 32,000.
Anyways, some old timers tell me that the SN Index is heading rapidly towards the 50,000 mark (itās their love for me, I know) while some have also quoted a figure of 100,000 to be reached by the end of 2018 (now thatās irrational exuberance, you see).
Warren Buffett is undoubtedly a famous man. And he is not just famous for his riches, but also for his rejection of the trappings of wealth. As we all know, he lives in the same house he had bought in 1958 for US$ 31,500, and his annual salary of US$ 100,000 is far less than what most CEOs (including many in India) earn.
But thereās one aspect of Buffett that many people donāt know much about. And that is about how he has brought up his kids when it comes to the subject of money.
Over the years, several interviews with his kids have revealed how Buffettās message to them on money was loud and clear as they were growing up. And it was that money wasnāt what mattered in life. Instead, it was finding something you loved to do and then doing it.
In his book, āLife Is What You Make Of It,ā Peter Buffett, a musician and the youngest son of senior Buffett writes about the values he absorbed growing up as the son of Warren Buffett and his late mother, Susan Buffett, and the path he has pursued to identify and pursue his passions in life.
He also writes about things like requiring children to do chores and letting them solve problems on their own instead of bailing them out. But he warns that children will pick up on their parents’ true beliefs about money ā no matter what a parent says about money.