Prime Membership

On December 24, 2014, AirAsia Flight 8501 took off from Surabaya (Indonesia) at 5.30 am local time. With 155 passengers and 7 crew members onboard, the flight was headed to Singapore. About 43 minutes into its flight, the Airbus A320 disappeared from the radar. The worst had come to pass. Two days later, the rescue team discovered the plane wreckage in Java sea. All 162 people onboard perished in the crash.

The crash investigation revealed that it was a pilot error. The in-command Captain Iriyanto – a 53-year old former Indonesian Air Force pilot – performed a non-standard reset of the onboard flight control computers. Which means he did something which was not mentioned anywhere in any of the operating manuals.

Why would someone with an experience of more than 20,000 flight hours do such a thing?

Here is the November issue of StockTalk, a Prime members exclusive, that contains analysis of a leading Indian company in the financial services space.

It was sometime in 2005 when a close friend of mine gifted me Ben Graham’s The Intelligent Investor, knowing that I was working as a stock analyst and aspired to become a sensible investor (aspirations are always sensible, you see).

“Is this a good book?” I asked him.

“Seek for yourself,” he told me.

One of the best books on the art of learning I’ve read is, well, The Art of Learning by Josh Waitzkin.

Josh is a champion in two distinct sports – chess and martial arts. He is an eight-time US national chess champion, thirteen-time Tai Chi Chuan push hands national champion, and two-time Tai Chi Chuan push hands world champion.

In his book, Josh recounts his experiences and shares his insights and approaches on how you can learn and excel in your own life’s passion, using examples from his personal life. Through stories of martial arts wars and tense chess face-offs, Josh reveals the inner workings of his everyday methods, cultivating the most powerful techniques in any field, and mastering the psychology of peak performance.

One of my favourite chapters from Josh’s book is titled – Making Smaller Circles – which stresses on the fact that it’s rarely a mysterious technique that drives us to the top, but rather a profound mastery of what may well be a basic skillset.

Josh starts this chapter with the story of the protagonist in Robert Pirsig’s book Zen and the Art of Motorcycle Maintenance. This man is Phaedrus, a teacher, who in this particular scene is reaching out to his student who is all jammed up when given the assignment to write a five-hundred-word story about her town, Bozeman.

One peculiar but common way our brain works is that we often remember what’s easily available to us, and see what’s easily visible.

So, we conclude that the stock trader who is rich must know what he is doing. In the same way, an investor who uses leverage to increase his bets and in the process magnifies his returns is also considered a role model.

In business, a CEO who borrows a lot of money to make acquisitions and in process turns his business bigger in quick time, also seem to be doing the right things (at least when times are euphoric).

In effect, the general belief is that if the outcome is good, the process and decisions made to arrive at that outcome must have been sound. Right?

I read a column on Forbes sometime back that contained a narration from one Nancy Ortberg, who was once a nurse at a hospital emergency room in California.

In her story, Nancy described something astonishing that she witnessed in the emergency room.

I recently presented to Prime members on the ‘art’ of investing, where I showcased my illustrations to emphasize the idea of long term investing and the key attributes that investors need to work upon to behave well in their pursuit of wealth creation.

Here are just a few topics I covered in my presentation –

• Is investing as simple or as difficult as it is made out to be
• Most important attributes we need to become a successful investor
• How to do well as an investor despite market corrections and recessions
• Why value investing works
• Dangers of blind long term investing
• Is investing a game of luck or skill
• How to protect ourselves against our own ego
• Are there any iron clad laws in investing
• Why stock market is a great humiliator, and how to avoid getting humiliated most of the time
• Basics of my stock selection framework
• How to think like a business owner
• Idea of financial independence
• Most important advice for wealth creation

Here is the video of my presentation and the Q&A session that followed.

Consider these stock prices –

• NTPC – Rs 144 per share
• Bajaj Auto – Rs 3600 per share

Do these prices tell you something if you were to decide which of these stocks to buy?