Stable Investor Mid-Monthly November 2016

This is the fifth edition of Stable Investor’s Mid Monthly. You can find my thoughts about big-event of currency demonetization in last section (A Random Thought) of this post.

Great Stuff Elsewhere

In 90s, people were so busy trying to predict the next 1987-like crash that they missed the internet bubble. In 2000s, they were so busy trying to predict the next internet bubble that they missed the financial crisis. Now people are so busy trying to predict the next financial crisis that they’re almost certainly missing whatever will cause the next crash. Sounds right? Here is how investors should deal with real surprises.

Here is how Warren Buffett writes his legendary letter to shareholders.

Being content with your current standard of living is probably one of the best ways for people to save more money, which can be supercharged when you start making more as your career progresses. If you are finding it tough, then here is how you can change your financial behaviour.

There is a reason why rich are rich and not-so-rich are not-so-rich. Infact, there are atleast 53 good reasons. This is a really good read. Don’t miss it.

Don’t Half-Work + two more time-management tips that actually work! Also read why you should focus on setting a schedule and not just a deadline.

Personal finance is like medical treatments. Markets are like biology. Financial planning is like designing a bridge. Think this is bu**Sh**? No it isn’t. Here is how to make more sense of investing.

 

In Last 30 days on Stable Investor

Don’t want to be a Stable Investor? 🙂 Here is how you can become a Bad News Investor.

You should get your immediate family members’ health and life insured. But if you really want to protect your wealth, also ask those people to get insured whom you will not be able to say NO in times of need.

You have nobody else but yourself to blame if you mix insurance with investments.

Understand the 3 T’s – Timeless or Timely or Timing?

Detailed analysis of the actual state of Indian stock markets – at the end of October 2016 – can be found here.

 

From the Archives

Remember one thing – You will not get a loan for your Retirement!

Shocked by results of US Elections, ban on 86% of Indian currency notes? These are events that you cannot control. But there is something that you can. Here is how to think about investing and what you can control.

We want to do it on a regular basis. But should we compare our returns with others?

 

Books I Read (or Re-Read) Recently

1. The Decision Book
2. The 4-Hour Workweek
3. The Unusual Billionaires
4. Seveneves (Sci-Fi)

 

A Random Thought

Interesting things have been happening lately. Biggest being the stunning move by our PM to demonetize Rs 500 and Rs 1000 currency notes.

And it does seem to be a masterstroke.

To be honest, I am extremely happy with this move.

After honestly paying taxes for years and feeling helpless in front of those who flourished without paying taxes on their blackest of wealth(s), there is now some hope to latch on to. 🙂

The actual impact of this move will only become clear after few months. But some sectors like real estate, luxury goods, etc. do seem to be in (big) trouble. For obvious reasons…

Just do a google search of ‘impact of demonetization’ and you will find plenty of analysis to consume for days! I don’t have much to add to what others are saying, atleast for time being.

But markets in general are falling at broader levels. And the falls in individual stocks have been steeper. So shouldn’t we be happy like we always are after fall in share prices?

The answer is that we should be – as we are long term investors who welcome stock market crashes and bear markets. But then, we also need to be cautious. Because this event (i.e. demonetization) is not a normal event. You can call it a black swan event. And we as investors are still not sure about the exact impact of this event on various sectors.

But just because some stocks have fallen a lot doesn’t mean that those stocks are worth buying or can’t fall further.

If you are thinking that 'how low can the stock of this good company go?'

then the answer is 'even lower' ;p

— StableInvestor.com (@StableInvestor) November 15, 2016

I repeat that this is a major economic event and its effect can be widespread and long lasting.

Being contrarian sounds intelligent but can lead to huge losses if you get it wrong. In addition, you get to hear a lot as you went against that crowd. 🙂

So invest with caution.

Thing might get worse before getting better. If you have surplus money to invest, don’t invest all of it in one go. Slowly build up positions in businesses you like, run and headed by trustworthy people, are financially strong and more importantly, you know will survive this event and wont die.

If you are not sure, then don’t worry. In investing, you will never have all the answers. And if you think you really are clueless, then stick with mutual funds. This might not be the right time to act smart with direct stocks if you don’t know how to ‘actually’ analyse businesses. 🙂