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.
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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.
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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.
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From the Archives
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Books I Read (or Re-Read) Recently
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. 🙂
I have been reading the Stable Investor Mid Monthly for sometime. Thanks for giving us an excellent view of the world through investor glasses. I suggest you to publish this in a PDF format with brief extracts of the links. It will help in spreading the good work you are doing here.
If you need any help in this, let me know.
Will try to implement your suggestion.
Excellent points on “black swan” event and on being a thoughtful contrarian. If an investor has done his homework wisely then these events provide good opportunities to pick stocks of fundamentally sound companies. Stumbled on this site couple of months ago (a regular readers since then) and must admit your site is one of the few quality blogs around. Please keep up the “stable” work:)
Thanks Ravichand 🙂 And I am glad you find my work useful.