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Mid-Monthly February 2017

mid monthly february 2017

This is the Eighth edition of Stable Investor’s Mid Monthly.

Great Stuff Elsewhere

Who is the most successful investor? Chances are you will take Buffett’s name. But who is the greatest stock picker of all time? An interesting analysis proposes that it is not Warren Buffett.

There are a million ways to get rich. But there’s only one way to stay rich. Getting Rich Vs. Staying Rich are two very different things.

Amazon is an admirable company. Not because its stock has done really well in recent past. But because other behemoths like Google and Apple cant innovate like Amazon.

The tail (stock portfolio) should never wag the dog (your life). The amount of mental capital you need to manage a portfolio of stocks decides how you sleep at night. Another interesting article that you can read is on Returns per unit of Stress.

We all want to be successful. But is it easy? No. Here are 35 Things no one told you about being successful.

I have been a long-time fan of Jason Zweig’s writings. Here is one of his good interviews I read recently. But if you don’t know who he is and how clear his thoughts are about investing, then I recommend you go through his principles first.

Everyone asks you to save more. If you don’t need further convincing, then good for you. But if you do, this article – The Real Reason Big Savers Retire Early will do just that. To summarize, saving more not only means that there is more in the account to grow. But it also reduces your retirement savings need. The reason is that for any given level of income, the more you save, the less you’re spending to live on. And if you don’t spend as much to maintain your lifestyle, you don’t need as much saved up to replace it!

A good article on the Goals Vs. Systems debate. Few months back, I had shared an article on similar topic. You can read it again here.

A solid list of wisdom-soaked quotes by Charlie Munger on Getting Rich, Wisdom, Focus and Fake Knowledge.

Your survival in an increasingly unpredictable world depends on your ability to embrace uncertainty. And it is more important than you think.

I need to improve my morning routine. And they say this routine can save you 20+ hours a week.

In Last 30 days on Stable Investor

You have life goals that need money? Ofcourse you do. Here is a solid method of goal based financial planning that can help you achieve most of your goals.

You should seriously think about getting FIREd!! Wait… 🙂 FIRE stands for Financial Independence and Retiring Early.

You will never miss having a life insurance policy. But your family might miss it dearly. A tragic story of one under-insured person’s family.

And the usual, State of Indian Stock markets at the end of January 2017.

From the Archives

You are only allowed to make 20 investments in your life. Which stocks will you pick?

A detailed analysis (3, 5, 7 and 10-year rolling) of how future returns correlate to broader market PE, when you invest in index. (Note – I will be publishing the updated analysis soon).

The severity of 2009’s crash might never be repeated again. In this old post done in 2013, I analyzed several well-known stocks where enormous wealth was created.

There are several hundred articles on Stable Investor. So if you want to deep dive, then you might find the archives section useful. Or if you are new here, there here is where you should start.

Books I Read (or Re-Read) Recently

I didn’t read anything significant in last few weeks. Was on a vacation.

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Stable Investor Mid-Monthly January 2017

mid monthly january 2017

This is the seventh edition of Stable Investor’s Mid Monthly.

Great Stuff Elsewhere

One way to think about work-life balance issues is with a concept known as The Four Burners Theory. [Must Read]

If money doesn’t make you happy, then you probably aren’t spending it correctly. Here is how to buy happiness with money. Surprised? Infact, there is an interesting book about the same theme titled Happy Money which I think everyone should read.

Every asset is an investment in some people’s hands and a speculation in others. So it isn’t what you buy, but rather why you buy, that determines whether you are investing or speculating. Jason Zweig asks you to be honest (for you own monetary benefit) and identify whether you are an investor or a speculator.

Your phone uses you (and no… its not the other way round).

Peak demand for oil might happen much earlier than 2040. An interesting article on how focus has shifted from ‘Peak Oil’ to ‘Peak Oil Demand’ in just a few years.

You can derive investing lesson from a lot of non-financial places. Here is an interesting list of 10 Non-Investing Quotes with great Investing Lessons.

Should you be scared of stock markets sometimes? I think one should be (detailed here). But here is another take on when to be scared of the stock markets.

Leave the bulls and bears. Here is how to find which animal is the best investor.

What do the World’s Top Entrepreneurs Read? And here is what some elite venture investors read every morning. But don’t worry if you are neither an entrepreneur nor a venture capitalist. Here is a useful reading list of investing books for beginners. Good place to start if you still haven’t.

And the much awaited documentary ‘Becoming Warren Buffett’ debuts on 30th January.

 

In Last 30 days on Stable Investor

Detailed analysis of Annual Nifty returns in last 20 years.

Don’t just save taxes. Being young, you have a long road of wealth creation n front of you. And since it’s a season of tax saving, here is how you can use Section 80C to create wealth (and ofcourse save taxes).

Are you a Monk or a Minister? Or a Monkster? Find it out here. I promise it will clear a lot of your answered questions. 😉

No matter how much you want or need the ‘high’ returns from markets, you wont get it. You only get Investment Returns you deserve.

 

From the Archives

Aim of investing is not to beat the markets. But to achieve what you want.

We all work for money. But make sure that you are not the only one. Make your money too work hard for you.

Roti, Kapda, Makaan – and add a 4th one – Equity.

Finally, an open letter to my 18-year old self.

 

Books I Read (or Re-Read) Recently

  1. The Hard Things About Hard Things
  2. You Too Can Be Rich
  3. Intelligent Investor (it’s a January ritual for me)

Stable Investor Mid-Monthly December 2016

This is the sixth edition of Stable Investor’s Mid Monthly.

monthly newsletter december 2016

Great Stuff Elsewhere

The richest man ever rarely spoke and deliberately made himself inaccessible. Why? Because he wanted to listen to himself. He wanted to think – about things that mattered. Einstein too had similar thoughts when he said – “I take time to go for long walks on the beach so that I can listen to what is going on inside my head.” So we should respect the fact that what actually produces good work can at first look lazy (and often waste of time from other’s perspective).

Are you worried about your stock portfolio’s performance? You are not alone and ofcourse the performance of your investments matter. But most people fail to realize that putting their personal finances in order is more important than worrying about their stock portfolio. These 20 Rules of Personal Finance are a good starting point for you to begin thinking about your personal finances.

Best Investment Writing of 2016 – worth bookmarking and reading in your free time.

When we plan our investments or personal finances, we try to be as accurate as possible while calculating monthly investment requirements, correct insurance amount, target corpus for financial goals and what now. But instead of worrying about getting the 2nd or even 3rd decimal point right, it is far more important that your directional decisions are correct. There is no point worrying too much about whether 65% or 70% of your portfolio should be in stocks. Both are almost fine. What matters is getting the decisions broadly correct. Like being in equity (and not debt) for goals that are decades away.

Bill Gates. You know him. Right? He tells about the best books he read in 2016. Here is another list of good books to read.

*At times, I feel there is not enough time to read as much as I want. Then I realize that I myself am to blame for not reading enough. Everybody has 24 hours. 😉

We remember Genghis Khan as a negative historical figure. Blood thirsty, terrorizing, plunderer. But this perceived barbarian was one of the greatest military minds ever. And that was because he was more open to learning than any other conqueror has ever been.

Insanely Productive + Happy + Balanced –> Isn’t this what we want to achieve with ourselves. Its not easy though. But remember that achieving these three doesn’t mean doing more work (in limited time) and being ‘ON’ 24×7. Its about getting the big things right and not vice versa (getting small things right and big things wrong). Its also about being ‘unreachable’ at times. Here are 33 ways to remember that we are human being and not human doing.

In Last 30 days on Stable Investor

I could not write much in last 30 days. Was on a mini-vacation with family. Here is the one post I wrote in celebration of completing 5 years of Stable Investor.

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

From the Archives

Many people believe that you cannot make money in large cap stocks. I think they are idiots. 😉

Should you invest in Real Estate or Mutual funds? Though there is no one correct answer, this detailed analysis might help you think rationally.

When it comes to successful investing, being sensible without getting over ambitious is enough.

Will RBI’s rate cuts or US Fed’s rate hikes impact you? Should you even be bothered about these events beyond a point? The answer.

Books I Read (or Re-Read) Recently

  1. God’s Debris
  2. The Everything Store: Jeff Bezos and the Age of Amazon
  3. Good to Great

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.

stable-investor-mid-monthly-november-2016-1

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.

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. 🙂

Stable Investor Mid-Monthly September 2016

monthly newsletter september 2016

This is the fourth edition of Stable Investor’s Mid Monthly.

Great Stuff Elsewhere

Leave everything and read this article by James Clear first (yes…its that good). You already know that achieving your goals is tough. This article has an alternative approach to help you achieve what you really want.

Another solid article to help you do exactly what the title says – How to scale yourself and get more done than you thought possible?

Note – If you don’t have time, do bookmark the above 2 articles for later reading. You will thank me when you have read and understood the importance of both 🙂

Stressed Out? Don’t worry. You will be Ok.

Bill Gates talks about his 25 Year old friendship with Warren Buffett.

A tale of 2 Annual Letters – A nice comparison of letters written by Jeff Bezos and Warren Buffett

Do you need a checklist for investing? Here is a 9-point checklist for value investors.

 

In Last 30 days on Stable Investor

As Indian markets continue their upward journey, the valuations seem to be getting out of hand. The reason is absence of earnings growth, which many expect is just round the corner. Surprisingly, just a day after I wrote Are Indian Stock Markets Overvalued, the markets corrected a little more than what people were comfortable with. 😉

‘The goal isn’t to become the richest family in town. Rather, the goal is to have enough to lead the life we want. If this makes sense to you then you will enjoy reading this interview of a person, who has written 1008+ personal finance articles for Wall Street Journal.

PPF is one of the most popular tax saving option for Indians. So, I decided to do an analysis of historical PPF rate changes and how things might change in future. If you invest in PPF, you might want to read this one.

Making your money work for you is easier said than done. But you have to start somewhere if you want to achieve financial freedom someday.

Wealthy.in thought that I deserved to be interviewed. Here is the transcript of the interview – if you are interested.

 

From the Archives

5 / 25 – How this simple rule can sort your life out!

Tired of spending money on repeated purchases (of certain items like TV, etc.)? Here is a Cheat sheet for automatically saving for Future Repeat Purchases.

To pay off your loans or to invest is the question.

Do you invest in mutual funds and think that principles of value investing are only applicable to stocks and not mutual funds? Here is how you can become a Value Investor even when investing in mutual funds.

If you have to choose just one investment book to read in your entire life, then it has to be Intelligent Investor. Here are 37 remarkable quotes from this book.

 

Books I Read (or Re-Read) Recently

  1. Zero To One
  2. My Gita
  3. Thinking Fast & Slow 

 

A Random Thought

At the start of 2016, a good friend of mine set himself a target – to read a new book every week of 2016. So that meant that by the end of this year, he would have read 52 books!

Initially, I also wanted to participate in that challenge. After all, I love reading and have always had trouble finding time to read. So this challenge was a good excuse to read a lot of books.

But I decided against following such a strict regime (even though somewhere inside me, I wanted to do it).

I love reading. And its not just about becoming wiser or more knowledgeable. Its also about – just reading. It gives me immense pleasure to sit down, relax and just read. I don’t rush while reading. I am no speed-reader. By putting pressure on myself to read 52 books a year, I would have converted reading into a chore – which would have been really sad.

So ofcourse, I have read much fewer books this year than I would have read had I stuck to one-book-a-week plan. But I would rather read few books slowly than rush through many books. Its about the choice. And this is what I prefer.

But having said that, some kind of compulsion is necessary to build a habit. Instead of 1 book a week, maybe doing 25 pages a day is more workable.

I don’t know what routine suits me. Sometimes I don’t read for weeks. At other times, I can devour 3-4 books in a week. May be, I should just read as and when I can. I am sure I will still be alive and doing just fine. 🙂

Note – You can read the third edition of Mid Monthly here.

Stable Investor Mid-Monthly August 2016

Stable Investor Mid-Monthly August 2016

This is the third edition of Stable Investor’s Mid Monthly. Little late in posting this as was on a road trip. Couldn’t stop myself from utilizing the extended Independence Day weekend. 🙂

Great Stuff Elsewhere

A logical compilation of investing rules – to help you maximize money per hour of research done.

I have always been intrigued by the flexibility that Chit Funds offer – being able to be a saving instrument and double as a lending instrument. So inspite of the suspicion and regular bad press these instruments get, it makes sense to know how these actually work. Here is a good article to start with.

I face trouble being productive. For example – at times I get overwhelmed with the number and variety of tasks I have. Ofcourse there is no one formula to become highly productive. But this little productivity tip of a Zen teacher is something that actually seems to be working for me. You should give it a try too.

Urgent personal finance advice by Seth Godin.

If you don’t follow through on what you set out to do, then you are suffering from Akrasia – a state of acting against your better judgment. Here is some help / cure for this extremely common ‘disease’ 🙂

 

In Last 30 days on Stable Investor

Enough of ‘Do-This-and-Do-That’. Here are 66 Don’ts to help you become financially rock-solid.

This one was a stunner. In just one 387-word paragraph, the author puts in (almost) every life tip out there!

India celebrated its 70th Independence Day. When are you going to celebrate your own independence day?

Creating wealth is not tough. Really. Don’t believe me? Read these 19 Simple ideas on Wealth Creation and you will understand why.

 

From the Archives

Do you like visiting graveyards? You should atleast visit this one.

Repeat after me…Remember God in good times and Equities in bad times.

You + 9 Principles of Anti-Fragility = Rich?

 

A Random Thought

As mentioned earlier, I returned from a road-trip just 2 days back.

During the return leg of the journey and about 200 kms from our hometown, my friend remarked:

“The highways (for next 200kms) are in good condition and we would be passing through low traffic areas. I think we can cover the distance in about 2 hours.”

But in reality, it took us 4 hours.

Why?

It started raining heavily – due to which, we couldn’t drive fast enough to cover 200 kms in 2 hours. That was not all. We also had to deal with unexpected traffic at few places.

Now… nothing rare about this.

But I could clearly draw out similarities between this and how our investments pan out.

We think equities will give 12% plus returns throughout – like a bond. But what happens is not smooth – its more like +15%, -10%, -5%, +30% and so on.

Then we assume we won’t need money between today and the goal-day. But we end up withdrawing money due to unexpected reasons.

So things never go according to our plan or assumptions. We need to build buffers to handle unexpected events – like having low return expectations, high inflation expectations, emergency fund, etc.

Note – You can read the second edition of Mid Monthly here.

Stable Investor Mid-Monthly July 2016

Mid Monthly July 2016

This is the second edition of Stable Investor’s Mid Monthly.

Great Stuff Elsewhere

If you are not living in a cave, then you would already know who Elon Musk is. Few days back, he tweeted:

The first part was published almost a decade ago – in a Tesla blog post. And from what he has achieved after that, I am quite eager to know what’s in store in Part 2 of the plan.

By the way, if you don’t know who he is, I suggest you read the wiki entry, read these 12 things, watch* this video (to know what he is capable off) and if you get time, read this awesome book about him.

*Don’t miss the video. Its 45 minutes long and if you don’t have the time now, bookmark it for later.

I remember that when I joined my first job, my first boss made it his mission (thankfully) to make me understand the difference between the urgent and the important. And that still remains one of the most important thing I have learnt till date. Now when I read this post by Seth Godin highlighting the same difference between the urgent and the important, I couldn’t stop myself from sharing it here.

Making more money is great, let’s be honest. But the thing that actually results in financial independence is something else. And maybe its the only thing that really matters.

Simple yet important lessons to learn about scorecards, investing and friends from Warren Buffett’s only authorized biography, The Snowball.

In Last 30 days on Stable Investor

Sometimes, just few words are good enough to send across a strong message. These 6 words by RBI Governor can bring order to your personal financial life.

Keeping track of 52-week highs and lows of the stocks in your watchlist can be quite profitable. See it for yourself here.

Is it possible that investing for just 10 years can have the same (or even better) result than investing for 30 years?

From the Archives

Only 98 words that you need to understand to become a successful investor.

You have already heard that stock markets can make you rich. Here is a stunning example of how it can actually improve your lifestyle.

Few years back, Safal Niveshak interviewed me. If you have recently started following my writings, then it might be of interest to you. (This interview took place in 2013. So its possible that few things that I would have said then might not be valid now).

A Random Thought

Here is a small story about a kid, his father and a paper kite:

(Taken from You Can Win)

A boy was flying a kite with his father and asked him what kept the kite up.

Dad replied, “The string.”

The boy said, “Dad, it is the string that is holding the kite down.”

The father asked his son to watch as he broke the string.

Guess what happened to the kite? It came down.

Isn’t that true in life?

Sometimes the very things that we think are holding us down are the things that are helping us fly.

Think about it.

Note – You can read the first edition of Mid Monthly here.

Stable Investor Mid-Monthly

Mid Monthly June 2016
Its extremely hot here in North India and I don’t know when the rain gods will send their blessings. I envy those who have permanently settled in mountains – and I gave it a serious thought myself when I visited Bhutan few months back. By the way, it’s a lovely country and if you are a traveller at heart and one who seeks peace, then it can be a great place to visit sometime.
Nevertheless, like my monthly State of Market posts, I have decided that once every month, I will do a roundup kind of a post where I share links to:
  1. Good financial and non-financial posts I have read in last 30 days. I read a lot, but will share only few that I think would be worth your time.
  2. Useful posts written here on Stable Investor in last month – for those who somehow missed reading them.
  3. Some stuff that is lost in archives here.
  4. Random thoughts which I might not want to write a full post on or tweet about.
I know you would be cursing me as I did start something similar last year too – when I did a series of posts titled Boring Tuesdays. 🙂
Unfortunately, I stopped it after few months – Not because of lack of stuff to share but because I really did not have the time to do a weekly roundup-kind of a post alongwith my regular writings.
So I am trying again. This time though, it will be a monthly commitment to start with.
Lets see how it works out (…and keeping my fingers crossed).
So here it is…
Great Stuff Elsewhere
When is a 7% return Not a 7% Return? Yes. That’s not a typo. (Must) Read it to believe it.
How the quartet of cash flow, liquidity, profitability and net worth can help you sleep well (focus on the second half of the article). (Update – Sadly, author has removed the article.)
Useful rules to organize and declutter everything (something I feel is very important) by Leo Babauta of Zen Habits. Of all things mentioned in the article, I don’t follow most of them myself. But I am trying a few and it actually works! The article is a good starting point if you are thinking on the lines of decluttering your life.
My guess is that 37.8% of readers of Stable Investor have had Maggi in last one month. 🙂 Now that was just a guess. But Maggi and more importantly, Nestle is trying to comeback from the fiasco. May be it was just the right wakeup call which the company needed. This article details how Nestle (after the Maggi screw-up) is getting back on its feet.
This is pretty old but I still like to revisit it at times – Ten things Google guys believe to be true. It’s a sort of owner’s manual in line with what Warren Buffett’s Berkshire Hathaway has. Now don’t tell me you haven’t read the Berkshire’s Manual. If you haven’t, leave everything and head straight to this page.
In Last 30 days on Stable Investor
This has become one of my personal favorites. These crystal clear financial principles (very easy to read and understand) by Jason Zweig (a noted writer) can open your eyes and mind to how best to manage your money, without being fooled by others.
First we didn’t bother about buying health insurance policies sighting various reasons. Now most smart people do buy it but still end up not paying attention to one very big risk, i.e. Health Care Inflation.
I interviewed John Huber of Saber Capital about investing, money and other stuff. Once you read the interview (Part 1 and Part 2) and do spend some time on his awesome blog, you will become his fan, just like me.
Some people are so fond of bad luck that they run halfway to meet it. They take unnecessary risks and to make the money they don’t have and they don’t need, they risk what they do have and do need. That is plain foolish and the real reason why some people always lose money.
From the Archives
I start with something personal. Here are the 17 Odd Things that you might not know about me.
What would happen if teachers, doctors, gardeners, weathermen, etc. i.e. the normal people started behaving like those in Stock Markets.
A Random Thought
I did try this on a friend recently – to scare and sadden her financially. 🙂 I asked her to add up all the monthly salaries (or annual incomes), which she had received in her working life.
Then I asked her to compare it with what she had saved up or invested anywhere.
And she was shocked.
This small exercise easily proved that she did not manage her money well. So lets say that she earned a total of Rs 50 lacs in last 7 years. Out of which, she was only able to save Rs 4 lacs. So there definitely is a problem somewhere. Isn’t it?
Try this exercise yourself.
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