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Vishal Khandelwal

BookWorm: The Little Book of Behavioural Investing

August 15, 2016

Behavioural biases are so deep wired in our brains that it takes tremendous will power and intelligent hacks to overcome its effects. This little book is a great reminder to all of us lest we become complacent and repeat the same mistakes.

Success in investing doesn’t correlate with IQ once you’re above the level of 100, writes Warren Buffett, “Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
[Read more…] about BookWorm: The Little Book of Behavioural Investing

Behaviouronomics: Naive Realism

August 10, 2016

Before we get started on the discussion today, I would like to invite you to have an intellectual and emotional experience. Take a few seconds and just look at the picture below.

Image 1

What do you see? You’d probably see a woman who is looking away from you. You’d also notice that she’s wearing a necklace. She also seems to have high cheekbones, long eyelashes and a petite nose. Alright, now I ask you to take your eyes off her and focus on the second picture below –

Image 2

What do you see now? Another woman? How old would you say she is? What does she look like? What is she wearing? In what kind of roles do you see her?

You probably would describe this woman as beautiful as the first one. You might guess that she’s about 25 years old, very lovely, rather fashionable and with a demure presence. If you were a single man you might even like to ask her out. [Read more…] about Behaviouronomics: Naive Realism

Investor Insights: Ninad Kunder

August 5, 2016

Ninad Kunder majored in finance and after a brief stint in the corporate world, moved on to entrepreneurship. He currently runs a venture in the HR staffing space and manages family money. Shuffling between these two hats has helped him both in business and value investing.

Safal Niveshak (SN): How did you get into value investing, and how has your process evolved over the years?

 Ninad Kunder (NK): Lottery tickets! That’s what the 10 buck equity IPOs were like, when I started dabbling into investing in my engineering days. Those early years I tracked the markets without any framework or thought process.

Luckily I didn’t lose too much money because we were a growing economy in which it didn’t take too much intelligence to stay afloat, if one didn’t indulge in stupidity. Guess my innate conservative self kept me away from stupidity which helped me survive. It’s really in 2006 that I encountered Charlie Munger, Prof Bakshi’s blog and other value investing resources.  It was a eureka moment and there has been no looking back since.

SN: Great! So how has your investment process evolved over these years? I mean, like many value investors who start with a Grahamian (cheap stocks) approach, did you also begin that way? Or was it a Fisher kind of approach of sticking only to high quality businesses? Please take us through the evolution of your investment process over these years.
[Read more…] about Investor Insights: Ninad Kunder

Spotlight:Be Risk Averse, Not Loss Averse

August 5, 2016

Risk aversion is different from loss aversion, and investors who understand this are the ones who succeed.

On April 10, 2003 soft drink company Pepsi announced a contest called “The Pepsi Billion Dollar Sweepstakes”. It was supposed to run from May 1, 2003 to September 14, 2003.

For the contest, Pepsi printed one billion special codes, which could be redeemed either on their website or via postal mail. Of all the codes redeemed, which Pepsi estimated to be 200 – 300 million, 100 were chosen in a random draw to appear in a two-hour live gameshow-style television special. Each person was assigned a random 6-digit number, and a chimpanzee (to ensure a truly random number and of course to rule out any monkey business) backstage rolled dice to determine the grand prize number. This number was kept secret and the 10 players whose numbers were closest to it were chosen for the final elimination. On the evening of September 14, the final day of the contest, the event, titled Play for a Billion, was aired live. If a player’s number matched the grand prize number, he would win US$ 1 billion.

Given the scenario, it was highly unlikely that anyone would win a billion dollar. The chances were literally 1 in a billion. Inspite of that, Pepsi was unwilling to bear the risk of the possible billion-dollar prize. So they arranged for an insurance company to insure the event. They paid US$ 10 million premium to Berkshire Hathaway to assume the risk.
[Read more…] about Spotlight:Be Risk Averse, Not Loss Averse

Life 2.0: The Miracle of Gratitude

July 30, 2016

“If the only prayer you said in your whole life was, ‘thank you,’ that would suffice.” ~ Meister Eckhart.

“People usually consider walking on water or in thin air a miracle. But I think the real miracle is not to walk either on water or in thin air, but to walk on earth. Every day we are engaged in a miracle which we don’t even recognize: a blue sky, white clouds, green leaves, the black, curious eyes of a child — our own two eyes. All is a miracle.” ~ Thich Nhat Hanh, from The Miracle of Mindfulness

How often do you start your day by thanking God and appreciating for the amazing life He has given you? Or let me ask you this. When did you last say “thank you” to someone to show how grateful you were for them?

You see, gratitude is such a small thing, but it can have a huge impact on your life, and the life of that person. But then…

What is Gratitude?

Wikipedia defines gratitude as – “…a feeling or attitude in acknowledgment of a benefit that one has received or will receive.”

So, when you tell yourself how thankful you are for…

• Roof over your head
• Food in your plate
• Your health
• Your relationships
• Your family
• Your job
• Your holidays

…you are showing gratitude towards the great things in life.

This is in fact that default form of gratitude you’re likely to come up with when you attempt to make a list of things to be grateful for, in good times and bad.

I often meet people who would counter their negative emotions by saying, “At least, I have a roof over my head” or “At least I have food to eat.”

This form of gratitude, which starts with the words “at least”, is a great way to tell yourself how grateful you are for your material possessions, which someone else does not have. But that’s not the best form of gratitude, my friend. These are, after all, things that create just a temporary feeling of gratitude in you.

“Why do you say so?” you may wonder. Well, if I change your circumstances – like I remove food from your plate or ask you to leave your home – you won’t be grateful for these possessions anymore. Right?

So what I am saying is that when we feel grateful “due to our circumstances”, that’s not the best form of gratitude we can show. Such kind of gratitude is fragile since all it takes to knock you out of state is a change in circumstances. Even three words like “You are fired!” or “I hate you!” or “You lost it!” can kill it.

The “Real” Gratitude

I believe real thankfulness or gratitude is independent of situations and circumstances. This is a feeling of gratitude for life itself, for existence, for anything and everything you experience.

So, instead of a temporary emotion, this type of gratitude is more of an underlying attitude. With practice it becomes part of your identity. So you are grateful not by choice, but just by nature.

Like being grateful for…

• Your life
• Your heart
• Your mind
• Your ego
• Your mistakes
• Your problems and challenges
• Your consciousness
• Your emotions

So, where the first type of gratitude we discussed above says, “How wonderful this thing is!” the real gratitude says, “How wonderful it is to exist!”

You feel grateful despite the circumstances you are in and without any justification.

Now, that is fascinating because you are grateful for your existence. After all…

You’re a Miracle!

Scientists estimate the probability of your being born as a human was miniscule. It’s same as the probability of 2.5 million people getting together – about the population of Nagpur or Kanpur in India – each to play a game of dice with trillion-sided dice, and they each roll the dice, and they all come up the exact same number, say 123,456,789,678.

You got the point, right?

A miracle is defined as an event so unlikely as to be almost impossible. Wikipedia says, “A miracle is an event not ascribable to human power or the laws of nature and consequently attributed to a supernatural, especially divine, agency.”

By that definition, you are a miracle. Now go ahead and feel grateful for the miracle that you are.

Start with making a list of five things you feel grateful about. Do this daily. Right now, light up your day by saying “thank you” to life. Right now, light up someone else’s day by saying, “Thank you for being you!”

Don’t just keep the gratitude on the inside. Express it.

Make other people happier too – and help them to perhaps pay it forward later on – by expressing how you are grateful for having them in your life. Plus, their smile and the joy in their eyes when you tell them this will make you happier too.

Now, that gratitude could just be a small sentence. But it can have a big impact on someone’s day, week or even life sometimes.

So tell the people in your life.

Tell them in person tonight. Or write an email or a letter to someone a little further away in the world. Or send a small text message right now.

Conclusion – Let’s Practice the Gratitude Exercise

Most of us (myself included) could benefit from adding more gratitude and thankfulness into our life. Here are three ways to do that:

1. Begin a gratitude journal – It might sound odd, but starting a gratitude journal will help focus your attention on the positive things in your life. Use this journal to record three or five things that you are grateful for each day and be open to sharing those items or the list with others. Over time, you will have a short book of all the people and things that have brought joy to your days.2. End your day with gratitude – Our family has begun a bedtime ritual. Before we say our final goodnights, we each share our favourite part of the day and what we are grateful for. My hope is that by doing this each night as a family, our kids will forever remember the importance of giving thanks and looking for the positive in each day. If you have kids, consider adding this to their bedtime routine. You might be surprised to hear some of their answers.

3. Say “thank you” to others as often as possible – Just like “I love you,” those two words – “Thank you” – can make a difference in others’ lives. Let the people who you appreciate know they are appreciated.

You see, gratitude makes others happy and gratitude makes us happy. So everybody wins.

Let me leave you with a prayer of gratitude that I’ve always found great to read and re-read –

Be Thankful

Be thankful that you don’t already have everything you desire,
If you did, what would there be to look forward to?

Be thankful when you don’t know something
For it gives you the opportunity to learn.

Be thankful for the difficult times
During those times you grow.

Be thankful for your limitations
Because they give you opportunities for improvement.

Be thankful for each new challenge
Because it will build your strength and character.

Be thankful for your mistakes
They will teach you valuable lessons.

Be thankful when you’re tired and weary
Because it means you’ve made a difference.

It is easy to be thankful for the good things.
A life of rich fulfilment comes to those who are
also thankful for the setbacks.

GRATITUDE can turn a negative into a positive.
Find a way to be thankful for your troubles
and they can become your blessings.

~ Anonymous

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