Memory is far more effective than law

John Kenneth Galbraith wonderfully put in the foreword to his book “The Great Crash – A Classic Study of That Disaster”: “As a protection against financial illusion or insanity, memory is far better than law. When the memory of the 1929 disaster failed, law and regulation no longer sufficed. For protecting people from the cupidity of others and their own, history is highly utilitarian. It sustains memory and memory serves the same purpose as the SEC, and, on the record, is far more effective.”

To add to what Galbraith wrote: Even the law has to be remembered.

Read “Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget” again and again.

#RidingTheRollerCoaster – 138

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Making money looked super simple

“In February of last year, Fortune magazine writers Erin Griffith and Dan Primack declared 2015 “The Age of the Unicorns” noting — “Fortune counts more than 80 startups that have been valued at $1 billion or more by venture capitalists.” By January of 2016, that number had ballooned to 229. One key to this population growth has been the remarkable ease of the Unicorn fundraising process: Pick a new valuation well above your last one, put together a presentation deck, solicit offers, and watch the hundreds of million of dollars flow into your bank account. Twelve to eighteen months later, you hit the road and do it again — super simple.”

The above paragraph is borrowed from a blog post titled “WHY THE UNICORN FINANCING MARKET JUST BECAME DANGEROUS…FOR ALL INVOLVED” dated 21st April 2016. See the link.

Why am I reproducing this line here? What is the point? Well, the point is quite simple. In the world of investing what seems to be too easy does not last for long. Look at the title of the referred post and you would realise how different it is from the opening paragraph.

See our post on similar lines here. Some lines from the same post are reproduced below.

“It was said that you could buy your stock at one door of Garroway’s and sell it at a profit going out of another” – Robert Wernick writes in his book “The South Sea Bubble”, describing the euphoria at the peak of the frenzy.

Few centuries later, the world was entering the digital era.

It looked so easy to make quick profits. Anthony Perkins and Michale Perkins write in their book “The Internet Bubble”: “Day traders might buy an dInternet stock at $94 in the morning and sell it at $96 in the afternoon, in what’s really a form of gambling.”

Making too much money can never be very easy. If it were, everyone would be wealthy by now.

#RidingTheRollercoaster – 137

Peter Lynch on corrections …

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

Wait, did he say something about corrections or about people’s attitude towards corrections? Price rises and falls are natural to a thriving open market. How we respond to the same is entirely ion our hands

#RidingTheRollerCoaster – 136

This day, 24 years ago …

The Times of India dated 23rd April, 1992 carried a story that remained as the biggest scam in corporate India for a little less than 16 years. Ms. Sucheta Dalal broker the story of missing Rs. 500 odd crores. The issue was discussed in the Parliament and a Joint Parliamentary Committee was set up.

One of the biggest bull runs in the Indian stock markets cam to an end.

There are many interesting anecdotes and stories about this episode. In the aftermath of the event, the stock market reforms were undertaken and the markets were never the same. Many safety features were introduced and investing in the Indian stock markets became much safer.

#RidingTheRollerCoaster – 135

World Book Day

Today is celebrated as World Book Day!

On this day, I appeal everyone to gift a book than to gift a bouquet on all occasions

Wish you all a very happy reading

 

 

Making money looks so easy and quick!

“It was said that you could buy your stock at one door of Garroway’s and sell it at a profit going out of another” – Robert Wernick writes in his book “The South Sea Bubble”, describing the euphoria at the peak of the frenzy.

Few centuries later, the world was entering the digital era.

It looked so easy to make quick profits. Anthony Perkins and Michale Perkins write in their book “The Internet Bubble”: “Day traders might buy an dInternet stock at $94 in the morning and sell it at $96 in the afternoon, in what’s really a form of gambling.”

See the similarity between the above lines and what Wernick wrote! Some things do not change!

#RidingTheRollerCoaster – 134

Sir John Templeton’s investments in Japan

Sir John Templeton was known as a global bargain hunter. He loved to spot opportunities across the world when majority of the investors invested within their own countries.

One of his major investments was in the Japanese stocks, when it was out of fashion to do so. He invested in Japan in early 1970s, much before the world saw any reason to do so.

Many Japanese conglomerates had cross-holdings, which the market could not put a value on. Sir John started loading up on stocks of some great companies, which were valued at single-digit PE ratios.

By the time the world got interested in Japanese stocks, the stock prices as well as the PE ratios had gone up a lot. Sir John Templeton had started to withdraw. Much before the peak of the market in 1989, he was completely out of Japanese stocks.

A true contrarian, a true value-investor.

#RidingTheRollerCoaster – 133