Learn from others’ mistakes and experiences as it is costly to make mistakes

Mr. Nilesh Shah, MD – Kotak Mahindra Asset Management Company Ltd recommends the book strongly. Here is what he has to say,

Wise men say, “We should all learn from our mistakes”. Someone added, “Learn from others’ mistakes and experiences as IT IS COSTLY TO MAKE MISTAKES .”

This is true in the world of investing, too. For investors, it is impossible to go through all experiences, especially what happened in the past. Amit Trivedi writes about various episodes of booms and busts in the history of financial markets in his book “Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget”.

It is a very well-researched book and yet so easy to read for even those who are new to finance and investing. I thoroughly enjoyed reading it and strongly recommend FOR READING AND REMEMBRANCE

#RidingTheRollerCoaster

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Liar loans

Do you know that during the boom before the sub-prime crisis, in there US there was a category of loans that was known as “liar loans”?

Apparently, this was a brilliant innovation (!) to give away loans to people who may not have supporting financial strength. These borrowers could take loans by simply stating that they had enough income and/or assets to qualify for the loans. No documents were checked.

As we have written elsewhere, “… seeds of disasters are sown in boom times …”

Well, if this sounds familiar to the current situation in India, remember Bishop Desmond Tutu’s words, “What we learn from history is that we don’t learn from history”.

#RidingTheRollerCoaster – 89

Rise and fall are inevitable

Rises and falls in market prices are inevitable. They are part of the nature of the open markets, wherein a large number of people can come and transact, based on their perceptions and opinions.

#RidingTheRollerCoaster – 71

#RidingTheRollerCoaster – 16

“Rise and fall are as natural and vital to economic condition as breathing is to the human condition” – Bob Swarup

Amar Mehta’s comments on Facebook about the book

Reading Riding the Roller Coaster has been an enriching experience. Amit is a delightful story teller. He also invariably has a point which is put accross for us to evaluate in an unbiased manner. This book is thought provoking, and will help many layman investors see connections between history, philosophy and emotions before making investment decisions. The uniqueness of this book is the simplicity, reference to the holy Bhagvad Geeta & numerous examples which makes you think and re think of investments from a completely new lens. My favourite is the “Seeds of the crash are planted in the times of the boom & vice versa”. The cycle is the destiny.

Amit – It’s a great achievement. Wishing you all the success in future endevaours!!

Facebook post by Jaydip Gohel

Just finished reading ‘Riding the rollercoaster’ by Amit Trivedi. A dive into the world of financial market, its movement, repeating behaviour, boom and bust. A must read for those who want to invest wisely, taking lessons from history. Good one..

Why are the markets falling?

The market crash of the last few days has been very steep and the reactions from people also have been quite caustic. The Sensex song has resurfaced after a long gap. Some people have highlighted that the crash is “made in China” and hence it can’t last long.

What is the purpose of this analysis? What are we trying to achieve by identifying the reasons behind the crash? I guess the idea is to be ready when the next time these situations arise.

What is the reality? Here is an excerpt from my book “Riding The Roller Coaster – Lessons from financial market cycles we repeatedly forget“:

As long as the open markets survive, wherein people can come and trade on the basis of their opinions, we will see the prices fluctuating, with amazing regularity. We have a tendency to expect explanations for everything – even if the explanation is incorrect. Experts (while there are genuine experts, in some other cases, the expertise may be questionable) are in abundance to fulfil this need of the masses. However, if you look at the explanations given, they often cannot pass scientific tests.

When the result is the same and the reasons keep changing, you know that the reasons do not matter. They have lost relevance.

That is exactly the case with explanations of market volatility. The reasons attributed to short-term market fluctuations keep varying, but the volatility is here to stay. The right thing to do is to accept volatility and stop finding the reasons behind it.

Remember the old saying, “You can’t direct the winds, but you can adjust the sails.” Translated in the context of this book, this should read as, “You can’t prevent market crashes, but you can safeguard your portfolio.”

The message is loud and clear. Stop thinking of the reasons behind price fluctuations. You portfolio needs to be such that the impact of market crashes do not steal your good night’s sleep.

So what should you do now? Nothing. Do not let the market fluctuations upset your financial plan, provided you have one. If you don’t, get one.

  • Amit Trivedi, author of “Riding the Roller Coaster – Lessons from financial market cycles we repeatedly forget”

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