Testimonial on www.amazon.in

 

 

“Amit takes us down the memory lane and re-caps the previous rallies and the turmoils. It is very interesting when he says that markets do fall because they do rise. The book is punched with interesting observations from similar books and mixes a good bunch of humour in between. This is a good read to set our expectations as an investor. Very good guide when we need help to learn the right behaviour in the market, as an investor. I enjoyed reading & learning.”

Rohit Shah on http://www.amazon.in

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… the tuition charged by the market is quite high …

This is what Rajeev Thakkar, CIO, Parag Parikh Mutual Fund has to say about the book:

George Santayana has said “Those who cannot remember the past are condemned to repeat it”. Amit Trivedi’s book helps us live through and experience the past vicariously and helps us in avoiding a repeat of the past mistakes. For those who are contemplating not reading this book, there is an alternative. They could directly try investing and the markets will teach them. However the tuition charged by the market is quite high!

#RidingTheRollerCoaster –

Beating the markets

There is a tendency among the investors to be able to beat the market averages and their own peers. in this process, many take unnecessary risks or make mistakes. these risks may offer rewards or generate losses. The mistakes take away some part of the earnings that one would have otherwise got from the investment.

The strategy should be to take home as much out of the investment income as possible. It is not about beating the market, it is about participating in the market.

A simple analogy would be to see the average mileage given by a vehicle. If your car runs 15 kmpl, what should be your objective? Should it be to try and get 16 or 17 kmpl? or to get as close to 15 kmpl as possible?

Think of investments in the same manner.

#RidingTheRollerCoaster – 255

Grexit – Brexit – Rexit – Investorexit

Last year, it was all about whether Greece would continue to remain a part of Eurozone. The event (or the speculation of the event), popularly known as Grexit caused a lot of anxiety in the financial markets the world over. Around this time last year, people started forgetting the same.

This year, we are struggling with another speculation – Brexit. Will Britain exit Eurozone?  While the decision is yet to be taken about the same, the markets are already nervous.

And while the world was debating about Brexit, we got a different exit, this time from a central banker. The Governor of Reserve Bank of India, Mr. Raghuram Rajan announced on Friday last week that he would go back to academia once his current term as Governor RBI gets over in September 2016.

We were very quick to coin the term for this exit – Rexit.

See the pattern – all these words sound so similar: Grexit – Brexit – Rexit. Our brains start to interpret such events as having similar outcomes. Read one of our blog posts on similar lines. Grouping the investment themes – a mental short cut. We love to take mental short cuts.

Biology says, the brain uses maximum energy and hence tries to conserve the same by taking short cuts.

Such short cuts invoke a fear and Grexit – BrexitRexit may trigger Investorexit from the markets.

Go back and read the blog we just referred to.

#RidingTheRollerCoaster – 186

 

 

 

Do we learn from history?

When Jeremy Grantham was asked, “Do you think we will learn anything from this turmoil?”, he responded, “We will learn an enormous amount in the very short term, quite a bit in the medium term and absolutely nothing in the long term. That would be the historical precedent.”

We have short memories. We need to be reminded regularly of the history, as a protection against our own mistakes during the extremes.

#RidingTheRollerCoaster – 177

More on Mazda Industries

After Harshad Mehta took over the company, the stock price zoomed. From Rs. 39 in October 1991, it went to Rs. 1,600 by March 1992. Yes, it was 40 times in six months. This is not a typographical error.

The Pied Piper Hameln led the children of the town to a mountain nearby never to return.

#RidingTheRollerCoaster – 142

Mazda Industries Ltd

Harshad Mehta took over a loss making leasing company – Mazda Industries Ltd. The loss making company turned profitable immediately after the takeover. Was it the Midas touch of Harshad Mehta?

A small detail in the accounts of Mazda Industries was ignored. More than 90% of the total revenue came from stock market related activities.

Attention to details is a rare trait among many. It becomes even more rare when greed takes over and everyone is in a hurry to make money.

#RidingTheRollerCoaster – 141