Happy Dussehra

Raavan was a very learned man and a great warrior. Though he abducted Sita, he never once touched her and paid due respect to her. In spite of all these qualities – wisdom, bravery and a strong character, how come he lost to a small army led by Lord Ram?

Maharishi Valmiki indicates in the Ramayana that it was his ego that caused Raavan’s downfall.

In the world of investing, there are many experts – highly qualified, skilled and experienced – and yet unable to see certain obvious risks. The ego and overconfidence blind these wise men. This is an important lesson from the book “Riding The Roller Coaster – Lessons from financial markets we repeatedly forget”.

While this applies to the experts, even the laymen get swayed by overconfidence. Under the spell of ego, we start believing in our invincibility. And then as the popular phrase goes: “Pride cometh before the fall”, meaning pride often causes the fall from grace.

Learn from the story of Raavan. Check your ego. Stay grounded.

Dussehra is also known as Vijayadashami (a day of victory). May you win all the battles and wars against your own emotional Raavans this Vijayadashami.

May this Dussehra bring lots of prosperity in your life.

#RidingTheRollerCoaster – 256

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Roller Coaster in the mind – “Success-confidence-overconfidence-ego inflation-mistakes-fall-lessons-right actions-success”

“The 22 Immutable Laws of Branding” – a wonderful book by Al Ries and Laura Ries has some superb lessons for CEOs, entrepreneurs, marketing managers and brand managers. I found some lessons for the investor, as well. Here is a short excerpt that I liked:

“Success in business doesn’t just show up on the bottom line of the profit-and-loss column; it also goes to the top. Success in business inflates the egos of top management.

Supremely successful companies believe they can launch any product into any market. They can make any merger work. It’s just a question of having the willpower and the resources to throw into the task. What is it that we want to do? is the question that management usually asks itself.

History hasn’t been kind to this type of thinking. Overconfident management has been responsible for most of the marketing disasters of the past decades.”

The above paragraph talks not about the skills and abilities of the successful managers. It talks about the way the human brain works. Success leads to confidence – that turns into overconfidence – which inflates the ego. Ego blinds the brain and misguides it.

It’s all in the mind – after all.

Now replace successful top managers of a successful company with a successful investor and you see the point that I am making. The moment an investors gets small successes, the “success-confidence-overconfidence-ego inflation-mistakes-fall” cycle must follow. Very often, the success of an investor is not a function of what the investor was capable was, it’s a function of the investor being at the right place at the right time. To make it short, “investor was at the right place at the right time” can be replaced by the words “investor was lucky”.

This can be turned to the investor’s benefit if the investor adds some steps to the cycle. The cycle should not end at the “fall”, but continue from there to “… fall-learning the right lessons-taking the right actions-success”.

#RidingTheRollerCoaster – 172