Vidya Profile picture
Nov 21, 2021 22 tweets 13 min read Read on X
1/22
I first read this book in 2009 after losing 80% of my monies on Penny stocks as a student when the 2008 drawdown happened.

Thought it was too simple !

Now in 2021, I think this is one of the best books to absorb & implement.

A 🧵

#BookTwitter
#BookRecommendations
2/22
Investing means different things to different people - Be it health/ career/external assets with an intent to reap benefits in future.

So then is everyone an Investor ?
No.
When people do different things with even same investment products we give it a different name.
👇
3/22
Investing is a PERSONAL Plan .
It's NOT a product . NOT a procedure.

One needs to have a clear picture of one's financials BEFORE making an investment plan.

Investment products comprise of items with distinct characteristics DESIGNED to satisfy a particular need.
👇
4/22
Nothing is permanent except CHANGE.
Same applies for market cycles.
Different Asset Classes help us in that.

By smart movement one can increase the velocity of one's money.

It is NOT about timing the markets.
It's ABOUT the trends in an asset class.

Few pointers
👇
5/22
Many folks acquire Speculative habits mistakenly thinking they are Investing. ☠️

L.T Investing is central for optimum returns.
Markets will be volatile.
But in long run shall only go ⬆️

Some notes on Cash Flow & Capital Gains Model , Speculation & Law of The Farm
👇
6/22
Difficult to say which strategy is good. Even good speculators make money.
It depends on the individual's attitude, discipline , risk taking ability & patience.

Too much UNCERTAINTY is making markets the bedrock of speculation & HENCE the volatility.
7/22
3 paths to achieve superior results.

🔸 The Intellectually difficult path - Admired in HINDSIGHT

🔸 The Physically difficult path - SELF complicated

🔸The Emotionally Difficult path - Deceptively Straightforward & Best suited for most

More explanation here
👇
8/22
Onto the most important part : *Behavioural Finance*

Most investors make decisions with their hearts.
Our WAVERING emotions (FOMO/Panic/Greed- IPO investments etc) define us.

Our logic & rationale takes a backseat & only retrospectively justify these decisions.
👇
9/22
🔸Check if you are a victim of Loss Aversion & Sunk Cost fallacy.
Work upon it to make wiser investment decisions in future.

🔸Diversify wisely WITHIN assets ACROSS asset classes to avoid reacting impulsively.

🔸Avoid looking at gains & losses in isolation.

More here 👇
10/22
Deciding not to take a decision is ALSO a decision.
Maintaining a Status Quo in times of continuous change is unwise.

It is a natural tendency to resist change which amplifies Decision Paralysis. ( The book has many examples as illustrations ) 1

More on this here👇
11/22
V.imp
Mental Accounting affects our behaviour in different ways.

The tendency to place DIFFERENT values to the SAME sum of money depending on HOW it was acquired & the EFFORT needed for this.

Such an underrated concept !
12/22
Some eg of Mental Accounting errors
🔸Holding onto losers unwilling to accept mistake & believing losses are notional & price will ⬆️
🔸Bonus shares considered as Freebie & bought post announcement ( Eg IEX ) . Stock ⬆️🚀 Companies gives Bonus shares to capitalise reserves.
13/22
🔸 Trading repeatedly with narrow spreads failing to consider transaction costs & brokerage.
🔸Being okay with high interest in margin trading & off setting it by a lower interest of bank F.D aka - 2 mental accounts.
Safe money & Risk money for SAME money.
14/22
Personal favourite : Mental Heuristics.

We reach conclusions by Trial & Error usually leading us to develop Thumb Rules which aren't always accurate.
Identify the principles underlying these thumb rules & the ERRORS. associated.
The book then discusses various heuristics.
15/22
Investing is a game of patience.

But Keynes is often quoted - " In the long run we are all dead" to justify our speculative urges.

We try to time the markets.
Sometimes we go RIGHT & MAKE a quick buck.
Many times we DON'T & LOSE HEAVILY.

Watch!
👇
bit.ly/3cxLpaH
16/22
The book talks on how Mutual Funds TALK about Long Term investment strategy but most often ONLY look to TIME MARKETS & fund managers being forced to act in a way NON CONFIRMING with basic investment principles owing to competition.

Ahem...RINGS ANY BELLS ? 🤔😁
17/22
Markets ARE unpredictable.

Intermittent bubbles happen. Burst. Gradually markets pick up.

It's all a circle which repeats as human nature is predictable.
Understanding the psychology of market participants helps.

A video of Parag Sir on this.
👇
18/22

The book then talks about :

1) Create Reinforcing Loop
2) Bubble Swells
3) Bubble at its peak
4) Bubble Pricked
5) Bubble Bursts

I couldn't help but nod for most part of reading this !! 🙂🤷🏻‍♀️

Sharing just the illustrations here.
19/22
Ultimately the Bubble bursts and we realise it only AFTERWARDS.

We pay heavily for our greed.
The govt orders the regulators to conduct an inquiry , and we all know what happens later ..........
:))

Investors must understand the workings & anomalies here.
👇
20/22
We need to change our paradigm.
Passion should drive us , not Greed or Fear.

Learn the Money game.
HARNESS THE POWER OF MONEY.

Understand Asset & Liability Cash Flow patterns.

What differenciates middle class from wealthy is the lack of financial literacy.
21/22
Moving onto Why stocks?

🔸Either keep cash in bank F.D which doesn't beat even inflation & erode money.

🔸Or take SOME risk & invest money sensibly in assets that have a reasonable chance of increasing value over time & become FI.

Choice is yours !
Choose wisely.🙂🙏
22/22
To sum it all up.
Read this deceptively simple book.
Watch the old videos of late Parag Sir , the founder of @PPFAS on YouTube channel & also their current videos.

The link :
youtube.com/c/ppfasltd

Think in isolation & Learn more about yourself.

Happy investing !

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More from @VidyaG88

Jan 6
1/10

A few important life hacks which I have implemented over the past few years that have helped me immensely.

A 🧵
2/10
🔸Making Gratitude an Attitude

Comparison is the theft of joy.
Each day begins & ends with gratitude.

Now I no longer envy others.

I am content. I feel blessed for whatever I have & work hard & live life each day to the best of my ability.

That's all !
3/10
🔸Accepting things & Letting Go

The older I seem to get, the more I have begun to let go.

Baggage weighs us down considerably.

All those thoughts,feelings, emotions we keep bottled up only hurts us.

So I try to reset each morning & travel light.
Certainly helps !🤠
Read 10 tweets
May 13, 2023
1/30

#BookRecommendation
#BookSummary
#Investing

A book that must be read by all direct equity investors but will be appreciated & understood by a few, that too only after witnessing an entire cycle play out in markets.

Few of my takeaways from this 💎 by Howard Marks.

👇🏽 Image
2/30

To consistently beat the market,
You either need a ton of luck or superior insight & awareness of psychology.

Because investing is at least as much of an art as it is a science, it is essential that one's investment approach be intuitive & adaptive always.
3/30

All investors can't beat the market, since collectively, they are the market.

Stellar returns majorly come from correct non consensus forecasts.

Here Second Level Thinking matters immensely.
And the number of people capable of it is tiny.

What is Second Level Thinking ? ImageImageImage
Read 30 tweets
Apr 28, 2023
1/10

We 80's kids are truly blessed.
Life was simple then !

We used to play until we were screamed at to return home.

We enjoyed our childhood without mobile phones & WIFI by playing a wide variety of games which improved our hand eye coordination,stamina & focus.

#Nostalgia Image
2/10

Weekends used to consist of watching episodes of Mahabharata , Ramayana,Mogli ,He Man and the likes.

We danced clumsily to the 90's Indi Pop songs & thought WWF was real.

We created so many memories with hardly any photos thanks to the 32 film roll. 😄
3/10

Small things like a top , marbles , a rubber ball , or even a piece of cake with some frosting ( there was no concept of black forest cake ) used to make us insanely happy.

We valued each & every possession of ours.
And somehow never craved for more ...

We were content. ImageImage
Read 10 tweets
Sep 11, 2022
1/18
#BookRecommendation #BookTwitter
#DecisionMaking

How To Decide by Annie Duke.

A brilliant no frills book that offers a framework for thinking about how to improve your decision making , along with a set of tools that help execute it.

A few of my takeaways from this gem !
2/18
There are only 2 things that determine HOW your life turns out : LUCK & QUALITY OF DECISION MAKING.

We have some control over only one of those two things.

When you make better quality decisions, you increase the chances of good things happening to you.
3/18
Our objective is to choose an option that gains most ground in achieving our goals.
Sometimes which entails the least risk.

Thereby we examine the quality of the beliefs informing the decision,the available options & try to envisage the future based on our choices.
Read 18 tweets
Jun 12, 2022
1/5

Do you know why most of us are majorly unhappy with our lives ?

Why do we constantly feel anxious or secretly envy others' life ?

Why do we feel unhappy despite having quite a few things going for us?

The answer is actually simple.... 🙂

#LifeLessons
#WritingCommnunity
2/5

It's because we humans constantly COMPARE ourselves to others.

Comparison gives birth majorly to all our emotions, especially the negative ones.

So why do we compare our lives with those of others' we (think) we know of?

Why do we benchmark our happiness to theirs' ?
3/5
Ever wondered why we constantly crave to equal or better our peers ?

What purpose does it truly serve ?
Isn't everything in life fleeting ?
Be it fame , beauty , money , laurels ....

So does it really matter ?
And if so, then how much ?

And at the cost of what ?
Read 5 tweets
Mar 18, 2022
1/8

#BookRecommendations

Bitly links of the #BookSummaries I have written from Non-Finance to Finance.
Do share if helpful !🙂

🔸 The only self help book I recommend.
Made these notes post my 3rd reading & implementation of the book.

Atomic Habits : bit.ly/36uCKpD
2/8
🔸The secret to a productive, happy & healthy life.
Wisdom in simple words !

Ikigai : bit.ly/3qgM5c2

🔸 My all time favourite , read in any mood kinda book, for simplicity is the ultimate sophistication.

A Book Of Simple Living :
bit.ly/3CSxLLG
3/8
🔸Social Media makes us crave for validation. How one can stay true to themselves despite it.

The Courage to be Disliked :
bit.ly/3N4ZaP6

🔸 Nuggets of wisdom by Naval Ravikant shared by Eric Jorgensen

The Almanack of Naval Ravikant :
bit.ly/3qjvpAB
Read 8 tweets

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