Vidya Profile picture
21 Nov, 22 tweets, 13 min read
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 ๐Ÿงต

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 ?
When people do different things with even same investment products we give it a different name.
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.
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
Many folks acquire Speculative habits mistakenly thinking they are Investing. โ˜ ๏ธ

L.T Investing is central for optimum returns.
Markets will be volatile.
But in long run shall only go โฌ†๏ธ

Some notes on Cash Flow & Capital Gains Model , Speculation & Law of The Farm
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.
3 paths to achieve superior results.

๐Ÿ”ธ The Intellectually difficult path - Admired in HINDSIGHT

๐Ÿ”ธ The Physically difficult path - SELF complicated

๐Ÿ”ธThe Emotionally Difficult path - Deceptively Straightforward & Best suited for most

More explanation here
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.
๐Ÿ”ธCheck if you are a victim of Loss Aversion & Sunk Cost fallacy.
Work upon it to make wiser investment decisions in future.

๐Ÿ”ธDiversify wisely WITHIN assets ACROSS asset classes to avoid reacting impulsively.

๐Ÿ”ธAvoid looking at gains & losses in isolation.

More here ๐Ÿ‘‡
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 here๐Ÿ‘‡
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 !
Some eg of Mental Accounting errors
๐Ÿ”ธHolding onto losers unwilling to accept mistake & believing losses are notional & price will โฌ†๏ธ
๐Ÿ”ธBonus shares considered as Freebie & bought post announcement ( Eg IEX ) . Stock โฌ†๏ธ๐Ÿš€ Companies gives Bonus shares to capitalise reserves.
๐Ÿ”ธ Trading repeatedly with narrow spreads failing to consider transaction costs & brokerage.
๐Ÿ”ธBeing 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.
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.
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.

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 ? ๐Ÿค”๐Ÿ˜
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.

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 !! ๐Ÿ™‚๐Ÿคท๐Ÿปโ€โ™€๏ธ

Sharing just the illustrations here.
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.
We need to change our paradigm.
Passion should drive us , not Greed or Fear.

Learn the Money game.

Understand Asset & Liability Cash Flow patterns.

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

๐Ÿ”ธEither keep cash in bank F.D which doesn't beat even inflation & erode money.

๐Ÿ”ธOr 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.๐Ÿ™‚๐Ÿ™
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 :

Think in isolation & Learn more about yourself.

Happy investing !

โ€ข โ€ข โ€ข

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More from @VidyaG88

30 Oct

Sharing some takeaways from the book : India's Money Monarchs* , ONLY of the conversation with Sanjoy Bhattacharya.

* Available on Kindle Unlimited now.

@Vivek_Investor and @dmuthuk
I think you & your followers might like this . ๐Ÿ™‚

๐Ÿ”ธOn How to Minimise Risk ?

* Look at long term volatility of Cash Flows ( assuming Financial Statements paint a fair picture )

* Check if business generates Free Cash Flow ( FCF). This ensures company is unlikely to be wiped out at the bottom of the cycle.
๐Ÿ”ธManagement Integrity matters.

You notice good governance only when it is gone !
Hence unless one has demonstrable proof on a long term basis that people are honest , consider them to be crooks .
Cynical approach but helps save us from losses !
Read 20 tweets
16 Oct

The Courage To Be Disliked is an extremely logic oriented look at happiness and life.

Snippets of it may sound patronising at times but it leaves you with more questions than answers - It forces you to think!๐Ÿ™‚

Some takeaways via a ๐Ÿงต..

The world in itself is simple. Life in itself is simple.

It is WE who make it complicated.

How ?
By Comparison.

We all live in a subjective world that we OURSELVES have given meaning to from OUR perspective.

So how can then they be the same for all ? ๐Ÿ™‚
Ever observed how the world seems beautiful at times , sometimes mean & selfish , at times helpful ?

So does the world actually keep changing or does our subjective world change due to the change in our projections ? ๐Ÿค”

Something worth reflecting upon !
Read 29 tweets
3 Sep

Some books within minutes , force you to ditch the e-version of kindle & buy the hard copy instead !๐Ÿ™‚

The Joys of Compounding is one such ๐Ÿ’Ž
Content ( Curation + Creation ) at its finest !

Compressed JUST A FEW takeaways in this ๐Ÿงต

Invest in yourself. Read.
Self educate. Think in isolation !

Everything in life can teach you when you possess the right mindset.
Read across a wide spectrum,for the scenes change but the behaviours & outcomes don't.

How to go about #READING & #THINKING effectively.

First Principles Thinking requires us to delve deeper & question everything until one is left with the fundamental truth in essence.

Deconstruct to effectively
Reconstruct ! ( Both in times of Greed & Gloom )

How to apply it to the field of #ValueInvesting
Read 26 tweets
29 Aug

* How to #Focus *

Few young adults asked me ways to improve focus.
Sharing what I follow.

To begin with :
* Turn off all gadgets
* Sit in a room & read hard copies of books / newspapers
* Primarily try to focus & absorb the content
* Read aloud if necessary

* First read with an intention of consuming content . Read slowly
* Gradually shift to reflecting upon it
* Then memorising points
* Finally writing takeaways

* Don't use mobile / laptop for reading when developing attention span . Mostly they are counter productive !

* It takes time to develop focus.
Won't happen overnight , especially given the addiction to mobile & social media.
So begin consciously & slowly !

* Gradually increase reading speed & time & retention

* Switch to kindle only when comfortable level of focus is reached
Read 5 tweets
29 May
#LetsTalkMoney by @monikahalan is all about US understanding OUR Needs & Wants, & constructing OUR Money Box.

It helps BUILD a system in place , rather than focusing on a (non existent ) single shot solution.



A ๐Ÿงต on it .
Firstly, build your own system to manage Cash Inflows & Outflows .
Find a way that's least troublesome but automatically separates the 2.

#Budgeting & #Allocation must not be a cumbersome task !

Easy bifurcation helps in Better mapping.

A bird's eye view on the same ๐Ÿ‘‡
Moving onto Emergencies . This pandemic has made so many of us realise the importance of it .

Another interesting facet :
Unwillingness to take risks comes from the FEAR of not having money when needed - typically why Bank F.Ds are preferred.

Hence the EMERGENCY fund.
Read 15 tweets
15 May
" Zen and the Art of Happiness "

It's a simple book but it makes you think .

Few of my takeaways ( with random 2 min doodles).
What is Zen ?

#Zen is a Japanese word that is derived from the Sanskrit word Dhyana meaning "Meditation" .
Zen is a journey of exploration & a way of living that , in and of itself doesn't belong to any one religion or tradition as such.

Zen doesn't teach. It merely
points, enabling us to wake up & become aware.

Ever noticed how zen stories rarely have predefined morals? ๐Ÿค“

The zen of doing anything is doing it with a concentration of mind , a calmness & simplicity of mind, that brings the experience of enlightenment and, through that experience , happiness.

It could be something as mundane as sweeping or peeling potatoes !

Read 22 tweets

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