Skip to main content

Markets & Life





Markets & Life

Fall free-fall, almost everything in the Indian and global markets was falling like there is no bottom in March this year and now it's rising as there’s no limit. Don’t worry while the market in the short term falls or rises let's take time and connect a few life concepts to the markets and try to change the way we view it.

1. On Unpredictability: can you predict what’s going to happen tomorrow or on any day after that with 100% accuracy? Leave alone the percentage but with any accuracy, can you? You can’t, now you still plan for tomorrow and that vacation and your future? 
Predicting the market movements is a waste of time because there are millions of people, institutions, algorithms interacting and each have varied timelines ranging from sec to years to decades and hence varied return expectations. This leads to severe unpredictability. 
Unpredictability is as normal as anything in life yet we take comfort in planning and get uncomfortable if something that we never thought of happens. Now this does not mean that we shouldn't plan in fact we should but at the same time be ready for bringing surprised every once in a while and be ready to face whatever is thrown at us. Be as prepared for unpredictability in the markets as you’re in your life.
2. On Letting go: A lot of people might bring out the worst in you, leave you broken or break you when you thought you have had it all, what do you do? You let those incidents and people out of your life and work on building yourself and your life again.
 Similarly, almost every time there’re going to be stocks that make you huge losses and dent your portfolio, have the courage to let those losers out and find new winners. The key is the ability to let these losers not affect you.
3. On ups& downs: Do you always succeed in life? The chances are almost none that you won't face difficulties or roadblocks in life. The rise in anything in life sows the seeds for its fall. A fall in stocks is as natural in investing as it is in your life.
The problem arises when you equate the fall to failure as you do rise to success. Treat both rises and falls equally, learn from the falls because rises won't give you enough lessons to learn and grow. If it weren't for our failures how would we realize the value of wins? Relax and keep working for when it rises again you would shine.
4. Gravity: The law of gravity is a universal law and it applies to stocks too. Anything that goes up drastically in a short time almost always sees a fall and drops down. The magnitude might differ but almost nothing in life or in stocks defies gravity. It is gravity that would teach you to be humble because nothing is going to keep rising.
 Realize that your stocks might come back to normal and prepare by either exiting or adding more when the do.
On an ending note realize that irrespective of how much research you do on stocks you’re not the one working hard or running the business (you’re not sweating it out all day). You’re just another provider of capital so be glad that you earn when the business does and get a ride in their profits.

Comments

Post a Comment

Popular posts from this blog

Empathy

One of the greatest gifts we humans as organisms have is the human mind. It is different from what other species have because of the variety of tasks it is capable of pulling in a short time. One of those capabilities we have is the feeling that we experience largely due to the ability our emotions provide us. To feel happy, sad, joy, fear, greed, etc. is a virtue we fail to acknowledge at times and take it for granted. Imagine what would you do if you wake up one day and are unable to feel any of these. This would take away the gift of life. To make this simple imagine this -we work so that we spend our time doing something productive in return to feel good about ourselves and earn so that we can buy things, in turn, to make us feel good or give us comfort which again is to make us feel good. Now if you can’t feel good what would be your motivation to do anything in life? We spoke about the feelings that we go through and we understand them very well because we have the first-h...
Post a Comment
Read more

Interesting Perspective on Investing

  I came across a post by Ensemble Capital this week which gave me a unique way to view investing. I obviously couldn’t stop myself from dissecting it and presenting you my views on the same. Investing is intrinsically a natural act of providing resources to an organism operating within an ecosystem . Investing is a form of participating in the living ecosystem in which the human race organizes itself into groups and then engages in both competitive and cooperative value generating behavior . Source: Ensemble Capital Blog Before you ask what do they mean, let’s look at what we as living organisms do. We take birth, learn about this beautiful world, get education, work to pay our bills, fulfill our responsibilities and leave the world one day. In this process just like the nature provides us with resources we as investors provide business with the resource (money $$$) we have. Similarly just like we coexist in an ecosystem along with other organisms so does a business coexisting w...
Post a Comment
Read more

Are you Biased?

We are all biased!! Yes, I said that out loud, we all are. It includes yours truly too because I am no exception. Let’s define what bias means before we delve into different types of biases. Wikipedia defines bias as “disproportionate weight in favor of or against an idea or thing, usually in a way that is closed-minded, prejudicial, or unfair”. Biases stem from the way our brain is structured to help us. Our brain always tries to keep past experiences in mind, remembers what gives us pain or pleasure, what worked to give us recognition or what led to failure, and tries to make sense of the present and future decisions based on them. So, the brain doesn’t recognize that it could be a bad thing for us. Biases make us irrational in our decisions and choices. Now almost none of us can eliminate biases because its difficult to recognize the bias when you’re actually being biased because your brain tricks you into believing that what you’re doing is the right thing to do. ...
Post a Comment
Read more