Connecting the dots

  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...

  “I gained because I knew this” “I had told you so” “I told you, stock X is going to double” “I knew this is going to happen, had predicted it long back correctly” What is one common thing you can sense in all the above remarks? The need to control, which stems from the need to predict and to create a narrative. Our brain is wired in a way that it needs to seek patterns in past events, analyze new information or events, and categorize them in accordance with past events. A narrative creating machine that we are, we find a correlation between the most random events which have the remotest possibility of being correlated. Let me explain, say you bought shares of Tesla. Is it suppose to obey you and rise in price because you bought it? The stock has no clue and is not even interested in knowing who bought it. Hell, it should ideally not even move just because Elon Musk tweets something. But it has moved in recent times whenever he has tweeted. Now there are two pos...

  A few basic ideas which I wish to reiterate to myself as they contain wisdom to think and become better. Embracing lifelong learning : If there’s one thing that should not stop no matter what situation you’re in, it is learning. Could be through reading books, watching videos, etc. The day we stop learning we almost stop growing. Reading opens up your brain, gives you a larger repository of knowledge to take information from, and a better reference point to think about. Time with Self : You’re going to spend the most time in this world with yourself, in your mind. You have to make sure it is a good place to be otherwise you won’t be happy. Things happen so effortlessly when you’re happy that nothing feels like a task. The way to improve your time with yourself is through reflecting on your thoughts as they eventually turn into actions and habits. Needless to say, it will help you know thyself better. Routine : One of the most important traits of any successful human being on eart...

  Investopedia defines risk as “Risk is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcome or return.” Different people define risk differently for some, it could be not earning on investment or a failed investment, for some it is not being able to beat a benchmark return sounds like risk. How should we look at risk? The risk would be taking permanent losses i.e. losing all your money Risk is having forced to liquidate all your stocks because you don’t have money to take care of expenses Risk is brokers calling for margins or force closing your position Risk is losing the financial security of your family & dependents Getting wiped out in business is a risk Not being able to do what you love to do due to work pressure is a risk Risk is putting yourself in situations where exists a possibility of dying even if it is 0.001 % Let’s invert & look at what risk is not? Share prices moving up & down e...