Risk Management : Art of Living another day !!!

 GUEST POST Today's post is by Manish Dhawan, founder of Mystic Wealth and my co-host at Stoic Investing Podcast. I know of very less people, who are as conscious and stringent on Risk management, as Manish is. He follows a very different style than mine. He is a proponent of Trend Following against my Value Investing focus (even though he is a die hard buffett…

Wait: Don’t Read Warren Buffett Letters!!!

To remove all doubts, let me first come out and say this clearly: Yes, I am a ‘Value’ Investor. No, I don’t invest only in low PE, low PB stocks and Growth is an essential component of ‘Value’ for me and most importantly, I absolutely cherish Warren Buffett Letters (and many other Investor letters which I intend to share on my website with my readers) Now, having said…

Scuttlebutt with Paul Lountzis

At the start of my investment career, few thoughts which made obvious sense to me were received from few amazing resources of knowledge. Besides the usual Buffett letters and Graham’s Security Analysis and many other books, a favorite of mine was ‘Common Stock and Uncommon Profits’. Philip Fisher always referred to Scuttlebutt ( Original term for a Ship bucket where sailors would meet to discuss…

Sheep in Wolf’s clothing: An asset’s true character

Let’s assume that you own a hospital (say Hospital C). You have been doing well in your market and currently have the third largest market share, and you are thinking of installing 500 slice CT machine (because both your two major competitors (Hospital A and Hospital B have one each) and it will cost you around 2 crores. You bought the machine and now it…

Octavo Pansophy #1: James Gipson

It has been quite a while. In these 2 long years, I went from working for a fund to start my own advisory firm along with an excellent investor and most of the time has been spent understanding businesses and reading annual reports. Few years back, I thought of starting a series of articles called “Octavo Pansophy“, but a dramatic turn of events in my…

Human Misjudgment : Deprival Super Reaction Syndrome

Imagine the following scenario. You are sitting at your work desk sipping your coffee when your boss comes and offers you the following deal.   He offers you a fixed bonus of Rs 1 crore for the year. Besides this, he offers you a variable bonus. For the variable bonus, he asks you to either take another fixed Rs 50 lac or flip a coin.…

Human Misjudgment : Authority

Authority, authority!” they shout Whose minds, not large enough to hold a doubt, Some chance opinion ever entertain, By dogma billeted upon their brain. ~ Ambroce Bierce   There is one thing we all have been taught from very beginning and that is to accept what our elders tell us; to accept their authority.   To do otherwise was considered to be an act of…

Human Misjudgment : Endowment Effect

Today I discuss the human trait that, despite all its glory, has lead to disastrous consequences for many individuals and societies and specifically in investment world.   In fact, if there is one trait which, even though I do frequently observe in successful people in various other human endeavors, is very rare to find in the top strata of investing community.   In Munger’s speech,…

Human Misjudgment : Social Proof

Few years back, while buying a book on Amazon, I ended up buying two more books along with the intended purchase.   It was due to a feature of Amazon, which tells you what other buyers have bought along with the book you are trying to purchase. I never heard of these books earlier but after few more clicks, I was convinced enough to buy…

Human Misjudgment : Confirmation Bias

“I hated discussing ideas with investors, because I then became a defender of the idea and that influences your thought process.” ~ Michael Burry (The Big Short)   I’m sure this is one statement most of you will relate to. We often discuss stock ideas which, we understand, are contingent to future events but if we declare/discuss the ideas in public, irrespective of how the events…