Monthly Archives: September 2020

Dont get drunk of own ideas

Hello Investor,

In 1966, Frank Blackmore of Transport Research Laboratory in UK designed modern traffic roundabout. Their design was highly accurate to decongest traffic considerably.

However, successfully implemented & operated in UK, It took another 30 years for US & Europe to widely accept & execute roundabouts in their traffic congested roads. In other words, it took 30 years of resistance & unwillingness for them to accept what others have discovered.

‘We are drunk of our own ideas’ which makes acceptance hard to new ideas.

We feel superior for our own ideas not matter how rational and meaningful other ideas are. To overcome, we have to step back & examine quality of our ideas to check whether own ideas in last 10-20 years were truly outstanding? Were we able to build riches from this ideas?

This applies with modern day equity investors. While having invested little time is studying past trends and performance they come up with ideas of their own specifics. However, that turns out to be their individual opinion and which may or may not come true. But with this, they become slaves of their own ill-researched philosophy which is hard to leave behind.

Hopping from Mutual Fund to Equity shares to PMS to alternate fund to commodities to precious metals, Investors think they are optimizing their returns but let me tell you that they are all same asset classes and equally volatile.

We have to learn from the past experience and put it for better use in future. We should remain adaptive to changing environment and act on it much before it is widely accepted.

Have we become ‘Neomaniacs’?

Hello Investor,

Are we suffering from ‘Neomania’ or have we become ‘Neomaniacs’?

Neomania is a new term coined by well-known author Nicholas Taleb.
It is the mania for all things new and shiny.

When iPhone was launched in 2007, it was certainly a device all wanted to have. However, the craze of having a latest iPhone has become irrational race of show off. Same goes with buying a new, fancy and shiny car. Obsession to be among the first to buy new car take waiting period to months.

Hunger of more feeds and information, choosing get-rich-quick schemes, addiction to social media etc is sign of a ‘Neomaniac’.

Covid in 2020 has made lot of investors turn Neomaniac. Short term volatility has made lot of investors turn to other jazzy and hyped investments like precious metals, Self-help stock trading and crypto currency. Due to additional available time, investors try to fetch information just to get easy returns in short time.

A common man is locked in cage of own belief. The need of the hour is to understand that every asset class has its own performance cycle. There is no short cuts for making money. By hopping different asset classes to imitate others and chase returns, investor may lose lifelong savings.

Don’t be a Neomaniac. Stick to your principles.