Tag Archives: Best fund manager in 2021

Borrowing Shoes to look Rich

Dear Patrons,

Borrowing Shoes to look Rich

In 1888, in Curacao, a Dutch Caribbean island, A bridge was built to connect two parts of the city. A toll tax was proposed but officials wanted it to be a “progressive” tax. So, they decided rich people will pay more to cross the bridge.

So how to identify rich and poor quickly?

They had an idea, rich people wear shoes (its 1888, remember), so they decided to charge a tax based on that. If anyone cross the bridge wearing shoes, he pays a tax, but if he is barefoot, he can cross the bridge for free. This format was Simple, Easy and Brilliant idea… But it failed miserably.

Why? What happened to this progressive idea? A good learning here, the rich always wanted to avoid tax so they simply took off their shoes and crossed the bridge. Paid no tax.

While the poor did not want to be seen as poor. They wanted to show off their status by crossing the bridge wearing shoes, so they wore shoes by buying it or borrowed the shoes to cross the bridge.

The lesson is… Rich stay rich by awareness on cash outflow. Poor stays poor by spending more. Interestingly even in today’s time, we find humans are irrational in spending habits.

The entire behavior is called Hyperbolic Discounting…

Those who are not Rich still wants to show their status to the world. They live by one line ‘Live as if no tomorrow’. They reward their own selves on instantaneous and short term achievements. This zest keep them in a trap of continued borrowing stuff which they actually don’t need.

While Rich people have thought process based on vision and wisdom. They only think of long term and think about their tomorrow irrespective of their social status. This behavioural psychology is the key of successful investor.

Are we wanted to be a rich & wealthy through investments or a person who just “borrows shoes” to cross any “bridge?”

Nishit Siddharth Shah

Seeing without Eyes open

Dear Patrons,

Seeing without Eyes open

You probably haven’t heard the name ‘Stanislav Petrov’ and maybe you will find it hard to believe that he saved the world from a nuclear war. He was a Soviet army officer, stationed as duty officer at Serpukhov-15 (the secret bunker outside Moscow) monitoring the nuclear early-warning satellite system. His job was to report any threat to the higher command so that a retaliatory action can be taken in time.

On September 26, 1983, the system detected five incoming missiles from the United States. The sirens howled and the big screen in front of him lit up with the word ‘Launch’ flashing on it. The instructions were clear: he had to pick up the phone and report the attack to the military and political leadership. They would, no doubt, respond with their own missile launch.

Every minute of delay took away valuable response time. But Petrov froze. “I had a funny feeling in my gut”, he recalled in an interview later. Something told him this was a false alarm. He rechecked the details; the system was clear about the incoming missiles. But Petrov wondered, ‘Why would US launch an attack now? ‘why would they launch only 5 missiles?’ It didn’t make sense as five would hardly damage Soviet capabilities and they would surely retaliate with a much severe attack on the US. Petrov called the command and reported a system malfunction. He was right!

On investigation, it was revealed that the system mistook a reflection of a certain cloud formation as a missile attack. If Petrov had not trusted his intuition, the world would have been very different today.

In investment, this boils down to phenomena Expert Intuition.

Investment decisions are not only about playing with numbers, juggling past data and coming to a random advice. Experience in the game plays very important role to gauge how really an event would make its ripple effect. Stanislav Petrov could have easily pressed launch button by relying on his system. No one could have blamed him. However, he thought something otherwise and made an alternate decision with his Expert Intuition which has saved the world.

Combination of process and intuition can really deliver the best desired results in Investment process journey. Experience in the game counts!!!…

Overseeing Oversight!!!…

Dear Patrons,

Overseeing Oversight!!!…

David Blair was a British seaman working with in White Star Line (WSL). WSL was one of the most prominent shipping lines in the world in early 20th century. David had opportunity to work on the largest ship in the world at that time, the RMS Titanic.

He was chosen as the ship’s Second Officer during her maiden voyage from South Hampton to New York City. On April 10, 1912, when the ship was ready for departure, the shipping line decided to make a change. They decided to replace David Blair with Henry Wilde, the Chief Officer of Titanic’s sister ship RMS Olympic. Because henry had more experience than David and better skills at running large ships.

Due to this last-minute change, Blair had to pick up his stuff, execute the handover process and leave the ship in a hurry. Being in a rush, David did everything he had to, but forgot to handover a key to one of the cabinets to Officer Wilde. That key was the only key to the locked cabinet that held the binoculars on the ship. By the time David and the rest of the crew realized the mistake, the ship had sailed on the night of April 14, 1912, and Titanic hit a large iceberg.

The ship, that was considered ‘unsinkable’, has descended to the bottom of the ocean. Fred Fleet, the seaman who was assigned the duty of lookout on that fateful night, survived, and said in an investigation, that if he had a pair of binoculars with him, he would have been able to spot the iceberg from far. This would have given the Ship’s command bridge more time to steer away and possibly avoid the disaster.

To Investors – Everyone make mistakes… QUITE OFTEN…

Such errors are due to ineptitude: This happens when we have knowledge but fail to apply it correctly. It is quite painful and frustrating. No one can completely mitigate it. However the solution lies in a simple tool called the “Checklist”. It reduces failure by compensating for potential limits of human memory and attention.

Smart Investor should have own investment checklist on ‘To Do’ and ‘Not to do’ during Mutual Fund investment. It brings discipline and helps reduce mistakes. It also acts as an intellectual net to catch our own biases. This checklist keeps us reminding on ‘What not to do’ during Mutual Funds and which does major work.

Nivesh = Vinivesh

Dear Patrons,

Nivesh = Vinivesh

In Indian Mythology, Vaikunth’s (God heavenly abode) gates are guarded by two gatekeepers – Jaya and Vijaya. They screen visitors who come to meet Lord Vishnu. In many Vishnu temples across India, their idols can be seen standing at the gates of the temples. There are also stories in Vaishu Puran about how they were landed a curse for their mistake in identifying Four Kumaras (the manasaputras of Brahma) to visit Vaikuntha.

We can use the gatekeepers as a metaphor to create a mental model of buy and sell discipline for an investor’s portfolio. Building portfolio is Divine process!!!…

The process of investing consists of a) buying the best investment and b) making room for it by selling the least attractive one from the portfolio. Both processes are linked yet different. They may use similar tools but with different applications. Let us visualize an investor’s portfolio as a room with two guards – ‘Nivesh’ (Investment) standing at the entry and ‘Vinivesh’ (Disinvestment) standing at the exit.

The buy discipline reflects the investment philosophy of the investor. The main job of this gatekeeper is to be intelligent and disciplined. Nivesh, standing at the entry door, has important tasks to do as we all know.

On the other hand, Vinivesh has an equally important job as Nivesh. Unfortunately, he gets much less attention than Nivesh in investment literature. Literally imagining, one generally does give attention to the door from which they come out.

Both, “Buy” decisions and “Sell” decisions, are important for an investor. A smart investor is the one who allows both Nivesh and Vinivesh to work in tandem and in a disciplined manner to create a robust portfolio, thereby increasing the probability of generating good returns.

Smart Investor should stress on ‘Buy and Track’ rather than ‘Buy and Hold’.

The Thor knows where to hit the Hammer.

Dear Patrons,

The Thor knows where to hit the Hammer.

A giant ship’s engine broke down and no one could repair it. The ship company hired an expert Mechanical Engineer with over 40 years of experience.

He inspected the engine very carefully, from top to bottom. After seeing everything, the engineer unloaded the bag and pulled out his set of hammers and delicately took one large sized hammer.

𝗛𝗲 𝗸𝗻𝗼𝗰𝗸𝗲𝗱 𝘀𝗼𝗺𝗲𝘁𝗵𝗶𝗻𝗴 𝗴𝗲𝗻𝘁𝗹𝘆. And soon, 𝘁𝗵𝗲 𝗲𝗻𝗴𝗶𝗻𝗲 𝗰𝗮𝗺𝗲 𝘁𝗼 𝗹𝗶𝗳𝗲 𝗮𝗴𝗮𝗶𝗻. 𝗧𝗵𝗲 𝗲𝗻𝗴𝗶𝗻𝗲 𝗵𝗮𝘀 𝗯𝗲𝗲𝗻 𝗳𝗶𝘅𝗲𝗱!

7 days later the engineer billed the ship company that the total cost of repairing the giant ship was $20,000.

“What?! You did almost nothing. Give us a detailed bill.” said the owner.

The answer was simple:

Tap with a hammer: $2

Know where to knock and how much to knock: $19,998

In investing, data and information is available plenty and free of charge with everyone. However, the importance is of appreciating one’s expertise and experience…because those are the results of struggles, experiments and even experiences out of huge losses.

𝗜𝗳 Experts do 𝗮 𝗷𝗼𝗯 𝗶𝗻 𝟯𝟬 𝗺𝗶𝗻𝘂𝘁𝗲𝘀, 𝗶𝘁’𝘀 𝗯𝗲𝗰𝗮𝘂𝘀𝗲 they 𝘀𝗽𝗲𝗻𝘁 𝘆𝗲𝗮𝗿𝘀 of 𝗹𝗲𝗮𝗿𝗻𝗶𝗻𝗴 𝗵𝗼𝘄 𝘁𝗼 𝗱𝗼 𝘁𝗵𝗮𝘁 𝗶𝗻 𝟯𝟬 𝗺𝗶𝗻𝘂𝘁𝗲𝘀. 𝗬𝗼𝘂 𝗼𝘄𝗲 them 𝗳𝗼𝗿 𝘁𝗵𝗲 𝘆𝗲𝗮𝗿𝘀, 𝗻𝗼𝘁 𝘁𝗵𝗲 𝗺𝗶𝗻𝘂𝘁𝗲𝘀.

Don’t build it to last, build it to adapt 

Dear Patrons,

Have you heard of The Choluteca Bridge?

It’s a 484-meter-long bridge over the river Choluteca in Honduras, in Central America, A Region notorious for storms and hurricanes. A Japanese firm was contracted and built a solid bridge in 1996 over river Choluteca which can withstand the extreme weather condition.

In Oct 1996, Hurricane Mitch hit Honduras. There was 75 inches of rain in four days. There was devastation all around, river Choluteca flooded the entire region, 7000 people lost their lives. But the new Choluteca Bridge remained unaffected with a problem. Bridge was intact but the roads leading to it were both swept away. And that’s not all. Flooding forced the river Choluteca to change course. It created a new channel, and the river now flowed beside the bridge, not under it. While the bridge was strong enough to survive the hurricane, it became a bridge over nothing.

The Choluteca Bridge is a terrific metaphor which can happen to us as the world is changing in ways we may have never imagined. Adapt to change. We get focus on creating the best solution to a given problem while the problem itself might change. Think about that too. ‘Built to last’ might have been a popular mantra. But ‘Build to Adapt’ could be the way to go.

The same goes with Investments. Investors do long term investments proudly pronouncing it as wise decision. This will definitely last of long but will not be adaptive. Investors invest in Fixed Income instruments for long term which can fetch them 0.5% extra. However, problem is not solved with that extra return. Real challenge is to fight the inflation and earn over and above it.

Your investment is may be for long term but must be adaptive with changing scenario. Else, you could be left with a Choluteca bridge. A superb bridge. Over nothing. To nowhere.

S.O.S.: Slower, Older and Smarter.

Dear Patrons,

S.O.S.: Slower, Older and Smarter.

“An Airbus 380 is on its way across the Atlantic. It flies consistently at 1000 kmph at 35,000 feet, when suddenly a Eurofighter Typhoon fighter jet appears.

The pilot of the fighter jet slows down, flies alongside the Airbus and greets the pilot of the passenger plane by radio: “Airbus, boring flight isn’t it? Now have a look here!”

He rolls his jet on its back, accelerates, breaks through the sound barrier, rises rapidly to a height, and then dives down almost to sea level in a breath-taking dive. He loops back next to the Airbus and asks, “Well, how was that?”

The Airbus pilot answers: “Very impressive, but watch this!”

The jet pilot watches the Airbus, but nothing happens. It continues to fly straight, at the same speed. After 15 minutes, the Airbus pilot radios, “Well, how was that? Confused jet pilot asks, “What did you do?”

The AirBus pilot laughs and says, “I got up, stretched my legs, walked to the back of the aircraft to use the washroom, then got a cup of coffee and a chocolate fudge pastry.

The moral of the story is: When you’re young, speed and adrenaline seems to be great. But as you get wiser, you learn that comfort and peace are more important.

A young investor may find it exciting and thrilling by investing in smallcap stock tips, equity derivatives, crypto currencies etc. But a wise investor has learnt from the experience that thrill and excitement is temporary so they prefer consistent and long term investment which my sound boring at first but it is the most suitable of all.

Achilles Heel

Dear Patrons,

Achilles Heel

In Greek Mythology, the King of Phthia – Peleus, falls in love with Thetis, daughter of the Sea-God Nereus and marries her. They are blessed with a son who is destined to be one of the greatest warriors in the history. The parents were told a prophecy about their son that their son would die at a young age. Worried about the well-being of her son, Thetis, takes the newborn to the river Styx. She performs a ritual to evoke the magical powers of the river water that are supposed to make her son immortal. She dips her son in the river and all the parts of his body that are immersed in the water, are blessed. Unfortunately, the heel from which Thetis held her child did not touch the water and was left vulnerable.

Time passed by and the son was than named Achilles and he indeed grew up to be the greatest warrior of his time. He was the key warrior who won the Trojan War for the Greeks.

At the end of the war however, Prince Paris of Troy shoots a poisonous arrow at Achilles that hits him at the heel and that causes the death of Achilles. The term, Achilles Heel, is hence used to describe a vulnerable point or a key weakness in an otherwise strong constitution.

For investors, Achilles Heel = Investors Ears. Metaphorically speaking, vulnerable point for any investor is their ears. All good investment ideas and plans are vulnerable to investment noise. Noise can be simply viewed as data or information flow that does not help in good decision-making process. It infact deters us from it. Every investor likens the noise to music and keeps on listening it until they realize that there is no significant gain from this data but it may be too late to realize that.

Data << Information << Experience << Knowledge.

No matter how much you feed your brain with data or information, they are only useful with enough experience. Again metaphorically speaking, Noise is to an investor what kryptonite is to Superman! It drains their powers (intellect) and makes them vulnerable.


Dear Patrons,


There are two states of mind,

The Cold state: when our mind/thinking is calm and comfortable

The Hot state: when state of mind overrun with emotions and act with impulse

Imagine you are at the supermarket on a Saturday, buying ingredients for dinner you are planning to prepare on Wednesday. If you are starving while you are shopping, you will tend to shop more than your average food quantity. This is because when you are hungry, you imagine to be starving on Wednesday too.

In the same way, if you are shopping after a meal, you will tend to shop a bit less. You will feel stuffed and cannot really imagine being starving hungry on Wednesday.

When we are in the cold state, it is difficult to imagine how we will feel and behave when we are in the hot state vice versa. We are unable to empathize with our opposite state of mind. This is called the Hot-Cold Empathy Gap.

In the cold state, we make good investment plans. We plan to buy more when the market is down, stay away from temptations, invest for long term etc. But the “Doer” in us, many a times, in the hot state of emotions does the exact opposite. We give up againsts the greed, fear and other biases that lead to inferior investment outcomes.

The investment strategy is like a diet. If the Doer in us gives up to temptations of junk and undisciplined food habits, we are not getting any healthier.

Missing the Forest for the Trees!

Dear Patrons.

Missing the Forest for the Trees!

Belgian surrealist painter Rene Magritte is one of the painting which creates lot of curiosity among the viewers. Name of it is “THE SON OF MAN” (Google it). There is an encrypted message in it. (Read further only if you have google the image).

At first glance, most people would naturally be curious about the face that is hidden by an apple. One can see the face partially but it’s still quite difficult to identify the man. What does the apple signify? What exactly the painting trying to convey for human behavior? For most people, the mind initially focused only on the face. The face is the only thing which is “visibly hidden’.

It is about the psychology of attention and how important it is in the field of investing. Investors often focus on the high frequency short term news / noise and miss out on the long-term goals.

The artist wants to decode a message from the painting which is The closer you look… The lesser you see!!!

Attention is scarce and there is enough noise in the financial markets to keep investors distracted from their core investment process. Here I use ‘noise’ as representative of data / news flow /small events which ideally should not have a significant impact on the investors’ decision-making process. However, noise does take focus away from long term investing and leads to shrinkage of investment horizons. Noise creates excitement and anxiety; and induces participants to trade more. That is the reason for us to remain focused to disciplined investment and control behavior in volatile times.