Dear Patrons,

It is all seasonal.

We like a bit of winter freeze but not Bone-chilling winter cold. We like a moody monsoon but not thunderstorms. We like sunshine with passing clouds but not red hot summer. If you the year of nature, it is all seasonal. Everything comes and goes as per their cycle. Time moves on in phases.

If your life was a cycle of seasons, which season are you in now?

Make a note of the ‘now’ in the question. Like all things true, seasons too are transient. If you are stuck in the rain, look for an umbrella. If it’s bright you and sunny, go out and get some Vitamin D. Some friends live between multiple seasons in a single day. Their morning starts with a sunshine and end with a hot summer.

If the same seasonal change question to be asked to Investors, do investors observe seasons in their portfolio as well? Sometimes it goes down and sometimes it goes up, and that is not all. As a human being, we enjoy monsoons and stay indoors in scorching heat. Similarly, investors should learn to enjoy but be cautious while market is delivering great returns but stay calm when market is not delivering returns.

Dealing with loss and profit is exactly same as enjoying each and every weather situation. Start going in open for long in summer, it will make you ill. So if investors start doing other way around during market seasons also, they will start making losses.

Nishit Siddharth Shah

Dear Patron,

Weight of Invisible Burdens

There is a guesthouse in Varanasi, where people check in to die. It’s called “Kashi Labh Mukti Bhawan’. There is a strong belief that if you breathe your last in Kashi (Varanasi), you attain ‘Kashi Labh’ “nirvana”. Bhairav Nath Shukla, the manager of Mukti Bhawan is the most interesting personality who has witnessed more than 12,000 deaths. He shares very important life lessons from his long-standing career.

One of the most resonating life lessons is, ‘Resolve all conflicts before you go.’

Shri Ram Sagar Mishr, a Sanskrit scholar of his times. Mishr was the eldest of six brothers checked to the guesthouse, carrying his little paan case, and asked for room numbers 3 to be reserved for him. He was sure that he would pass away on the sixteenth day after his arrival. On the fourteenth day, he called on his younger brother of forty years to come see him. That day he relieved and resolved his conflict which was making his heart heavy. Both wept for long before Mishr took few last breathes.

Shukla has seen this story play out in many forms over the years. He said, People carry so much baggage unnecessarily all through their lives, only wanting to drop it at the very end of their journey. The trick doesn’t lie in not having conflicts but in resolving them as soon as one can.

The story stands very much similar to investment portfolios of investors. Investors load up their portfolios with so much weight from hot tips from friends, media and relatives, filling IPOs, chasing past returns etc. In the end, the portfolios end completely loaded with not performing stocks / funds.

A wise investor resolves the non-performance as soon as it is visible in portfolio. An immediate action would definitely a better choice than weeping for the undone regrets in the end.

Investors should get their portfolios checked at least once in a year for portfolio monitoring. This is the most important part we carry out for investors during their investment journey.

Nishit SIddharth Shah

 Dear Patrons,

Does the world amaze you or offend you!

As per Mayan mythology in Mexico, there are two trees that looks strikingly identical. One is called “Chechém”, and the other is “Chaka”. One is poisonous and the other is its antidote. They both grow together. It is like made of each other. If we dig in and read up about those trees, there is a beautiful folklore, explaining why Chechém and Chaka grow close to one another. It comes from an oral tradition handed down through history in Yucatec Maya.

Once upon a time, there were two ancient brothers, Kinch and Tizic, young Mayan lords who fell tragically in love with the same beautiful woman, Nicté-Ha. The brothers were polar opposites; one calm and thoughtful, the other reckless and evil. They fought a furious battle driven by passionate jealousy, and, in the end, died in each other’s arms, neither attaining the love they so endlessly sought. Their final request to the gods was to see their beloved Nicté-Ha again, so the brothers were reincarnated as Chechem and Chaka- trees that share one flower.

Mythology aside, scientifically, both trees produce and share same flowers and fruit. These trees also end up sharing them with various birds that typically eat from them. The seeds are then deposited in the same place and often take root less than a meter apart.

In investment portfolio also there are some Chechém investment and there are some Chaka investments. Some are making losses for years but we hold on to them considering they will achieve their value someday while some investments make good profit and we tend to withdraw them considering exit time from them has come. This stands true for most of investment scenarios too. Our ‘Chaka’ is close by, waiting to catch our attention.

Investment journey is an amazing journey with full of ups and downs. Investors will make best out of it if they don’t offend with situational worries. Make maximum ‘Chaka’ out of ‘Chechém’ in your investment portfolio.

Nishit Siddharth Shah

Dear Patrons,

You boarded the a bus, thinking it would take you to your destination. You settled into your seat, having worked for the entire day. As you took out your phone for checking distance to destination, you realized that you had made a mistake.

You had no idea that you were on the wrong bus, heading in the opposite direction. You would miss your appointment. However, you will not leave the bus because you are proud of your decision and you think the bus driver will drive you to your destination.

How absurd is this thought?

If you realize you have boarded a wrong bus. Without any second thought you would get off the bus at next stop and correct your actions by taking the right bus. It is the surge of panic and regret that makes you correct your decision.

Consider the same scenario with your stock investments. You have bought a stock on advice of a friend or relative thinking it as your Right Bus. You thought that this stock will make good profits for you. But it turns out to be a Wrong Bus for you. It starts going down and that friend or relative does not have clue why it is so.

Ideally, you should follow that instinct to immediately correct the wrong and realign the portfolio. But human behavior prevents to do that. You will keep on holding that stock considering that it will make you some profit someday.

This is as absurd as holding on the same wrong bus considering that it will get you to your destination someday.

Investors should always believer in correcting the actions. Not all investments are perfect. But with rightly correcting them brings investments back in order.

Nishit Siddharth Shah

Dear Patrons,

Let me explain Speculations with an exercise. What are the different possibilities of this image?

Before going further, Guess! What would it be?

… A Balloon?

… A new experimental type of kite?

… A ‘designer’ frying-pan?

… A plain button with a loose thread?

Our mind is speculative.

We can only see the visible part. We do not know what else is. There is so much overlap between speculation and hypothesis of the same thing.

In the world of speculations, it is always fun and thrill because they are open to people who do not have special knowledge. A balloon can be treated as frying pan or a kite or a button. The one who uses speculations for his benefit can put any random logic to stand correct to their arguments.

However, a hypothesis is much more serious. It is only accepted with right set of question answered. A hypothesis, provides a frame through which we can look at a part of the world. Hypothesis add richness and interest to thinking and to conversation.

Coming to the point of Investments, speculations have become major source of information. Such information spread fast and gets accepted easily because of speculations add thrill and excitement to the piece of information. Asset classes where fundamental hypothesis is required, has to be kept away from speculations. In equity investing, it is very easy to engage someone with convenient speculations but at the same time talking about hypothesis with the same person is very boring task.

At Shalibhadra, we believe speculations/guess/ gossip will not help to create wealth. For this, instead of focussing on distractions, correct approach is investors’ focus, discipline and right attitude.

Nishit Siddharth Shah