Tag Archives: Best planning for young

The ‘Yaksha Prashna’

In the heart of the forest, the Pandavas wandered during their exile. While pursuing the stag, the brothers sensed urgency of water, Yudhisthira requested Nakula to locate a water source. To their relief, Nakula spotted a lake. However, a peculiar crane, claiming ownership of the lake. The crane informed Nakula that it could only get water after successfully answering his questions. Disregarding the crane’s warning, Nakula died soon after tasting the water.

In a tragic turn of events, one after another, the brothers met with the same fate at the hands of the crane on the lake’s shore, simply by disregarding its warning. Eventually, Yudhisthira arrived at the scene and got devastated by the loss of his siblings.

The crane unveiled itself as ‘Yaksha’, and warned, “This Lake is under my ownership and your brothers paid the price for not answering my questions before drinking from it. If you also ignore this, you too will suffer the same fate.” Yudhisthira responded respectfully, “I have no intention of claiming what is rightfully yours. Kindly ask me your questions, and I will make every effort to provide satisfactory answers.”

As the story goes, Yudhisthira answered with the wisdom drop by drop and all his brothers came back to life.

With respect to investment, the five answers of the ‘Yaksha Prashna’ can be following

What is the most surprising thing in the world? – The most surprising thing is that countless people believe that their wealth is immune to risk. They forget that fortunes rise and fall like tides.
What path should one follow? – The path of disciplined investing. Analyse history, study fundamentals, and plan strategically. Emotions sway like monsoon winds; principles endure.”
What is the greatest wealth? – Contentment. True wealth lies not in hoarded gold but in finding peace with what one possesses. Market highs and lows are mere ripples.”
What brings the greatest happiness? – Detachment from greed and unrealistic expectations. Happiness blooms when we accept what is achievable, ignoring market noise.”
What must you protect? – Investment strategy should be of ethical standards, honor and integrity guard wealth. Shortcuts lead astray.

As an investor, Investment is nothing but following simple these 5 ‘Yaksha Prashna’ and not deviating from them.

Nishit Siddharth Shah

90% of his brain was missing and he still lived

Dear Patrons,

In 2007 in France, a 44-year-old man went to the doctor complaining of numbness in his leg and underwent a brain CT scan that revealed a shocking truth. That man didn’t have 90% of his brain. The skull was almost entirely filled with cerebrospinal fluid and all that remained of the brain was a thin peripheral portion surrounding the skull.

Yet that man, had been leading a normal life for years: he was married, had two children, a job. He moved, laughed, loved and ultimately he lived. The case shocked the world scientific community and was described in the prestigious Lancet journal, becoming the subject of questions and amazement.

Many questions about the very concept of consciousness, understood as “awareness of the self” and the possibility of leading a normal life practically without a brain. The brain invaded by cerebrospinal fluid and eroded by 90% of its volume but during this time brain recalibrated itself over the years, allowing him to lead a normal life anyway.

According to a hypothesis, “self-awareness” (or detailed self-cognition) is formed through experience, the relationship between oneself and the surrounding world and learning, and is subject to continuous modifications and adjustments in course of life.

Similarities are in investing as well. An investor needs to have “Self Awareness” in term of own Risk Appetite for his / her investments. Investments done seeing someone else’s portfolio or past performance often do not succeed. Whether investment is in few thousands or crores, ‘sense of self’ helps and plays bigger role than hopping around in multiple investment.

We at Shalibhadra, firmly believe that Investment decisions are not about applying brain every time for creating wealth, But Investment success is more about forming an experience that teaches to handle emotions.

Nishit Siddharth Shah

The shape of fear…..!!

It is from the time of Mahabharata. Once Krishna and Balram were passing through a forest. They had been walking for a long time and now the sun was about to set. It was not possible to move ahead in the darkness, so Krishna said, “Balram, let us stay here till morning, as soon as it is dawn we will move towards our destination. Balram said, “But we may be in danger in this dense forest, it will not be appropriate to sleep here, we will have to spend the night awake.” Krishna suggested – “Okay, let us do this, first I will sleep and till then you keep watch, and then as soon as you feel sleepy, you wake me up; Then I will guard and you go to sleep.” Balram got ready. In a few moments Krishna went into a deep sleep

In sometime, Balram saw a terrifying figure coming towards him, it was a demon. The demon screamed loudly on seeing him and Balram got very scared. This incident had a strange effect. Due to fear, Balram’s size became a little smaller and the demon became even bigger. After that the demon screamed once more and again Balram trembled with fear, now Balram shrank even more and the demon became even bigger than before. The demon slowly started moving towards Balram, Balram was already scared, so he screamed loudly – “Krishna”, and as soon as he screamed, he fell unconscious there. Hearing Balram’s voice, Krishna got up, seeing Balram there, he thought that Balram got tired of guarding and called him before sleeping.

Now Krishna started guarding. After some time, the same demon came in front of him and screamed loudly. Krishna did not panic at all and said, “Tell me, Why are you screaming like this, what do you want?” This time also something strange happened- due to Krishna’s courage his size increased a bit and the demon’s size decreased a bit. For the first time the demon had found someone who was not afraid of him. In panic he screamed loudly at Krishna again. This time also Krishna was not afraid and his size increased even more while the demon became smaller than before. In a last attempt the demon screamed with all his might but Krishna smiled and said again, “Tell me what do you want?” Then what happened was that the demon became very small and Krishna took him in his palm and tied him in his dhoti and then kept him tucked in his waist.

In morning, Krishna and Balram started moving slowly when Balram said excitedly, “Do you know what happened last night, a terrible demon came to kill us!” Wait, wait”, interrupting Balaram, Krishna took out a demon tied in his dhoti and showing it to Balarama said, “Are you talking about this?” “Yes, it is the same. But yesterday when I saw it it was very big, how did it become so small?”, Balarama wondered. Krishna said, “In life when you try to avoid something that you must face it becomes bigger than you and starts controlling you but when you face something that you must face you become bigger than it and start controlling it!”

In the world of investments, if an investor tries to avoid or ignore risks, the risk starts becoming bigger, which can lead to fear-based decisions. On the other hand, if an investor acknowledges the risk, understands it, then the risk can be controlled. This does not mean that the risk disappears, but it becomes a manageable one.

Facing risks is a better strategy than avoiding them. It is about understanding and managing risk, not avoiding it.

Your Problem or You’re Problem?

Dear Patrons

Human mind is encyclopaedia of problems. Like, eat chips or not, put AC on 26 C or 27 C, where to go for holidays, from fitness to relationships, from jobs to hobbies, from personal to professional issues, the struggles of modern life are never-ending. The best way to find resolution is to acknowledge its effect on our psyche and course-correct to a desired routine.

As the story goes, A solo traveller and physiology professor once visited monastery in Sikkim. He has been posed with lot of question about individual problems in his professional life.

He met a very elderly and senior monk and sat across him and presented worldly question on problems. How should one get rid of repeated problems and issues in life? The monk thought for a moment and replied, ‘Well, you must to be like the sun. On some days you go sunbathing, stretch out and soak in all the sunshine in the world. And on others, you put on your shades, roll down your windows, draw your curtains and curse the all for the hot sun. In the end, the sun doesn’t change because of how you behave. It shows up every day just like it used to. Try to be like the sun.’

Same goes for a risk averse investor. There is a simple question to them before investment,

‘Are you taking the risk or someone else making you take the risk?’

When market goes up, No Problem. When market goes down, lot of problem. Some investors are not inherently risk takers and adverse market makes problem to them. Generally to solve this problem they start following someone who takes much more risk than what they actually can take. But is it is not a solution, it is just a herd following.

Identifying own risk taking capacity and investing accordingly is the right course correction. A wise investor makes sure that his problem are not just postponed but duly addressed by course correcting the process of their risk capacity.

It is all seasonal.

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

Weight of Invisible Burdens

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

Does the world amaze you or offend you!

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

The Wrong Bus

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

Speculations

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

Jimmy and his tennis elbow

Dear Patrons,

Jimmy and his tennis elbow

Jimmy paid Rs.1,00,000 to an indoor tennis club that entitled him to play once a week for the indoor season. After two months he developed tennis elbow, which made playing painful. He continued to play in pain for three more months because he did not want to waste the membership fee. He only stopped playing when the pain became unbearable.

When an amount of money has been spent and the money cannot be retrieved, the money is said to be sunk, meaning gone. Expressions such as “don’t cry over spilt milk” and “let bygones be bygones” are another way of putting economist’s advice to ignore sunk costs. But this is hard advice to follow, for example, leaving a boring movie in between or selling non-performing assets.

To make things clear, let’s stipulate that if a friend invited Jimmy to play tennis (for free) at another club, Jimmy would say no because of his painful elbow. For him, the utility of playing tennis with painful elbow is negative. But having paid Rs.1,00,000, he continues to play, seemingly making himself worse off every time he does so.

There are dozens of examples of people paying attention to sunk costs. One involved a friend, who was in argument with his son who wants to play cricket while he wanted his son to play football. That friend already bought football kit for his son. If the son continues to play cricket than football kit goes to the waste. To save what he spent for the kit, he wants his son to change interest of the game. This is falling for sunk cost.

Investors fall for sunk costs many often. Anyone who trades in stock market has portfolio with Sunk Costs. Many stocks / funds are in the portfolio with comparatively less yield than others. But it is not easy to get rid of them. Investors still keep holding them with view that it will someday regain its glory which never happens. Portfolio review and reshuffling has to be the priority for investors. Investing and Reinvesting is two sides of a coin and equally important.