holdyourthoughts

I just finished reading Liar's Poker by Lewis, an account of the early career of a Saloman brothers bond salesman. The book captures the culture and work ethos of a famous Wall Street investment bank and exposes the motives of people who run the business. The fact that the whole business was managed with only short term goals in mind and the customer's interest came last (after personal, followed by Saloman's) is etched into the reader's mind. Also, the hypocrisy perpetuated regularly by the management exposes the emotions of how fear and greed works in the market. Liar's Poker raises fundamental questions in the mind of the discerning reader. Are the interests of the customer ever foremost in the mind of the the broker or is the broker out to make a killing for himself and his firm? Are the tie-dangling MBAs hired by these brokers who walk and talk like financial wizards have any knowledge of the markets or are they just parroting what they have picked up second-h...

Education is something we are supposed to get in school (and college). However, the more "educated" investors meet, the more I come to suspect this. It's like what 'Rancho' in the film 3 idiots says, circus tigers are called well-trained, not well educated. I guess, the education system, the world over focuses on producing a plethora of well-trained people. The genesis for that, I suppose, dates back to creating workers for industrial factories. What is really needed in life and in investing is multi-disciplinary learning. Learning and correlating various subjects and finding their real-life uses. Subjects that really help an investor is basic mathematics, algebra, probability, logic, philosophy, history and very importantly psychology. Unfortunatley, colleges that turn out MBAs teach very little of this. Arcane academic theories are as useful to an investor as a wooden stick to a tiger hunter in a dense forest - it's just not useful enough. As Charlie Munger ...

Knockout Entrepreneur by George Foreman and Ken Abraham was a decent read. It tries to relate Foreman's experiences as a heavyweight boxing champion and as an entrepreneur after his boxing career was over. It is always interesting to read about someone who is a high achiever in his chosen field (like Foreman in boxing) and then goes out to achieve success in another unrelated field. It proves that success is based on certain attributes like hard work, perseverance and the ability to think and act for oneself. This is as true in the boxing ring as in real or business life. The book is simplistic in it's approach and readers who are looking for some guides on how to star a business will be disappointed. This is more of a story of how Foreman made it big in business rather than a how-to guide. The book contains mostly common-sense approaches to starting a business which is available in nearly all this type of books. People who know George Foreman and have some liking of boxing wo...

There are some very important questions that you can (and definitely should) ask yourself on a regular frequency. This aids in introspection. When people are in school or college they have term exams which help them judge if their progress on their education journey is reasonable. One of the problems of growing up is we stop asking ourselves that question. One probable cause is because we are not conditioned to ask questions of our progress ourselves. So, here is a ritual that I suggest everyone follow atleast once a year. It's best to choose significant days to do this like our birthdays, New Year or any such day. What you need is a pen and a blank sheet of paper and a quiet place to sit and contemplate. With paper and pen in hand ask yourself the first question, "What would I do for the rest of my life if I won the lottery for xxx amount today?" The amount can be anything that you think is more than enough for you. Think about this. Write what you would do if you did ...

Last week I completed Bill Bryson's Short History of Nearly Everything. It is a good book that tries to cover in one sweep the evolution of natural sciences. It starts of from the creation of the universe and goes on to explain the universe, planetary systems and other celestial phenomenon. It then moves on and covers diverse topics like Physics, Chemistry, Biology and Geology. It takes the user through a journey of how each of these subjects of study evolved over a period of time and also it's more illustrious practitioners. The book has very nice glimpses, in the form of anecdotes, into the lives of great scientists. It is a very good read and is sure to engage readers who are scientifically inclined.

I just completed Parag Parikh's new book titled "Value Investing and Behavioral Finance". It is a very nice book with examples of equity mis-pricing by the markets based on fear/greed. It explores various mental models of behavioral finance. It makes nice reading because the examples are from the Indian markets so familiarity is high. It has some interesting insights on index investing. Something that I had not known/thought about earlier. Parikh has put data from Sensex from 1979 to 2005 of stocks that were taken out of the index. The data suggests that companies that are taken out from the index have actually performed better over long term than the index! It is a good book to read for long term investors, specially if you are interested in investing in the Indian stock markets.

This weekend was great. Saturday we went to the Alumni Association of our school (AGCS). I met a lot of old friends after over 14 years. I met Irshad, Tabish, Hemant, Debarshi Ganguly, Durjoy Sengupta, Rajni and Kavita after 1995. It felt really nice to see these people. Sandip (Das) is now in Calcutta for a vacation. So, today we met at Tung Fong, Park Street. Sandip and his wife, Sudipta and his wife, Biswajit and me. Sanjoy and Chotu came late, nearly the time when it was time for Bishu and me to leave. It's nice and cold in Calcutta now, so it was good to go to Park Street in the evening. The good thing was I managed to come out without eating a lot, so the new year resolution is on track.