Aaditya Chhajed, CA, CFA

your capital may erode slowly. You might have to work in later stages of life even if you don’t want to. In 58 years, petrol has approached INR 100 per litre w ith the implied growth in price of 8.86% per annum.  Similar is the inflation rate for other expenses as well.  Simply, if your money doesn't earn at least 8.86% post-tax, you are losing its value. Human nature is a failed investor. The human being is naturally bound by a complex of fatal misperceptions diminishing the capacity of executing a successful lifetime investment strategy.  Cultural factor is a major factor contributing to the essential human incapacity for successful investing.  Humans, in general, cannot distinguish between currency and money. Currency is a medium of exchange. Money is a store of purchasing power. The only rational lon-term definition of "money" is "purchasing power" is a perception that is culturally unavailable to human mind. - Nick Murray   Invest for maximum total REAL ret...

Regret is the most enduring emotion in the lives of most equity investors. Because sooner or later, they make the mistake of getting out of a falling equity market, only to see it turn around and rise, three years out of four, and for the rest of their lives. Some get back in much higher; others never get back at all.  This process gets repeated during the next bear market and the next. No matter: the pain of regret is with them forever. Nor does the passage of time heal the pain. If anything, time and relentlessly higher prices make it worse.  There are, after all, only two master emotions: love and fear.  When markets are falling, investors fear permanent loss; When prices go up, investors fear missing out, and envy (another face of fear)  those who seem to be getting rich. I say again: that isn't "greed". It's just a different form of fear.  Don't envy the harvest of the rich. Envy their pl anting. - Bo Sanchez. Many years ago, there was a detergent adve...

I recently read the book- The Psychology of Money by Morgan Housel, Timeless Lessons on Wealth, Greed, and Happiness ;  the most intriguing investing book I have ever read. Top 20 learnings from this book as follows: Financial success is not hard science. It’s a soft skill, where how you behave is more important than what you know. If you are short of time jump directly to points 19 and 20. 1. No One’s Crazy Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works. Spreadsheets can model the historic frequency of big stock market declines. But they can’t model the feeling of coming home, looking at your kids, and wondering if you’ve made a mistake that will impact their lives. The economists wrote: “Our findings suggest that individual investors’ willingness to bear risk depends on personal history.” The New York Times wrote in 1955 about the growing desire, but continued inability, to retire: “...

I recently read the book- The Education of a Value Investor by Guy Spier.   This book is about Guy Spier’s journey from that dark place toward the Nirvana where he now lives. This blog post includes  my top learnings from the book.  8 Rules developed by Guy Spier to be followed while investing: 2.        1. Stop Checking the Stock Price o    As Buffett has said, when we invest in a business, we should be willing to own it even if the stock market were to close the next day and not reopen for five years. o    We also know from behavioral finance research by Daniel Kahneman and Amos Tversky that investors feel the pain of loss twice as acutely as the pleasure of gain. o    The Rule: Check stock prices as infrequently as possible. 3.        2. If Someone Tries to Sell You Something, Don’t Buy It o    As Charlie Munger has joked, “All I want to know is where I...

Reading Time: 10 minutes. Why are we so bad at separating luck and skill? Why are we so uncomfortable knowing that results can be beyond our control? Why do we create such a strong connection between results and the quality of the decisions preceding them? How can we avoid falling into the trap of the Monday morning quarterback, whether it is in analyzing someone else’s decision or in making and reviewing the decisions in our own lives? Poker vs. Chess Chess, for all its strategic complexity, isn’t a great model for decision-making in life, where most of our decisions involve hidden information and a much greater influence of luck. This creates a challenge that doesn’t exist in chess: identifying the relative contributions of the decisions we make versus luck in how things turn out. Poker, in contrast, is a game of incomplete information. It is a game of decision-making under conditions of uncertainty over time. The quality of our lives is the sum of decision quality plus luck. Von Neu...