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How to Outperform Professional Investors Effortlessly

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You can outperform most professional investors with zero effort. Yes, it is guaranteed . We will first understand the why part of it and then the how part of it. The WHY Part Mathematics of the market: you and me Let’s imagine a simplistic scenario. There is only one stock listed in the stock market. Only one stock of only one company. And there are only two investors in the market—you and me. On a given day—any day, but let’s say 1st January 2022—the price of the stock is Rs. 100. You and I trade in that stock. When I sell, you buy; when I buy, you sell. On another given day—any day, but let’s say 31st December 2022—the price of the stock is Rs. 115. What’s the total amount of money you and I made? The answer is Rs. 15. If you earned Rs. 4, I earned Rs. 11. If you earned Rs. 20, I lost Rs. 5. If you earned nothing, I earned Rs. 15. Plain arithmetic. But wait. We also paid the brokerages, taxes and advisory fees. Let’s assume these amounts totaled to Rs. 3. Now how much you and I ea...
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Thoughts on FIFA World Cup 2022

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We just witnessed one of the greatest football matches of all time pulling down the curtain on the greatest spectacle of the most loved sport in the world. A few quick words: The unworthy hosts : Sorry to begin with a negative, but this has to be said. Qatar was an unworthy host of this great festival of joy. Yes, they organized it superbly, but how can FIFA ignore the blatant human rights violations? Human life and freedom are sacred. We need to be more empathetic towards the migrant labourers including those who died building the stadiums, the LGBTQ+ community and the women in that country. It will always remain tainted in my memory. And I’m not even getting into the corruption allegations on FIFA for allotting the tournament to Qatar in the first place. About the game now. The giant killers : Some of the traditionally weaker sides made this world cup highly entertaining. Morocco and Japan punched above their weights. What’s even more impressive is that they didn’t just sit deep to ...
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Location: New Delhi, Delhi, India
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Book Review: Sapiens (by Yuval Noah Harari)

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Where are the other Humans ? Tigers, lions, leopards and jaguars are evolutionary siblings (Genus panthera ). So are horses, zebras and donkeys (Genus Equus ). Where are our evolutionary siblings? From about 2 million years ago to until around 30-40 thousand years from now, our sibling species lived on this planet. We are Homo Sapiens . They were Homo Erectus, Homo Floresiensis, Homo neanderthalensis (the Neanderthals), and others. No, they were not monkeys. They were Humans . The other members of Genus Homo . Somehow, they became extinct, but we survived. Perhaps we had played a role in the extinction of the Neanderthals ; but we’re not quite sure. Slowly, we spread out from Africa to the rest of the world, and we are thriving—at least for now. We chose to call our humble selves Homo Sapiens ; meaning ‘wise man’ in Latin. Nearly fifty millennia ago, a magical spark happened to our brains that enabled us to imagine things. We call it the Cognitive Revolution, when we become intellig...
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Location: New Delhi, Delhi, India
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Self Propelling Cycles

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We are surrounded by self propelling cycles. Money: The more money you have, the easier it gets to make more money. The rich getting richer is a feature, not a bug. Fitness: The more you move, the fitter you get. The fitter you get, the more you move. We end up thinking some people have blessed bodies. Business: The lower your price, the more you sell. The more you sell, the lower your price. Call it economies of scale to sound smart. Economy: Income pushes production and production pushes income. In a generation or two, a poor country becomes South Korea. Social media: You see what you like & share. You like & share what you see. We polarize our opinions and lose the ability to see things neutrally. The sickulars and the bhakts going mad at each other. Markets: Prices drive narratives and narratives drive prices. That’s why we see bubbles, and even the collapse of Lehman Brothers. Reading: The more you read, the more you want to read. The more you want to read, the more you...
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Location: New Delhi, Delhi, India
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Pizzas and Value Investing

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Here is some myth-busting about stocks. During the process I’ll end up explaining “value investing”—a method of investing applied by many great investors including the legendary Warren Buffett. Pizzas are great gurus. We will take help from pizzas whenever things get complicated. Before we start, be aware of this: A stock (or ‘share’ as it is alternatively called) is a piece of a business. If Reliance Industries is a pizza, a share of Reliance Industries is a slice of the pizza, albeit a very small one. Here we go. Myth: Price of the stock indicates size of the company A large pizza can be cut into many small pieces. The size of the slice does not indicate the size of the pizza. Exactly the same for the businesses. The price of one share does not tell anything about the size of the company. As I’m writing this, ITC’s stock is trading at Rs. 260, and MRF at Rs. 72,000. But ITC is a 10 times bigger company than MRF. That’s because ITC has 12,300 million (1230 crore) shares, whereas MRF ...
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Location: New Delhi, Delhi, India
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