Parth's blog

Where does the universe end? Is there really a boundary? Nobody knows if by boundary you mean some sort of a wall that can’t be jumped across. But there is another kind of a boundary. A point beyond which we can’t see or interact. In that sense, the boundary is set by our ability—or rather, inability—to look beyond. Imagine a monkey on an island surrounded by an ocean that nobody can cross. If it can see up to 10 kilometers, the boundary of its universe is its horizon that far. Whatever lies beyond is practically non-existent for the monkey. We know how far our horizon in the universe is. Here’s a law of our universe: Light travels at around 300,000 kilometers per second, and nothing can travel faster than the speed of light. When light from any object reaches our eyes—directly, or after being processed by machines—we can see that object. We can see objects laying far away— very far away . Light from any object should reach us someday, although that ‘someday’ would be billions of ye...

If a book of 200 pages contained the history of humans proportional to the years, only 1 page would be dedicated to civilized societies based on farming. The industrial era would be covered in merely 2 lines! Almost all of the book would be about the life of our hunter-gatherer ancestors. Since humans have always been hunter-gatherers (called so because their lives depended on hunting animals and gathering edibles from plants) e xcept very recently, o ur brain and body are designed to live in the hunter-gatherers’ world (the African savannah) instead of cities and villages. That’s because evolution designs the bodies of the species to adjust to their surroundings so as to optimize for survival and reproduction. And evolution, as you know, is an extremely slow process. 10,000 years is an insignificant fraction in evolutionary terms. The surroundings of our hunter-gatherer ancestors were quite opposite to what we see around us. There was rarely any abundance; there were only shortages...

We overestimate the capacity of willpower, especially, when it comes to our own. The result? New year resolutions don't survive even January. Why not modify the system? The problem is not that you can’t resist the cake. The problem is that the cake is staring at you every time you open the fridge. The problem is not that you can’t focus for long. The problem is that the notifications of all the zillion apps in the phone keep pinging continuously. The problem is not that you fail to push yourself to the gym in the morning. The problem is that the gym is the only place the body gets to move. The problem is not that you need more coffee than oxygen to survive the day. The problem is sleep deprivation. Thank Netflix? The problem is not that you end up spending every penny you earn. The problem is the credit card. And of course, the habit of visiting that nice shop once in a while ‘just to have a look’. “Dekhne ka paisa thodi lagta hai?” The problem is not that you fail to drink more w...

Warren Buffett has educated millions of investors around the world for many decades. He has written and spoken extensively — not only about investments but a lot of important aspects about life in general. This is my attempt to summarise his most important teachings to the investors that I have learned from his letters to the shareholders of Berkshire Hathaway and from other authentic sources. Invest in index funds When an investor’s stock-picking ability is constrained due to inadequate time or know-how, such an investor is better off investing in index funds and space out his purchases. In fact, regularly buying index funds will provide more-than-satisfactory results. Mr. Buffett strongly recommends index investing for the common investors. "By periodically investing in index funds, the know-nothing investor can actually outperform most investment professionals. Paradoxically, when “dumb” money acknowledges its limitations, it ceases to be dumb." This is the mo...

Investing in equity is unarguably one of the best, if not the best, investment options available to the long-term investors. If the economy has to grow, businesses in the country have to flourish; and if businesses flourish, so will the market price of these businesses and the investors’ wealth. Also, investing through mutual funds (MF) is the only sensible way to invest in equity for the majority of investors as against stock-picking . In the last couple of years a large number of Indian investors have realised this fact which is reflected in the steadily rising amounts being managed by the MF schemes. However, countless retail investors are observed confused about finding the best MF schemes for them. The misleading advertisements and mis-selling by the distributors make the matter worse. This article is an attempt to inform the readers about which MF is right for the purpose of long-term wealth creation while minimising the risks. To outline briefly, there are two types of equit...

One should always be suspicious of words like ‘secret’, ‘shortcut’, ‘formula’ etc. when it comes to investing, or most other things in life for that matter. Generally, there are no shortcuts in life. In the end, you must log-out of the Netflix and do the tedious jobs of working-out, eating broccoli and analysing a business in detail. Basically, almost all successful long-term equity investing is about (1) estimating future earnings of a business and (2) buying them at a price lower than the ‘value’ corresponding to those future earnings. This is a tough thing to do, no matter what ‘formula’ you have. Earlier I had written a piece on why most individual investors cannot beat the market-returns and it does not make sense for them to pick individual stocks . Forget about part-timers; majority of professional investors fail to beat the index-returns after accounting for their fees and transaction costs. Hence, it makes sense for most investors to buy the index and end up being an abo...