Live events have an element of mystery. They appeal to your craving for the unknown. They give you the high of watching something unfold in front of you. On the flip side, missing a live event can induce FOMO, the Fear Of Missing Out. You feel terrible that others get to know something that you don’t.
Peter Lynch, one of the greatest investors of our time has given ample time tested techniques in this book.
How retail investors can win in the stock market
-> Take advantage of what you already know. i.e invest in familiar sectors.
-> Invest in a house before you invest in a stock market
-> Ignore short term fluctations
-> Predicting economy or stock market direction is futile
-> 6/10 wins is a stellar record
Though raised in Mumbai, I am Tamil. People from Tamil Nadu have a huge affinity for their top actor of all time, Rajinikanth. Internet memes have been created in his honour. At every movie theatre in Tamil Nadu, be in Chennai or Kanyakumari, when a Rajini movie is aired, fanatic Tamils stand up and cheer his every punch dialogue. It can be comical, entertaining, bewildering or exasperating, depending on whether you like him or not. I am not a big Rajini fan, nor do I call him a superstar, nor think he is a particularly good actor. But even I cannot deny that his so-called ‘punch dialogues‘ are packed with lessons for life, especially in the virtues of productivity, discipline and humility. Add to that the music scores that accompany his every punch line and the words seem profound and immortal!
Who is the book for: The book is meant for retail investors with a long term investment horizon.
What retail investors must avoid to avoid losing money?
(1) Following the stock tips provided by brokers blindly. Brokers have vested interests in increasing volume of your trade and not your profits.
(2) Intraday Trading : Its a high speed game which hardly anyone has mastered. Its no wonder we don’t have any stock market millionaires/billionaires who have become rich solely due to intra day trading.
(3) Investing on Borrowed Money: Although stock market is one of the greatest wealth generators it comes with no guarantees or timelines. Pressure of borrowed money and to make higher returns than the cost of funds can cause the investors to take many high risk bets leading to loss of capital.
(4) F&O trading: High margin trading without understanding its risk can cause capital to be wiped out in no time.
The time tested strategy to create wealth in the stock market is to:
“Invest in high quality business(stocks) and hold it for the long run.”
Recently, Maharashtra banned the use of plastic bags. Shops stopped handing out polythene bags overnight and people found themselves carrying things in their hands or going back home to set out with a cloth bag. It caused some confusion and friction for a week. Then everything felt okay. Carrying a cloth bag seems like second nature as Maharashtra has accepted and fully integrated the ‘no plastic’ rule.
Why wouldn’t people bring their bags before the ban? Why did it take a ban to spur them into action? And how could people change so quickly?
People already knew that use of plastic is questionable and that cloth bags are environment friendly. There were thousands of awareness programs about the ‘evils’ of plastic. But the systems were in favour of plastic. With polythene bags costing a fraction of a Rupee, shops would give you polythene bags free of cost. People didn’t need to carry bags with them and would set out empty-handed. Not anymore. With cloth bags being costlier, vendors stock up only paper bags. But paper is unsuitable for wet (curd) or really heavy (watermelon) grocery. People had to take stock of their behaviour and alter it. They needed a nudge.
And nudge, we too did. The featured image of this post shows our home’s front door, with a cloth shopping bag attached to the hook. It is nearly impossible for us to forget our bag behind. In this post, I want to emphasise the importance of nudges and triggers. I want to say why mere awareness is not enough and why you should have a system of triggers to make you really do something you plan. Continue reading Grow awareness, but nudge yourself