Hindsight Bias. A well known, well documented and well understood behavioral bias. Do I have something new to offer here? Yes, personalization. There is a difference between reading about a bias in a book and experiencing it real time. The former is something one can quote in debates to appear smart; the latter teaches you…
Glengarry Glen Ross, 1992 – One of the most under rated movies in my opinion. Like The Shawshank Redemption, this was a dud when it released but has since gone on to become a cult classic. But then this blog is not about movies, underrated or not. This blog is about investing for the most…
Superficial comparisons are very easy to spot, but rarely work well in equity research. Sell side might still get away with it once in a while but not buy side. When Lovable Lingerie came out with an IPO in 2011, it debuted at a 100% premium to its offer price and stayed at that valuation…
Investment bankers focusing on public markets have their swagger back after a hiatus of three years. They have an important role to play in the capital markets ecosystem, they are the folks who facilitate liquidity events for corporate India. Those who provide risk capital (PE, VC, other investors) to entrepreneurs when they need it the…
Learn new skills, new techniques, new mental models and what not. The self-help and personal development industry bombards us with a laundry list of things we need to learn. This post however is about the part that is as important but is not given enough due. Unlearning concepts that don’t work because they aren’t grounded…
This post is a slightly modified version of my original post on valuepickr a few months ago You can read that here https://forum.valuepickr.com/t/towards-a-capital-allocation-framework/504/86 I have further built further upon some of the points there, especially those related to the behavioral and more personalized aspects of the asset allocation thought process. The investing world is various shades…
You cannot outperform your belief systems. Belief systems are so deeply ingrained into us that they influence our behavior at a sub conscious level. Which is why they are so difficult to change, if you do not even consciously know where your deep-rooted preferences come from, how can you change them? We can see many…
Increases are of sluggish growth. But the way to ruin is rapid – Seneca, Roman Philosopher At its very core the Seneca Effect is a model that proposes that decline is usually way faster than growth. I am not proficient enough to get to the math of it but let us view this as an…
We are educated but we aren’t necessarily numerate. Innumeracy plagues many of our decisions and renders many of them sub optimal; not necessarily bad but sub optimal. We tend to ignore base rates and believe that statistics do not apply to our lives. Our hind brains constantly tell us that our specific situation is unique,…
No investment blog is complete without an analysis of the investing mistakes one has made. My early mistakes were all schoolboy level mistakes that can be eliminated with a good investment process. The mistakes to worry about are those that one can make even after having a good investment process. The kind of mistakes that…