I’ll give you some examples, followed by comments. Since this article is about learning, let’s start with this:
“What we learn from history is that people don’t learn from history.” When investors get either too fearful or too greedy, they sometimes hide behind the notion that “This time it’s different.” Usually they regret it.
On fear and greed
“Two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. … We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” This is the simple recipe for being a contrarian investor. Continue reading
Here is an anecdote between investing and saving , Savings are anyway always killed by the inflation considering the time value of money,
You may lose some or all of the money you invest depending upon your planning and risk appetite . You can earn interest by putting money in a savings account, but savings accounts generally earn a lower return than investments. Investments have the potential for higher return than a regular savings account
Saving is Passive
Investing is Active. Continue reading
Extraordinary returns follow extraordinary discipline. Discipline in buying and selling, and maybe the most important one of all, holding. Developing the conviction to hold is something that I’ve learned over time. It didn’t come easy. The basis of this article is to give some insight on how to develop the conviction to hold your winners. It is very tempting to sell along the way, and it’s okay to take a little off the table, but the big money is made by holding.
“It never was my thinking that made the big money for me. It always was my sitting.” — Reminiscences of a Stock Operator
Many of us, myself included, look at stocks that have made big moves and think to ourselves, “If I would have only knew about that company and bought it back then.”But would you really have developed the conviction to hold during the run up? The problem is that to achieve a multi-bagger in the portfolio, you have to hold a multi-bagger. And if you want it to change your life, you need to hold a lot of it. Continue reading
In personal finance, if you divide the number 72 by the rate of interest, you get to know the number of years it will take for you to double the money..
Ex: if the rate of interest is 9%, simply divide the number 72 by 9% and the answer is 8. Thus 8 years will take to double your money if you invest at 9% of rate of interest.
INTEREST: we can use this rule in reverse to know the rate of interest needed to double your money to achieve your set goal. Continue reading
It’s often said that financial markets are driven by two competing emotions, greed and fear. There’s a third emotion that requires constant management: boredom.
It’s exciting when assets go up or down by a lot. Generally, they don’t. It’s boring to watch things that don’t do much in a hurry.
And it’s boring to wait for the market to validate your assessment of fundamental value. Continue reading