Tuesday, March 29, 2016

The value of time

Let's get right to it. Here's the precursor to this blog post. I highly recommend going through it first before you go continue with this post.

I have been harping about the important of money in the previous two posts. But here is the thing about money. It is out there in abundant supply!! There is no end to it!! The government can print as much of it as it likes! And that's exactly what we have seen happening in the past few years. I know this is a gross simplification of things but the point I am trying to make here is unlike say, gold, oil, dodos or chimpanzees, money is not going to get extinct. You can actually lose your money and earn it back again! (I know what you are thinking: Even I am surprised seeing chimpanzees in that list. Fun fact: We share about 98% of our genes with chimpanzees! Bet you didn't know that).

Anyway, my attitude towards money has changed a bit ever since I have started thinking of it as there being lot of it out there and it not being a scarce commodity (The catch is you gotta know how to earn it but that's not the purpose of this post). So, equally important, or more important, is another quantity: TIME, which IS actually the most scarce quantity there is and I am talking here, about the time we spend running after money. I have actually mentioned this in a couple of earlier blog posts - 

And this is what our guide Seneca who was first mentioned in the last blog has to say about the importance of time.

"What man can you show me who places any value on his time, who reckons the worth of each day, who understands that he is dying daily? For we are mistaken when we look forward to death; the major portion of death has already passed. Whatever years be behind us are in death's hands."


Now, here I have to admit dear readers, that this just blew me away. And here's why. I don't know about you but I have always though of death as something in the future. Something that I know will surely come one day, but nonetheless, one day in the future. Never thought of death as something that is actually happening to us each and every moment that we live. If doesn't make us realize the importance of time nothing will.

Take care and good luck! 

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Sunday, March 27, 2016

Seneca as applied to personal finance

This post is going to make a lot more sense if you go through the first post of the series. Here's the link. I promise it would take you less than a minute to read it.

We were (are) basically looking for answers to how to get rid of the eternal cycle of running behind money. Sometimes it feels like the goal is just within our grasp, only for it to elude us. And then the circus begins all over again. Its not just money, its the amount of time we spend in search of it. And its not just the time you spend at work, its also the time you spend in commute and also the time you spend getting ready to go to work. And can you even put a number on the amount time you lose in the evenings just because you are too tired after an entire day of work. I don't need to tell you that these numbers really add up!

But like I said last time, I would be the last one to knock down money. When you don't have enough of it to fulfill your basic needs, its the most important thing in life. So, here we are, looking for answers. Let's make one thing clear before we go ahead - I don't have any answers or advice for you. I don't have anything to sell. I actually don't care about you enough (sorry about that!) to even try and influence your way of thinking. This is not a self help site. Actually its a blog about trading. Or finance rather. Just an average guy trying to find some meaning from it all. Surely there is more to life than just …….. (fill in the blanks as you deem fit!). If you are still interested, lets go ahead.

My readings introduced me to this guy born in 4 BC and it turns out he had some pretty relevant stuff to say. Seneca. Here is a link to his Wikipedia page if you are interested to know more about him.  Pretty interesting life. Anyway, he wrote a bunch of letters which are available in book form, Epistulae morales ad Lucilium (Latin for moral letters to Lucilius). I came across them just a few days back and was blown away on how relevant the letters were even in today's times. I am still reading the book but midway through it, I decided to blog about it, so that writing about them might help me do a better job of understanding and appreciating them, and also make them available for easy reference. Since this is a blog about finance, I am going to concentrate only on the application of the letters to personal finance.


Enough said. On to letter number one when we meet again. 

Take care and good luck! 

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Friday, March 25, 2016

The value of money

I am a firm believer in not reinventing the wheel. Maybe it's because I am lazy. Maybe it's because I am smart. I would like to believe the latter. I also believe that a picture can say a thousand words. In a post yesterday, I posted the following image and commented on the futility of running after money one's entire life. Since I love that image and will use any excuse to reproduce it, here it is. 


But hey, make no mistake, money is important. For someone who doesn't have enough to make ends meet or doesn't know where the next meal is coming from, it is the most important thing in life. Money first, everything else second. Even health.

But for those of us who are reading this blog, it would be a fair to assume that we have won the ovarian lottery and are not in the dire condition mentioned above. But do we have enough money? Heck no. Well then, how much IS enough money? I don't know. Firstly, is there something at all like too much money? Hmmm…How long do we postpone what we really want in life for the sake of earning money? Is there a way out of the rat race? I can't claim to know all the answers. And no, living without the finest things in life is not an option for me. So, that means extreme frugal living is not an option. But like I said, there is no point in reinventing the wheel. Luckily for me, and for you too if you too are interested in finding out these answers, people much smarter than us have pondered over these questions since ages. And done a damn fine job with the answers too. At least some of them.

I will do a series of posts on one such person and his solutions in the next few days. These posts are for my benefit but if you, dear reader, are also more than welcome to join me in this journey. More the merrier!  


More on the guy whom I am talking about in the next post. But here's a hint: He was tortured to death. Actually it was suicide. 

Take care and good luck! 

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Thursday, March 24, 2016

What is your goal in life?

I find myself asking this question to each new batch of Masters students I teach. I don't know why I do that. I remember I used to hate it when people used to ask me the same thing. For some reason, people stopped asking me that question after I completed my PhD. Maybe they thought that I had to have it all figured out by now. It has just stuck me that people not asking me that question anymore has to be one of the top benefits that I have got from my PhD degree. Take that all you people who think that it's worthless!

Anyway, back to the post. "What is your goal in life?" I ask them this question every year. Poor lost 23-24 years olds. Like I said, I don't know why I ask them this. Maybe I am just checking if their generation is smarter than mine and has it all figured out. Maybe I get some sort of comfort from getting to know even they don't have the answers. Maybe I am just jealous of the age they are at where everything still seems possible. Maybe I just want to feel happy for them for not being like me. 

I ask them. Every year. I get some answers. Mostly I get lost faces. After I am done with asking all of them, inevitably someone gathers the courage to ask me the same thing. They look at me expectantly. Little do they know that most of the times even we don't have answers to the questions we ask. They will learn that quickly enough. Till a few years back, they got "I don't know" as an answer. At least, I was being honest. The answer disappoints them but I could see they were also comforted by the fact that even I didn't know. It was their "Right back at you" moment.

But my answer has changed in the last couple of years. I have given them a simple one word answer. "Retirement". More confused looks. Then laughter. They think I am joking. I tell them I have never been more serious. Then the discussion begins. More on that another day.

Take care and good luck! 

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Why do people get attracted to trading?

Work 9 to 5. Be responsible. Love your family. Do your job the best that you can. Work as hard as you can. Spend wisely. Save for the future. Postpone that trip around the world for another year. Hey, that's what retirement is for, isn't it? Try to earn as much as you can. But no matter how hard you try, it just keeps getting a tad more difficult every year, doesn't it? Ever wondered about the pointlessness of it all? I think the following image captures it pretty well.


Story of most of our lives, isn't it? And if you are stuck in a job that you don't like, it's all the more worse. Trust me, I know what I am talking about. And "don't like" is an understatement. I guess that is one of the main reasons why most of us are attracted to trading. People think its the rush that you get or the gambling or get rich quickly aspect of it that makes people addicted to trading. But I don't think that's the only reason or even the main reason. Most of us are smarter than that.

We want the freedom that one gets from trading. The control over our own lives that it gives us. The ability to make our own decisions. And yes, we fully understand that our decisions have big consequences and contrary to what most arm chair psychologists think (actually, aren't they ALL armchair psychologists??), most of us are willing to take responsibility for our own actions. We want the ability to take a day off when we want. The ability to work from home. The ability to spend more time with the family. The ability to not get away from the dreaded commute. The ability to live our lives on our own terms. This is what gets most of us attracted towards trading. That's the dream. Its not the get rich quick or the adrenaline rush. Common, we are smarter than that.

But you readers know, that for most of us this story does not have a happy ending. More of that later.

Take care and good luck! 

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Here's to new beginnings

2010 - 551 blog posts
2011 - 173 blog posts
2012 -   54 blog posts
2013 -   36 blog posts
2014 -     1 blog posts
2015 -     1 blog posts

I don't need to plot a graph to paint a picture for you readers. This blog is on its last legs. And its been that way for quite a while. The posts in 2014 and 2015 were there just so that I could say to myself that I had been blogging for 6 years. I guess I am easy to fool, at least when I do so.

Still, no regrets. Its been a great journey so far. Lots of friends made all over the world. Still have a tad below 4000 followers on twitter (that's just an ego trip, right?). Anyway, I don't want to spend too much time dwelling over the past. Here's the link to the best of the blog so far, if you are interested. It's not half bad, even if I say so myself. If nothing else, it does represent an honest journey of a trader.

I was 28 when I started the blog, so that makes me 34 now. The good news is, a lot has changed since then. The bad news is, a lot has changed since then. I wont bore you with the details. Its been a pretty average journey so far as far as life is concerned. It could have been better. It could have been worse. You know what I mean.

But you need to know that I have moved on from technical analysis to Buffet. Its hard to trade when you have a full time job. Oh yeah, the fact that you have moved halfway round the earth doesn't help too. Have over 60% of my net worth in the stock market, still think picking stocks is the most challenging job in the world and simply love stocks. Only thing that has changed is my way of picking stocks. Turns out fundamental analysis and technical analysis combined is a kick ass way of picking stocks.

So, what prompted me to start writing this blog again? More on that in the next few posts. Will it continue this time or will it be just another false start? Frankly speaking, I don't know. Somethings, only time can tell. We will be in touch.

Take care and good luck! 

You can follow me on twitter for latest blog updates. Also, here is the link for free subscription to the blog.