Investing too suffers from the same problems as everything else in this gen – too much. We have too many blogs, bloggers selling stuff, bloggers peddling influence, bloggers acting like soothsayers, magazines, channels, …etc. In this cacophony, I can assure you there is NOTHING helping you to improve as an investor. To be a better investor, you need to cut through the clutter. Investing Vipasana is what you need.  Our past investing track record shows us how tightly we all cling to our preconceived notions, how we resist evidence (so bad that we cannot even see them) that we might be wrong and how adept we are at rationalizing (deluding ourselves) into thinking we were right all along. Yes hindsight bias and not maintaining a diary lets us believe that we knew the outcome, but just got unlucky because of some silly mistake that we made. We forget that we were blinded to that possibility all along.

If you were a NaMo supporter you could not see Bihar coming. You then rationalized by saying ‘they did not have a CM candidate’. You did not see Delhi coming. You did not see the ill effects of DeMo.

If you were a Hillary supporter, you did not see the Trump wave (the NaMo wave of 2014 was visible to all its supporters, but of course not to Mani Iyer,  Ra Ga and the other Congress leaders). And the funny thing is that Trump was supposed to chastise Wall street, but as of Mid Jan, the American markets are higher by 5% !

In Jan 2016, my broker woke me up from slumber and asked me to buy more of Hindalco,  Tata Steel and JSW steel. He got me to trade JSW steel. I was wondering why. I did not see the steel revival, but I saw the sugar and fertilizer re rating happening. So sometimes you can see part of the future and sometimes nothing at all. And in most times we are in denial. I did not expect the market economies to catch up so quickly in China. Remember the amazingly stupid sugar subsidy in the USA is hurting the sugar industry world wide but is going on for many decades. I have no clue when the subsidy will end. Will Trump end it?

All that I have said above is caused by CONFIRMATION BIAS and HINDSIGHT BIAS. You can do this simple experiment – stand near a big playground where children are playing and think “so many children are wearing a green dress today” – and count the number of kids wearing green. You will then find that the game can be played with any color, and you will come to similar conclusion. If you did not know about ‘Confirmation bias’ you would do it with just one color (because your kid was wearing it) and conclude that “suddenly more kids are wearing green than any other color”. Wrong conclusion – but your eye was forced to look ONLY at the kids wearing green.

In a world of dropping interest rates and even negative interest rates, RR kept interest rates high. I do think he was very fair on the retired people who live on interest income. Right now the political pressure to reduce interest rates is so high, that I do not think Urjit Patel will be able to hold the interest rates here. How low will we go? I have no clue, but I am surely seeing a soft bias. Having said that will Mr. Patel increase rates say in June, 2017 if the inflation were higher? Again, no clue.

One thing is certain, we have to reduce our expectations from the bond market and the equity market. None of our commentators dare talk of a 11-12% return on equities. I know some famous ‘advisers’ who still happily make predictions in the high double digits – a number not achieved for a few decades on a discrete basis. Some of us were lucky to be riding the Infra boom of 2003 to 7 when our FMCG portfolio made us look stupid. Bond returns too will be lesser, and the portfolio gains in the bond market may now be a part of history. I also realize one huge worry in ageing – we tend to remember the past as ‘how we wished it were’ rather than how it actually was. If we cannot be honest with ourselves about the difference between the truth and what we think ought to be true, we may well be intelligent and irrational. (The Rationality Quotient, Keith Stanovich).

Many, many, many IFAs, and highly intelligent audiences – like doctors – have consistently told me that equities will return in excess of 15-20% p.a. while there is absolutely no evidence to say that. At least recent past evidence – which people use – is nowhere near that number.

Will do an article on how to improve…soon I needed to create this back ground…