One very important fallacy is called the ‘Sunk cost fallacy’ – which makes us throw more good money after money already gone bad. Typically a lender keeps lending money to one customer hoping that this will enable the borrower to do well and repay ALL the money. Another manifestation of this is called ‘Averaging’ – […]
Yesterday I did a small gig on what a Real estate agent says…and how you should interpret it…so today it is the turn of the life insurance agent. 1. Sir since you have an income, you should have a life cover: Meaning: You have an income, I need to increase my income, so please take […]
Seth Klarman, a living legend in the Investment world, said in one of his newsletters, early this year: Someday, financial markets will again decline. Someday, rising stock and bond markets will no longer be government policy – maybe not today or tomorrow, but someday. Someday, QE will end and money won’t be free. Someday, corporate […]
Is real estate a fantastic Investment? If yes, are the math tools available to prove that? If no, are the math tools available to prove that point of view? The jury is still out there to judge these questions and there are no clear answers. However I found an article in the Times of India […]
Many people do not know the word asset allocation. Recently I have been talking to reasonably successful people who have achieved fantastic financial success but with a breathtakingly risky portfolios. This is like saying ‘I drove from Mumbai to Pune in 2 hours flat – I drove at a speed of 120 km per hr.’ […]
The assets that are easy to understand are those in which you know how much returns you are getting. So you keep a fixed deposit in a bank, the bank tells you that the FD is for 5 years and you will get 9.25% as return. Ditto for PPF, Kvp, nsc… However when it comes […]
I keep talking about having an Investment Philosophy Statement. What exactly is this? Well for an individual it should have the following: Objective, Constraints, Fears, Investing target, Asset allocation target, rebalancing strategy, Reasons or basis for change in strategy, Monitoring methodology. The Objective / Goal statement can be as simple as: Accumulating Rs. 10 crores […]