Tuesday, June 26, 2018

Toughest Decision in Investing

Having spent the last few years investing and having read some of the widely recommended investing books – I have come to the conclusion from my experiences that the toughest decision to make in Investing is When to Sell”.

Here are the reasons why I feel it is the most difficult decision –

1.  There is no way to know if you’re selling at the highest value.

a)  The stock can still go up (little up OR much higher) from the price you sold it at. It can go downwards too. But it is peculiar human nature that we remember only the times when we were left rueing our decisions.
It is said it is impossible to “time the market” i.e buy at the lowest point and sell at the highest point on the graph. There’s absolutely no way to do that so futile to try for that.

b)  Also, we keep hearing some surreal stories like so and so bought a stock at X and after few years it was worth 10X (multi-bagger). Everyone believes/hopes that his pick would turn out so. There’s a saying “Do not be married to the stock” – so keep emotions out of your decisions.

2.  External Factors (sometimes Noise)

At any given time – there are investors/traders/brokerage houses standing up for both sides of the trade for any given stock. It is very hard to make a choice if you are to listen to them.
With so much information floating around it (and the subsequent confirmation bias from that), it gets incredibly confusing and often the window of opportunity passes and you’re left to regret.

Try to lean towards the most rationale/practical choice. [easier said than done!]

3.  Keep collecting profits

There is also a school of thought which recommends that you should keep booking some profits from time to time as to hedge against the decent element of uncertainty (Black Swan events as Taleb would call it) in the markets. Now how to decide when to collect some of your money from the table; how much money should you collect (5%? 15%?).

4.  After selling – how to re-invest?

If you eventually come to a decision that you need to sell, you have another HUGE decision to take – how to reinvest the money?
To me increasing the number of decisions you need to make in investing increases your chances of failure. Unless, it is plain and obvious to sell [you need the money/need to pay off the creditors/you got the returns you aimed for] – you shouldn’t.

This is why when to SELL is the biggest and possibly the trickiest decision in an investing lifecycle.

Tuesday, May 8, 2018

Conflict between Morality and Etiquette

Usually morality and cultural etiquettes are aligned. But there are few instances in life where they come in direct conflict.

It is usually a tradition/etiquette in some cultures that you do not speak ill about a person once he/she has passed away no matter his/her wrongdoings in the past. But this is something that has recently started to generate lots of conflicts.  Or atleast I’ve started noticing it now.

With the recent demise of Margaret Thatcher and Barbara Bush – both personalities who had made some unsavory comments, which hurt the feelings of a large section of public, this tussle seems to have risen in intensity. Whether we should mourn the person and let go of the past instances which hurt feelings and offended people OR be as blunt as the person in question when he was alive was with others feelings.  

Without a doubt, these are divisive times with social media providing a platform to voice your opinions about anything and everyone to large audiences. It has been put to use in a good way (ushering positive change) and in a negative way (trolls in the garb of anonymity wishing unspeakable ill for anyone they don't like). Clearly, morality and etiquettes are not the top considerations anymore when number of views/TRP/viral nature of content can be strong determinants of the paycheck.

I’m just trying to weigh the arguments in this tussle although I do not claim to reach at a conclusion at the end.

We all have a fairly decent idea of why one should not speak ill of the deceased. Courtesy, decency or respecting the person’s life on the planet and nothing can be changed/undone now. It is usually these.

The reasoning given on why scrupulous scrutiny should continue is: 
i) There are different yardsticks for influential and powerful public figures. It seems like Public figures not only forego their privacy when they step into the public limelight but are also held against high standards thus exposing them to be critiqued long after they have passed away. There’s this piece in The Guardian where it says this line of argument. 

ii) Another interesting one is – “Respect should be earned during the lifetime and not after it”. This is indeed very profound and emphasizes importance on actions.
iii)Speak the Truth -  Irrespective of the situation with the person around or not say what you feel the truth is.

It’s hard to wrap your head around all these arguments on both sides. Someone well-versed with religious scriptures could offer any quotes on this topic but I feel like most things in life – this is not a black or white question but a Gray one having no clear answer.

So far, all attempts to regulate what is said on the Internet has failed (I’m not in favor of any regulation. Self-regulation is the best but that’s whole another conversation). What is scary is now that everyone has picked a side aka tribalism this conflict is going to get worse in the future.