Investors — No Emotions Please

 

Lavasa — First Planned Hill City of India

Financial investments and emotions do not go along. Many wise men have already spoken about it, but I had to learn it my own way. I guess I am the one who does not believe in theories, so easily. Rather than reading the words of wisdom in books, I prefer to experiment. I am an emotional person by nature. But I didn’t know it would be so difficult to survive in the financial world with your emotions. Be it stocks, real-estate or anything else, investment principles are not altered. You must remain emotionally detached to expect returns.

I like to share the most emotional investment of my life and the lessons learnt. Hope it helps the people who are unlike me, the ones who believe in other’s theories:)

Falling in love

I fell in love with this place. It was an early monsoon in Pune and we decided to enjoy our Saturday in Lavasa — The first planned hill city of India. It was a two hour drive from my home in Pune. I had heard about this place but could not make it earlier. And this was the first time for me and my two other colleagues to explore this place.

We were soon driving on Temghar — Lavasa Road, with the lush green scenery on its sides. We found this road much better than the ones within Pune (at least in 2010). We started absorbing the beauty of countryside with the lakes, villages, open air and the cozy weather. And then came the steepest curve, almost 180 degrees of turn, where only the first gear helped (manual transmission). We knew the hill area started. Our car was almost crying when we reached the summit. We were almost standing at the top and could see the whole city underneath.

It was beautiful. The city was covered with the clouds, briefly showing its outline. It was almost 10 am in the morning but still the road ahead was full of mist. We had to drive down 8km further through the curves, in the midst of mist. We started getting the hint of infrastructure in this place. Roads were professionally built with all the signs, guarding rails, landscaping. The whole area was well guarded by security. We reached the city which had a bank, a school, a five start hotel, independent houses, commercial street. And all next to one of the biggest lakes I ever visited. This was beyond my imagination, in such a far distant place. I had never seen any such place in India. It was difficult to resist my temptation to fall in love with Lavasa.

By the time we started driving back, I had decided to get my weekend home in Lavasa. I was not the only one. My other colleagues shared the same thought. And by the time we were back home, our plan to initiate the formalities were clearly laid out. We contacted the company officials and requested for apartment quotations. We were impressed with our quick decision making skills and the fast execution. With in a week, we made the advance payment and received our allotment letters. I had just booked my lake facing apartment. I could not stop imagining myself, sipping the morning tea in front of the lake and getting lost into the beauty of nature.

Dream falling hard

I was living in the dream world. The construction was supposed to finish in two years. Four months had already past. One fine day, my newspaper reveals - Lavasa lands in trouble for flouting green laws. Orders were issued to stop the construction immediately. This wasn’t the first time somebody had raised the concerns with Lavasa construction. Environmentalists and Social activists were raising their voices since long.

This is normal. Thats what I thought. All the big projects face legal battles in some way or other, in India at least! Eventually capitalism wins. Lavasa corporations was a subsidiary of one of the leading firms — Hindustan Construction Companies. The project was well supported by the top politicians of state (Maharashtra). I considered the construction halt as temporary glitch, which the company will be able to deal.

It took more than a year to get the sanctions clear. Lavasa corporations did get the permission to start the construction but with some caveats. In the meantime company’s bookings were stopped. With no money inflow and only the outflow (maintenance costs, loan payments, employee salaries) the one year gap had created a big dent in company’s financial health.

It did not stop here. Real estate market was in boom when I booked the apartment but the saturation was visible now across the country. The demands deteriorated. And the uncertainty due to legal issues further degraded the brand value of hill city. This kept going for years. Though the company kept postponing the date of possession, I kept my dream alive.

I had made 70% of the payments by the time I got the news that company filed for its bankruptcy. I knew this is the full stop. I will never be able to see my dream home. Only thing I wanted to get was the money in return. Its been two years since I filed my claims, but I did not hear anything from the authorities. As per the experts if the liquidation happens, every investor would be taking a hefty haircut, almost 90%.

Hard lessons learnt

The wise men have said — Treat your failures as experiences. I am trying to do the same. Here are the lessons I learnt from the “investment of my life”.

Follow the signs

I liked Lavasa for its location, infrastructure and the beautiful landscaping. I thought, if I I like it, others will like it too. And the ever increasing demand will soar the prices high. I got blindfolded with my love to this place and ignored the facts. I did not look into…

• What are the environmentalists concerns? What are the social activists objecting to?
• What is the scale of opposition?Are there any legal lawsuits against the company? Are there any protests going on? Is the government already looking into any of these objections?

Its correct that many big projects face legal challenges but it does not mean to ignore the facts. We must watch out for any signs that indicate a shaky path ahead. These legal matters discussed above were already in advanced stage at the point when I booked. A bit of study could have saved my investments.

Stop your losses

Stock investments have the concept of stop-loss but its applicable to other investment areas as well. Before investing, you must decide at what point of time you will let the investment go. What is the limit you are comfortable to take chances?

I did not decide on this. I remain optimistic that some day my investment will see the light. I got multiple chances to exit. I should have booked the losses and moved on. Yes there were some penalties to break the agreement but still my losses would have been much smaller than what I expect now (90%).

Fix your targets

Yes I had fallen for Lavasa. I considered it as my dream home. At least in terms of location. I sensed it quite early that its not going to be easy. There were many times where I could have come out of this deal. When the construction stopped, or when the company postponed the possession dates (multiple times), or when a money was demanded even when the progress was least. I always comforted myself with the thought that eventually everything will fall in place.

Emotions has no place in the financial world. Either you make profit or loss. You must calculate your investments and returns over a specific period of time. You must decide the target price and period before you invest.

In my case I had not defined any period. Though I had no plans to sell the house but I definitely wanted to enjoy the returns in terms of rental or stay. As I had no fixed period in my mind, I could not take any decision on it.

Conclusion

Though the lessons I learnt are related to my financials but they are applicable to many areas of our lives. Be it financial, professional or personal. We must decide on the time-bound targets before we invest in an activity. We must follow the signs indicating upward or downward trend. If its upward book the profits or else stop your losses.

My First $500 in Stocks

 

Image by skeeze from Pixabay

I know what you are thinking, its petty! You can hardly do much with this. Be it rent, insurance or the household needs. What important though is the success of my perseverance. There was a time when I got drowned in the neck- deep losses. But it was my perseverance that helped me in discovering the winning strategies. Will the returns be consistent? I don’t know. Only time has the answers to this question.

I failed fast. The steep downfall of stock market in pandemic is the most significant event of my short journey in it. At first it was brutal but then it helped me in overcoming my mistakes. A better investor I guess. I am feeling more confident than I was nine months back, when my journey started.

The journey started

I started in the stocks only a few months prior to the pandemic. I was looking for investment opportunities and landed upon the idea of stocks. I had heard mix stories on the market and I was not sure about its prospects. I did not mind taking a risk though. But I wanted to prepare myself first.

I started exploring the trading strategies and landed up on the concept of “Swing Trading”. In this trading style, investment tenure is typically few weeks or months. I was more interested in short term investment so it suited my needs. Also it requires only couple of hours daily commitment. This meant I don’t need to compromise with my existing routine, much. But it didn’t come so easy. This field demanded good awareness on concepts of Technical Analysis, Tools, etc. It was too much. The literature on this subject was all over the place — blogs, videos, books. Finally I found an audio book on Amazon audible. This provided a good platform for me to take my first step in the stock market.

The bitter truth

No magic happened in the first month. I followed the guidelines like a sincere student. I selected some “mid-cap stocks” with good fundamentals. Picked up the ones which created the right curves and buying positions. Fundamentals of these stocks were impressive. So much that I got glued to them, emotionally. Even though the prices fell down for them, I kept my faith up. Some of them did come back and some didn’t. At the end of the month, my balance sheet was just balanced. Neither it moved up nor down. In fact it was a bit down I must accept ~ 2%. Clearly the formula did not work. But the daily movements in stock prices convinced me to experiment with another trading style — “Day Trading”

I was ready to take the benefit of momentarily swings in the prices. And I got lucky. The first day I generated $50 dollars. The next day $60. And the next day, I fell straight on my face. I lost $150 dollars. This time my balance sheet was not balanced. It was negative. I had lost almost $500 in the month. Along with the money, I lost my interest too. For me neither the Swing Trading nor the Day Trading worked. I cannot be a trader, I decided. The only way I could be connected to the stock market is through long term investments. I convinced myself with the only remaining trading style, in the books.

I had researched on few stocks already, with good fundamentals. Though they did not give me any returns in the short term, but I was confident long term investments in them will be fruitful. Returns will be much better that ETFs. I decided to look into the stocks less frequently. Got busy with my work and stocks were the least priority. And the pandemic began. I was not worried. I had invested in the stocks with strong fundamentals. Even if the market comes down, it will impact their value temporarily only. And then it started falling.

It was mid of Feb 2020 when the market crashed. And it crashed almost daily for few weeks. By the time I realized I need to take some action, I was down 50% of my portfolio. And experts were still not sure, if its a bottom.

The Art of Trading

Continued failures in the stock market tried to shoo me away but I knew I could make it.

The first lesson I learnt in the market is never to buy or sell stocks in panic. Do not enter the market with the mindset that you are missing out on the opportunities. You must follow the market but not in fear. You need to turn off your panic button, it has no place here. Right time to buy or sell should be defined based on your trading style, investment period and the chart indicators. Whether you are a short term investor or a long term, you must learn to understand the charts and patterns. Technical analysis helps us in identifying better buying and selling opportunities.

The second lesson I learnt is to put a stop-loss. I always understood this concept but never applied practically. And this caused me to bear heavy losses. If a stock goes below your stop-limit, you must sell (or buy if its a short position). Even if you booked profit with 4 (out of 5) stocks in the portfolio, pulldown in one stock could be enough to erase your earnings. “Never ever loose your money” is the key mantra.

If you stick to the above two, this is good enough to start your journey in the stock market. The only part remaining is to improve your winning chances. And this will come gradually. Even if you do not score in your early investments its not going to harm your financials (assuming you execute your stop-loss actions). In fact this is going to improve your filtering criteria. Your screening efficiency will go up eventually which will convert into your profitability.

The final nail is to decide the trading style. For me, I am back to square one — Swing Trading. You can choose to be a Day-Trader or the Long term investor. There is nothing wrong in either of these styles. But it should suit your routine, pockets and emotional stability.

Looking forward

I could have easily run away and never enter the market again, when I went in losses. I could have closed this chapter of my life but I chose not to. I somehow felt connected to the stocks, prices, charts and money. And this kept my will to continue. I am sure there will be many other challenges too in the future but I am ready to face them. I am ready to fail, retrospect and learn.

Every journey is different. You might experience different challenges than mine. You might learn different things than me. What important is to stick to your journey and improve your chances!

WE - Need To Change

In the middle of Navi Mumbai traffic, and in the midst of rains, continuous honks of the cars behind me are driving me crazy. Sounded like I am at dire mistake. Yes !! I was not jumping the signals in spite of no policemen around.  And people behind me are of-course eager to do that. Most of these people are rushing to their offices having white collar jobs. Looks like jumping signals is such a norm here.

I remember while working in Talawade [Pune], we used to get stuck in long lasting traffic jams. There were some infrastructural issues for sure, but it was often made worsen by the sophisticated class pulling over their vehicles on the wrong side, creating a big time catch 22 situation. Over-speeding on highways, parking on the wrong place, drunken driving are just some other instances where our responsible behavior is so evident. Sometime back, I was meeting my friends who were boasting of  not giving tolls, and paying penalties with clear sense of proud. Wow!! Looks like we have adopted ourselves with breaking the rules very well.

With this "WE", I am not referring to Indians. No!! I am specifically referring to the educated class. The class who is considered to be most responsible section of our society. According to some critics this is the section which will shape India's bright future. Is it only the traffic where we break the rules? Other instances like, submitting fake bills/documents by individuals for tax evasion is such a common act in IT organizations.

Are we responsible for the ill-managed state of our country to any extent? We always talk about politicians breaking the law. We criticize them and held them responsible for the ill-managed state of our country. If it comes to breaking the laws and rules, how are we different from the politicians and other law breakers. Do we have a right to criticize the law breakers who pop up in our media now and then?

Some people might have an opinion that the rules, they are breaking are petty in nature. May be yes! But more than that we are just opportunistic. Wherever we can escape laws for our benefit, we go for that. As we belong to the educated class who are in general, less "risk takers", we don't opt for the high risk law breaking activity. Wherever there is less chance to get caught, or a less penalty, we follow the trail. Our mentality is nothing different then the other severe law breakers.

We need to change this!! We need to come out of this Hypocrisy. We need to change our MENTALITY. If we represent the section who is considered most responsible, we have to justify it. We have to stop breaking the rules, however petty it is. That's the only way our future generations can be groomed to behave responsibly. Its not the educated class but its the "Responsible Class" which is going to shape future of our country. A bright one!!

To support this,

Today I take an oath, that I wont be involved in breaking any rules/law however petty the rule/law is. 

Economic Reforms and Our Good Deeds

What a big deal if FDI bill is pushed to the backburner?

It might not be for some people. But yeah... its a big deal with the sentiment in corporate segment across the world. Multi National Companies and foreign investor bodies are losing faith in india inc. Even indian business conglomerates are thinking to shift their base out of india. Indian policies are no more open now, and indian market is no more a preference. Just imagine if all these corporates pull out their money from india ....can we sustain?

Somewhere in the back of mind I feel, this damage is been done by ourselves only.

If I recall the situation around a year back, india inc was running smooth. With all the uncertainty in economies around the world, india was standing pretty robust. Around the same time our news channels started flashing various scandals. A series of corruption headlines like 'commonwealth games', '2g' just shook everybody's head. Fire was spreading fast and with Anna as a catalyst, it became a movement. Lot of people contributed to it, for the sake of india's good of course. But can we call it successful? I dont know. May be it has revived the people emotions against corruption, but what about the negative sentiment it created within the minds of foreign investors .. ??

Indian goverment has become weak and truly helpless. Inspite of it being aware of the repurcussions on its FDI decision, they cannot take a chance on another mass rage. FDI is been slapped back by oppositions and the coalitions so hard, that I doubt government is in a position on pushing economic reforms and policies any more. These are the same policies which led india shine some 20 years back, and now they are pushed aside for the sake of mean politics.

Anna is talking about another movement against lokpal bill. Are we ready for another revolution with Anna? I feel india inc is just not ready for another unstability in indian politics.

We want this social reform, but not at the cost of our economical growth !!

Ram - He is not God

RAM!! With all these dushera celebrations around I wondered why do we call Ram a GOD. Was he really a Superpower? On contrast, I believe all his actions were just HUMAN !!

He was helpless when his own father asked him for VANWAS. Are we so proud of him killing Rawan that we treat him as GOD. Well that too he did for his beautiful wife. But later on he surprised everybody by leaving his pregrant wife to her own fate. Wow !!

What was so great about him? I wonder sometimes whether the whole Ramayana was kinda a propaganda of a KING to make himself popular. And he influenced the religious leaders so much that all his tales got linked with the Hindu religion. Hmm?? Looking at the history of india, there are so many heroic stories of so many heroes [Kings] but why none of them are associated with religion. I am sure the hero [Ram] in this heroic tale was smart and powerful enough to influence religion. He knew what he wants to acheive and by what means. He is definetly successful in making himself popular and making himself a GOD!!

Looking at ramayana, though Ram is treated as GOD, he was actually a mean character. He invaded whole lanka just for his wife. Was he a true lover? I dont think so, coz he left her as soon as he realized that he would have to compromise his kingdom if he doesnt do so. So why did he invade lanka...I think he always wanted to be a Great & Powerful RULER. When Rawan took his wife, it hurt his ego to a great extent. But more than this he wanted to beat Rawan to prove his power and superiority. He was always crazy about power, kingdom and money and thats why he went back and accepted the kingdom of ayodhya. He never bothered about his wife and kids later. Isnt this MEAN?

I think this human race was always in search of superheroes to be associated with the Superpower. Superpower which everybody knows exists but not the form of it. And thats why we accepted these superheroes as our gods. Well its not the case with Hinduism only. All the religions have superheroes [GODs ofcourse].

But who cares. I believe in celebration. I like to sing and dance. I like to eat good food and have sweets. I like to share all the happy moments with my friends and family. So stop thinking and just chill out.

Wish you guys a VERY VERY HAPPY DUSEHRA!!

Mauritius - A sophisticated Mini India

After a long juggling on my vacation locations, I zeroed-in on Mauritius. I was stunned by its beautiful pics over the net. An island surrounded by blue lagoons!! An island full of green landscapes!! Believe me - it’s ACTUALLY as beautiful as it looks out in pictures. In fact somebody has truly said that pictures themselves can’t express the magnificent beauty of Mauritius, You have to be there to experience it. But this is not the only thing which impressed me. There is a whole different world out there with a complete blend of east and west, which I like to give you a glimpse of. And I would call it – A sophisticated Mini India.

Around 50-60% of Mauritius population is of Indian origin. Interestingly they look like Indian, dress like Indian but don’t speak like Indian. Oh yeah! French is the most common language over here. And these Indians have very well adopted it. Hindi and English have become secondary languages for them, and they JUST manage to speak in these. It’s not only the language what they have adopted well, you can clearly see a reflection of European culture when they talk and move around. Another interesting fact is that most of these Indian migrants hail from Bihar. These people still follow Indian traditions in terms of clothes and rituals. You can see females wearing sarees, salwar suits with the big orange colored sindoor over their heads. People have proudly put up small temples and red flags in front of their houses as a symbol of Hinduism. Along with this Indian culture they have embraced the sophistication of Europe.

Infrastructure of Mauritius is way ahead than India. The planned roads, buildings, shops are the things to cherish. The whole country planning in terms of infrastructure clearly reflects European sophistication. Every corner of Mauritius is well connected with magnificent roads. Though transport options are limited [buses and taxis only] but these are good enough in number and frequency. If you talk about vehicles on the road, you won’t find many two wheelers. There are some scooters and bikes, but 90% of the vehicles on road are 4 wheelers. In fact for every 10 people in Mauritius there is one car on the road [a figure provided by locals]. Most of the international car brands you can see on the roads. By the way, you won’t find any cycles [pedal] here, instead of that a luna like vehicle is in fashion for economically poor class.

Greenery with beautiful landscapes is what you find across all the roads. Houses are usually average built but well planned and demarcated. Even the small streets in capital [Port Louis] are way ahead than our Indian haphazard setups. Capital covers quite less area, so you won’t find many big buildings around, but hotels and resorts spread around Mauritius enhances its beauty in its own way. You can see numerous sugar cane fields around, very well placed in harmony with the other setups like houses, buildings, hotels, etc. How well towns and villages can develop together in harmony, is what this place tells us. By the way, sugar industry is one of the prime industries in Mauritius. Other primary industries include tourism ofcourse.

I had a really short trip of 7 days in Mauritius but would love to spend more time here. I am sure it inspires every Indian who visits there. If I visualize a developed India, I am pretty sure it will look like Mauritius – A sophisticated Mini India.

US visit : Brotherhood

I was visiting United States first time and I was thrilled. It was my official trip in portland. I was recieved at airport by one of my old friends. We were good friends in college and I was meeting this guy almost after 6 years. I was quite impressed by his changed accent and life style. THINGS were american and I had liked it with my first glance. Dont ask me Why :)

So coming to the core of this talk, once we made up a plan to roam around his campus [portland university]. Campus was really good, spreaded within the downtown area with multiple locations, buildings, etc, etc. Lot of parks in between as well. Though the campus is scattered but beautiful too. We were capturing these campus moments with my camera clicks :)

During one of these snaps, I tried to put my arm around this guy [friend] and was just shocked by his reaction. He almost jerked my hand away and said "Dont be a gay". Well that was HOSTILE !!. After that he gave a 2 min painful lecture on guys and gays etiquettes and their differences offcourse. Still it was an OVERREACTION to me.

A similar incident happened when I went to San diego to visit my another friend [again a collegemate]. We were on some outing and taking our snaps. I had forgotten my previous incident and again did that gayish act. Oh lol, the reaction I got was exactly same. Hmm...so its not only my friend in portland but the gayish culture is not accepted in san diego as well :)

I just thought to myself , am I missing something?? In india we [guys] used to put arms around each other. It was so casual, so warm filled with the emotions. The emotions which brought us together. It was a symbol of brotherhood, a friendship whom we seek in our happyness and sorrows. These people spent few years of their lives and they forgot this lovely gesture of ours so disgracefully.

Well I cant force an individual to stick to its culture and values but does it mean you will accept everything that comes on your way labeled as AMERICAN. Just a thought!!

Being an INDIAN !!