The big money is made by hedge funds and mutual funds. This is the popular view. Now lets just explore it further. Lets start with mutual funds. Roughly 80 percent of mutual funds will not beat the market. The basic system of mutual funds is flawed. In India there is a rule if any stock in the mutual fund portfolio becomes 10 percent of the fund size, the mutual fund has to sell it. According to the authorities the risk would increase and it can lead to losses in the future. Investing is not mathematics and set numbers. This is like taking out Sachin Tendulkar or Michael Jordan out of your tea ..read more

You will learn more from history about human behavior than from financial markets. You will learn more from stoics, Taoist than from anywhere else. Once Confucius was asked what would make person best suited for riding a boat. Confucius said that the best skill would be that person should be an excellent swimmer. For if he knows how to swim even if the boat shakes or is turned upside down he would be fine. Any wise investor always welcomes the volatility and it is to his advantage. So he looks for the downside first and the upside will take for itself. It is my strong belief that the best inve ..read more

There is more to be learnt from ancient books than from social media posts. If you read Epictetus, Cicero or learn how to meditate you would learn far and more from it than from anywhere else. The key to life or investing is not adding but subtracting. Subtract all negative emotions like greed, envy, fear, suffering etc. Its very easy to lay all these but to do in actual practice. When you start to meditate and all sort of emotions come in. Your mind begins to wander and then some sage or some book tells you to notice your breath. Then you slow the breath down. the average breath per minute is ..read more

A great investor would be someone who would have these qualities as mentioned below. (Using he in describing..No points for guessing she is as or maybe more capable of being a great investor as she(mostly) has more patience than men) He would unemotional about money. Rational and some people might call them cold too. He would be a contrarian in his approach. The Rudyard Kipling poem “if “would resonate with Him. He would be a constant learner and enhancing his knowledge and wisdom. Knowledge is the easy part, its wisdom that counts in financial markets. He would be ok with not doing anything ..read more

There are round about 5000 companies listed on bombay stock exchange. Out of these round about 4500 are crap. They are no, rather big NO…. Now the left 500 are not all great. There would 300 that would be average. And then there would be about 100 which have excellent managments which make them decent companies. They could be low cost providers, some in cyclical industries, some whose promoters increase shareholders value by share buyback, dividends, by acquiring other companies at discount. The 100 left would would be ones you look at. That means a rate of 2%. Now dont be happy yet. The ..read more

Its been a while since i last wrote a blog. Sorry for the delay to all followers of berkshirepupil. So lets fast forward 5-7-10 years. In life its most important to read history, law of averages and extreme bubbles and recessions. Keeping all those in mind from tulip mania to 1929 depression. It takes a lot of guts to stand against the crowds and invest. In my humble view the prices like these in mid and small cap won’t be there in the next 5-7 years. It is because of Almighty and the mentors that i am able to learn about these manias, recessions and law of averages. But how does someo ..read more

How should i start. Lets fast forward 4-5 years and see in hindsight.You don’t make extra ordinary gains in bull markets but in when you buy in bear markets. What would happen in the markets. A very famous investor once taught me(on a youtube video). There are 28 floors on the Bombay sensex building and when someone says buy from the 28th floor and no one replies. Being that voice to affirm the buy is in born, contrarion, rational or gumption. Whatever you want to call it. Buying stocks at 3-4 p/e or Ev/ Earnings before taxes of 1,2 or 0 with roce of 20% avg for last 5 years. Don’t know ho ..read more

So lets start right away. Suppose you have identified a great company which makes a great product. The company itself owns a lot of shares and roce is over 20% and roe is about the same. Now market is going down by the day. Here is an example of XYZ corp Price Rs 50 Eps 10 Roce (avg 5 years) 33% Roce (avg 5 years) 25% Enterprise value 98 crore ($14 million) Profit before taxes 43 Crores($6 million) Everything looks great and all till now. This is where exctiement gets in. Now lets add another layer to it. Suppose the economy goes down and now the earnings are slashe ..read more

The hardest thing in life and investing is waiting. Some people just cannot wait and that is where the oppurtunity lies. The more volatile it gets the more better it is. The rule is not to let emotions rule you, rather opposite. What i mean by that is be greedy when others are fearful and fearful when others are greedy. There is a price at which it becomes a no brainer, at that price some buy a lot, some buy like its once in a lifetime oppurtunity. The more you play that more chances of you loosing. There are layers of stupidity on on all of us(no one knows that more than me). The question ..read more