Market View: All experts

Many experts in the market now have a view on the market. This is of course only to be expected is it not? It is like when you thrust a mike in front of a person, suddenly he becomes a wise man (person?).

Mr. Ken Fisher who is himself a great fund manager and the son of Mr. Fisher whom Mr. Buffet recommends calls the market a “The Great Humiliator”. Whenever you risk predicting the market it does the opposite!

I have research reports from a big broking house (Oh my God, sent urgently from a Blackberry!), view of a CIO who said “the best bull run of our lives is over, Subra”, a technical expert’s report (on CD) that the market will see a 55% correction from its peak of 21000 – which means sensex will see 9827 (sorry maths or facts one of them is correct), and therefore I do not have a view. One very senior banker has a very pessimistic view on the “land bank” of most real estate companies. And particularly of one company – and he is expecting that to spoil the recovery party, if any.

All these views are pessimistic in the short run (which could be 5 years?). One expert said “it took the market 10 years to cross 4200 the previous peak – from 1992 to 2002” so you may see 21000 in 2018!! Vow! we as human beings love creating a trend where none exists! God save us.

I know only one thing – if your money is being invested for the long run (I am old fashioned I mean about 7-10 years) that money should be in equities. If it is for a shorter period (3-5 years) be in a balanced fund. If you have money for less than 24 months, be in debt instruments like FMP, or short term floater. As simple as that.

Will the market touch 10k before touching 21k? Please consult an astrologer.

Keep learning – it is the only hope of survival

Watch, listen, and learn. You cannot know it all yourself. Anyone who thinks that they do, is destined for mediocrity.

Donald John Trump.

Obviously Donald Trump has said this with respect to life. This is amazingly true for markets. Ken Fisher calls it the TGH – the great humiliator. The minute you think you understand markets, it slaps you, real hard.

So keep your ego at home, learn from every organism in the market. Sanjeev is a good friend and a great trader – i have seen him worry about a transaction of 50 shares to go to comfortable deals of 200,000 shares. In an interview to Times of India while speaking to Gaurav Pai, he has said “the volatility in the market has kept me out”. That is humility. Do not go against the market – it is like spitting against the wind.

Learn, learn, keep learning – the market knows much more than many of us do.

Best books on investing – must read list

Here is a complete and full list of books that I like my students to read. Extremely long, and randomly written i hope to write reviews on all these books and it should be available soon. Some of these book reviews have already appeared in the In house magazine of BSE called Sensex. Some of the reviews may also be available online – in the personal finance section of myiris.com. Books have been listed completely at random – and I have intended it to look like an index. Keep coming back to this page – will add short summaries or comments on each book from time to time as well as full reviews. One of the links on the blogroll is a quaint friendly neigbourhood book shop – twistntales. The other place where I have bought most of these books is bookzone.com based in Mumbai.

A Random Walk Down Wall Street by Burton Malkiel.

Jeremy Siegel’s Stocks for the Long Run

Commonsense of Finance – Dr. Prasanna Chandra – get the basics of finance and accounts from here so that you understand concepts like P&L, B/ Sheet, write offs, taxation, etc.

Analysis for Financial Management by Robert Higgins.

Accounting Shenanigans.

Why Smart People Make Dumb Money Mistakes by Gary Belsky and Thomas Gilovich.

Parag Parikhs’ book on Behaviourial finance has brought some Indianness to this science! The book is called Stock to Riches.

Roger Lowenstein’s Making of an American Capitalist.

Benjamin Graham‘s The Intelligent Investor is a must-read. But it can be kind of painful for today’s kids who do not like to read about bond valuation. However, if you realise that bond valuation is the basis from which equity valuation evolves, you will appreciate this book better!

Phil Fisher – Common Stocks and Uncommon Profits

Speaking of Phil Fisher leads us to Ken Fisher – and his latest book “The Only 3 questions you need to know” is also an excellent book to read, and as useful as his father’s book. It clears a lot of cobwebs – turning the PE ratio is a useful example!

Peter Lynch‘s Beating the Street is the journal of a successful money manager, who is also a good communicator. CIOs should do their job well and also be able to communicate their skills and strategies. The Indian examples of course are Mr. Nilesh Shah of Icici Prudential and Mr. Nagnath of DSP Merrill Lynch.

You Can Be a Stock Market Genius by Joel Greenblatt –it’s relatively short, full of case studies, and engagingly written.

John Train‘s Money Masters of Our Time and The New Money Masters

Reminiscences of a Stock Operator – Edwin Lefevre. Reads like a pot boiler!

Seth Klarman‘s Margin of Safety.

Marty Whitman‘s The Aggressive Conservative Investor- I personally found this a difficult read!

David Dreman‘s Contrarian Investment Strategies.

Munger’s biography–Damn Right! by Janet Lowe.

John Kenneth Galbraith’s A Short History of Financial Euphoria.

Devil Take the Hindmost by Edward Chancellor is a fantastic and in-depth history of manias through the ages.

Ron Chernow’s The House of Morgan

Peter Bernstein‘s 2 books – Capital Ideas & Against the Gods

The Money Game – Adam Smith

Michael Lewis’s 2 books: Liar’s Poker and Moneyball.

Roger Lowenstein’s When Genius Failed, which chronicles the rise and fall of the Long-Term Capital Management hedge fund in the late 1990s.

Bethany McLean’s The Smartest Guys in the Room,

Kurt Eichenwald’s Conspiracy of Fools

Robert Cialdini‘s Influence Fooled by Randomness, by Nassim Taleb, is more directly about finance, and is thought-provoking. Taleb explores how easily we confuse luck with skill, and the importance of knowing which is which. He has followed this with Black Swan. Frankly if you are planning to read, or have read Black Swan, his earlier book Fooled by Randomness becomes unnecessary.

Bruce Greenwald‘s Value Investing

Michael Porter‘s Competitive Strategy.

The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk – by William J Bernstein

Asset Allocation: Balancing Financial Risk by Roger C Gibson

Rich Dad Poor Dad – Robert Kiyasaki Market Wizards – Jack D SchwagerThe Warren Buffet Portfolio – Robert Hagstorm

Future for Investors – Jeremy SiegelCommon Sense on Mutual Funds – John BogleNew Perspectives for the Intelligent Investor – John Bogle

The Art of Short Selling – Kathryn F Staley

Barbarians at the Gate – Bryan Burrough and John Helyar

Beating the Dow – Michael O’Higgins and John Downes

Buffet – the Making of an American Capitalist – Roger Lowenstein

Extraordinary Popular Delusions and the Madness of Crowds – Charles Mackay

45 years in Wall street – WD Gann

Great crash of 1929 – J K Galbraith

How to lie with statistics – Darrell Huff

John Maynard Keynes (Volumes 1 and 2): Robert Skidelsky

Soros on Soros – George Soros with Byron Wien and Krisztina Koenen

Technical Analysis of Stock Trends – Robert D Edwards and John Magee

Think like a Tycoon – W G Hill

Where are the Customer’s Yachts – Fred Schwed Jr.