Category: Essays on Investing

Reflection on my learnings and experiences on Investing in the Stock Market…

Market Narratives Drive Stock Prices

Investor beliefs significantly influence market narratives and ultimately stock prices. Unexpected events trigger major price movements; however, these shifts often stem from prevailing beliefs rather than reality. A successful investor must understand these narratives and maintain a belief system aligned with market realities, allowing for agility amid changing conditions.

Money Matters

Understanding the emotional drivers behind financial behaviour can enhance decision-making and promote financial well-being. Financial literacy alone is insufficient; emotional awareness is crucial. Negative feelings like shame and guilt can lead to unhealthy financial habits. Improved financial well-being arises from recognising and addressing our feelings towards money, fostering control and security in our financial lives.

Finding Contentment in Your Investment Journey

Contentment about our investments and money matters is determinant not of what is on the outside but of what happens inside of us. The underlying motivation behind most of our investment endeavours is not just the money but the plethora of opportunities that money opens for us. The bigger house, faster cars, better neighbourhoods, and … Continue reading Finding Contentment in Your Investment Journey →

Refining My Investment Philosophy: A Journey

The renowned investor Howard Marks, widely revered for his investment memos, was once asked about the reason behind his investment success. “An effective investment philosophy” was his answer. The answer made me curious about my investment philosophy. I worried about not having one. If I do have one, what is it? I do believe I … Continue reading Refining My Investment Philosophy: A Journey →

The Reckoning

The purpose of the financial system is to support the ‘real’ economy by facilitating transactions, majorly through credit and money supply. But on certain occasions, the financial system would dissociate from its principal purpose and start functioning for its own sake – its expansion and survival. Unfortunately, the financial system gets seized by many ill effects if dissociated from its primary purpose. Precariously high asset prices, credit booms, capital misallocation, and financial fraud are a few of the ill effects.

Distortions and Imbalances: The Insidious Nature of Low Interest Rates

The low rates prevailed from 2008 until 2022 were a result of central bank interventions in response to the financial crisis. However, these interventions deviated from the prudent path, fostering economic distortions and financial imbalances. Modern central bankers' adherence to price stability and inflation targeting, driven by a flawed understanding of history, has contributed to these issues. The repercussions of this flawed monetary policy are soon to be felt as the economy transitions to a more normal monetary condition. This transition is expected to bring about necessary corrections, albeit painful in the short term, and lead to positive long-term consequences.

Implications of Leaving Ultra-low Interest Rates

"Interest rates play a crucial role in shaping economic and financial conditions, influencing spending, saving, and investment behaviour. As we transition from ultra-low interest rate environments, it's crucial to consider the long-term consequences of these changes on asset prices and the overall economic prosperity."