There was always an ongoing joke when I was growing up that if the weather forecast says it would rain, it definitely won’t rain. If they say, the day will be sunny, high chance that it will rain cats and dogs. Fortunately, the accuracy of weather prediction has come a long way and it is indeed really accurate nowadays. But forecasting remains a funny topic.
I spent the majority of the last 3 years working in forecasting for retailers. The algorithms take historical sales and inventory data and after applying a bunch of data science models, generate forecasts for the next few seasons. When it comes to retail, it is generally safe to assume that for mature market societies, patterns generally repeat seasonally. Thus, the forecasts more or less are pretty accurate. Of course, when drastic events happen, all forecasts go haywire but even those are nowadays taken into account and predictability takes into account such shocks and comes up with good predictions.
You cannot apply forecasting easily to many other things like Share Market, although people try their best to do so. Gambling and Betting on Sports play on human emotions and greed more than luck and forecasting abilities, I think. Another field that deals with prophecy is Astrology. It is beyond me that horoscopes are given such a big place in newspapers and people take pride in being from such and such zodiac signs. I can go on and on about this but let me not digress.
I recently read Morgan Housel’s ‘Same as Ever’. He surely is one of the most known writers nowadays who knows how to drive a point using stories. His earlier book The Psychology of Money was also a best seller and is often quoted. He explains, in this book, that no matter how much we can predict and play with numbers and emotions, some things never change and that is Human Behavior. Time and again, people do the same things, make the same mistakes, learn from the same mistakes, and the cycle goes on. Societies or individuals go through cycles of ups and downs and initially, we forget what we did then but later we realize. It tells that the world remains unpredictable and human attempts to tame it remain the same. Mediums might change but the primal urge to react to things hasn’t evolved much since our ancestors also reacted and adapted to changes in the same way.
It might sound pessimistic but rather the book strengthens the belief that if we have got into trouble, it is also the human ingenuity that can pave the way forward. I felt that it encourages us to experiment and use previous knowledge to come up with new solutions because even if nature cannot be predicted, people’s behavior remains the same.
As I mentioned earlier, I have been following Housel’s blog https://collabfund.com/blog/ for some time and all his writings and storytelling are highly enjoyable. Like ‘Psychology of Money’, I recommend ‘Same as Ever’ as a compelling book about the psychology of people.
[AD] ‘Same as Ever’ by Morgan Housel can be bought from here:
To atone for the crime of watching the movie ‘Mohenjo Daro’, that too alone in a theatre, I will read 2000 books related to Indus Valley Civilization, I had promised. This is 1st of such.
Just kidding. There are not many interesting books about Indus Valley Civilization anyway.
Growing up with Comics and working as a graphic designer for a few years, if something is presented visually, it naturally becomes interesting and appealing, as far as I am concerned.
The People of Indus: and the birth of civilization in South Asia by Nikhil Gulati is one such wonderful book which presents information visually through the medium of cartooning about the advent, the peak, and eventual decline of the Indus Valley Civilization (IVC). I came across this book in one of the Podcasts from Puliabaazi.
History is assumed to be taught in such a bland manner that most people think of it as a boring thing. I, however, was blessed to have good school teachers who tried their best to make it interesting, within the constraints of the school syllabus and the time allowed. Also, thanks to my grandfather who had translated a number of books related to history (or rather decolonization, as they say, to be specific), my interest always remained aligned to learn more about history. But, all the books mostly had text. There have been a handful of photos in black and white as if nobody had access to a color camera ever. This book certainly piqued my attention as for the first time ever history is shown in a medium I enjoy.
What this book does is to enhance the knowledge about IVC by presenting various aspects about how life could’ve been between 3000-2000 BC. It goes through the familiar seals and mini-statues of the IVC. It also talks a lot about how that civilization interacted with the other nearby civilizations like Mesopotamia and the gulf. It goes into detail about one peculiar aspect that IVC has had no signs of any battles and the hierarchical structure of the society was governed by commerce.
I liked the aspects that it touches daily lives, the commercial as well as social processes and the possible languages of the period. It doesn’t try to extrapolate information and shows the evidence as they are.
Since I have had some interest about this so some facts were already known. It didn’t shock me, if I was expecting that. But it does expands the knowledge horizons and acts as a good refresher certainly.
It’s interesting that even now artefacts are found across the north and western plains of India and sadly some of the major sites are now in Pakistan. Rakhigarhi chariot, fortunately was found near Delhi. Aryan Migration/Invasion theories are being challenged regularly with more and more studies being done which suggests that Indian DNA has been generally the same across the subcontinent even though people try to divide us. As far as the mystery of the language of IVC is concerned, that is yet to be deciphered which keeps some secrets as secrets. I recently also read an article that they might not mean anything religious at all, although Shiva has been mentioned on the seals sometimes. Anyways, theories will change as we become better at genes study and archaeology gets more traction.
I enjoyed this book and hope that it might trigger others to start showing mundane concepts graphically, thereby making them interesting. Surely, if this is shown to school kids and young adults, they would be more inclined to know more about Indians from the bye gone era which still has impacts and make us what we are.
This book can be bought from Amazon from this link [ad]
When I was growing up, discussions of shares and stocks, Interest Rates, Sensex, and Money in general, were as alien to me, as Machiavellianism is to Rahul Gandhi. In my family, the discussions at the dinner table were mostly related to *wait-for-it* just dinner. On the contrary, some of my close friends knew about all these financial terms and games very well. I liked to believe that it could be a caste thing. But then it turned out that being money-minded and knowledgeable about Finance isn’t a crime but rather a necessity in life.
I recently read that the author of ‘Rich Dad Poor Dad’ Robert Kiyosaki was himself under a debt of billions of dollars. Morgan Housel’s Psychology of Money also made it clear that it is one thing to earn money, but it is a different thing to gain wealth. And to gain anything, one needs to be smart with money.
I kept delaying understanding finance and the nitty-gritty of markets and thought of myself as a Nerd who felt elated only when some PSLV took off, or when India’s run rate went up and not when the market went bullish or bearish. This continued even when I started earning. However, the reality that some smart people do spend time planning their finances pretty early in life, hit me when my bank balance remained, even after years of working, in the figures that looked more like an OTP and less like a Mobile Phone Number.
But one cannot remain ignorant for long. I did start learning about things slowly and steadily and learned to save and invest in safe havens, where risk is minimal. I also came across help from friends and acquaintances who told me a thing or two. One grudge I always had is that Articles and Videos I came across had so much jargon that I would watch Chess or Golf instead.
But times have changed, YouTube nowadays has a plethora of good information in a language you can easily understand. There are shorts and reels as well, in which people dance and tell you which Mutual Fund for how long would make you a Crorepati. There are playlists after playlists you can watch and become an expert yourself and start your own finance-related podcasts. Kids nowadays (sigh) have become much more knowledgeable due to the rise of Fintechs than surely my age group.
I wanted to remove the clutter and learn things slowly (or rather reconfirm my understanding) that come from some experts who could break down things into a not-so-complicated manner and give information without ads. That can happen only with a Book.
I came across The Bee, the Beetle, and the Money Bug: The Bankbazaar Guide to the Financial Wild by Adhil Shetty and A.R. Hemant. I have known the co-author @arhemant since Minimal Movie Posters days. I found this book a pretty good primer in explaining a lot of things that can be beneficial to a salaried employee like me who is between 30-40 or even younger. It also convinced me that I am not an idiot after all and some decisions which I had taken early in my career were rather good. It also gave me insights about what can I do now to secure the next 20-30 years and beyond as I am now reaching the middle of my career (mid-life-crisis is looming large). If one has a family to support, this book does cover whatever options are available at this point at our disposal.
To summarize, it is late but never too late to take stock of our finance-related knowledge. This book (and nowadays there are several such books) can help anyone who is looking to learn personal finance and see through the noise.
Here are some of my notes with a disclaimer like they say:
Please read the offer documents clearly as everything below is subject to market risks. This is not an investment advice blog. Or any advice blog for that matter.
Anything can happen to anyone at any time. So, try to have at least six times your monthly income as an Emergency Fund in a secure but liquid fund such as a Fixed Deposit. One needn’t complicate this but aim to review this as salary increases. When created at the same bank, FDs and RDs offer the same returns. While an RD is ideal for creating your emergency fund, an FD is ideal for holding it. During an urgent need, you can liquidate either. You will only lose a portion of your interest for the premature liquidation.
Don’t put all eggs in one basket
Diversity in savings and investment is necessary. It is advisable to park the bulk of your savings with large, stable banks and go for a carefully calibrated exposure when it comes to smaller banks.
Learn about sweep-in FD facility
Here, your bank automatically transfers surplus funds from your FD and never lets your bank balance go below the minimum level.
One basis point is one-hundredth of a percentage. That’s all.
Don’t Do just FDs
Avoid making the mistake of investing only through FDs. This is because they yield low post-tax returns. Therefore, a 7 percent FD returns only 4.9 percent if your highest marginal income tax rate is 30 percent.
Kya Mutual Funds sach mein Sahi Hain?
Equity funds buy stocks in high-performing companies. Debt funds invest in the government and corporate bond markets. Liquid funds invest in money market instruments—highly liquid debt instruments, such as treasury bills issued by the Government of India.
While picking any MF, do look at its past performance, the fund manager’s credentials, and the quality of securities it is composed of. You may want to refer to its fund rating. Several MF research websites analyze funds on various parameters, such as performance, risks, and costs.
Split the money into five deposits at different rates. Each deposit will renew at different intervals of one, two, three, four, and five years. Doing so ensures better average returns.
Highs and Lows
When the rates are high, go for longer tenures with your deposits. When they are low, ladder them and wait for higher returns.
Your credit score is a measure of your ability to repay your past loans. A lower score—anything under 750—implies you have had trouble paying your loans on time.
Turn your FOMO into JOMO—the joy of missing out. You might save yourself from wasteful expenditure.
Using Corporate Insurance Wisely
You have the privilege of working for an employer that provides great health coverage, do not waste it. Port the policy when you leave that job, and continue with the coverage—it will help you protect your family because getting coverage for your parents only gets tougher with time.
When your policy is due for renewal, you have the option of shifting it to another insurance provider. This ensures you will not lose the waiting periods already served when the term for your new policy begins.
50 percent to be set aside for essential monthly expenses. These can be for rent, groceries, utilities, education costs, or insurance payments. Then, 30 percent can be spent at your discretion—visiting the mall, upgrading your gadgets, or taking a vacation. Lastly, the 20 percent should be set aside for savings and investments—the minimum amount of money you need to compulsorily lock away.
It stands for Must Have, Should Have, Could Have, and Won’t Have.
If something is important, do it now. If it is urgent, but not important, delegate it. If something is not urgent but important, schedule it for later. If it is neither important nor urgent, avoid doing it.
Invest and Forget and let the Power of Compounding do its magic
Companies by Market Cap
India’s top 100 companies by market capitalization would be called large-cap. Mid-cap companies would now be those ranked from 101 to 250. And small-cap companies would be any company ranked 251 onwards.
To rephrase physicist Richard Feynman talking on quantum physics, if you think you understand taxation, you probably do not understand taxation.
I first came to know about Hans Rosling, through this TED Talk. I was searching for data visualizations and how the world perceives other nations.
Naturally, once you watch this, you will realize that Hans Rosling was not only a witty speaker, but also the stats he displayed were proof that most of our knowledge comes from our perceptions and not the facts. These perceptions are ingrained in us from the very beginning. The even more disturbing part is that the perceptions present the image of something from the past and are highly deceptive because the world is continuously changing. The example of how Chimps sometimes, randomly, would be more right than most of the so-called developed and educated audience was extremely funny.
So, I recently read a book called
Factfulness: Ten Reasons We’re Wrong About The World – And Why Things Are Better Than You Think
by Hans Rosling, Ola Rosling, and Anna Rosling Rönnlund.
Hans Rosling has passed away since then but you would’ve certainly heard of Gapminder and if you haven’t, it is difficult to not have seen graphics from a similar org called ‘Our World in Data’. Remember the daily cases and overall case graphs? Hans Rosling, for most of his later life, worked to help people know better about the world. He was a Swedish medical professional who worked extensively in Africa and Asia so he saw things firsthand.
We can divide people or countries into 4 Levels of Development based on income. Every country wants to be at Level 4 that’s the highest per capita income level. Funnily, every country would believe that they are not on Level 1, which is the poorest of all. Like a normal curve, the majority of the world lies on Level 2 and Level 3, and even if news channels show a grim picture of the world, the trend is that every country is moving towards Level 3 or 4, the pace might be different. It is also fully possible that a country might appear on Level 4 but it might have subsections of societies that are on Level 1. For example, if you work in any Tech Park in Bengaluru, you work on Level 4. As soon you come out and hit the traffic, you go through Level 3 and Level 2, and sometimes Level 1 as well. As soon as you enter your home, you are back to Level 2 or Level 3, if not Level 4.
This book tries to encourage people to think beyond the news articles and images one has been through. It encourages one to think about averages and exceptions. I particularly like the aspect that it tries to clear the stereotypes and encourages the reader to look at things objectively.
My highlighted notes
The throat is flat, not round. That is how circus performers swallow flat swords.
Critical thinking is always difficult, but it’s almost impossible when we are scared. There’s no room for facts when our minds are occupied by fear.
Fears that once helped keep our ancestors alive, today help keep journalists employed.
A doctor in a relatively poor country continuously has to balance between treating everyone or putting all resources on one patient.
“In the deepest poverty you should never do anything perfectly. If you do you are stealing resources from where they can be better used.”
Finding Real Stats and Numbers by dividing the total by the population. For example, emission by China and India is often called the highest. But in reality, per capita emissions by China and India is still lower than the West.
“I learned that Indian Medical textbooks were sometimes three times as thick as Swedish ones, and they had read it three times as many times.”
Forming your worldview by relying on the media would be like forming your view about me by looking only at a picture of my foot.
Being intelligent—being good with numbers, or being well educated, or even winning a Nobel Prize—is not a shortcut to global factual knowledge. Experts are experts only within their field.
Red List is a list, where you can access the status of all endangered species in the world, as updated by a global community of high-quality researchers who track the wild populations of different animals and collaborate to monitor the trend.
“Give a child a hammer and everything looks like a nail.”
“If the pharmaceutical companies were better at adjusting their prices for different countries and different customers, they could make their next fortune with what they already have.”
Before modern medicine, one of the worst imaginable skin diseases was syphilis, which would start as itchy boils and then eat its way into the bones until it exposed the skeleton. The microbe that caused this disgusting sight and unbearable pain had different names in different places. In Russia, it was called the Polish disease. In Poland it was the German disease; in Germany, the French disease; and in France, the Italian disease. The Italians blamed back, calling it the French disease.
We need the Olympic Games, international trade, educational exchange programs, free internet—anything that lets us meet across ethnic groups and country borders.
The best part about this book is about Teaching Children
We should be teaching our children that there are countries on all different levels of health and income and that most are in the middle.
Teach them about their own country’s socioeconomic position and its relation to the rest of the world, and how that is changing.
Teach them how their own country progressed through the income levels to get to where it is now.
Teach them what life was really like in the past so that they do not mistakenly think that no progress has been made. • We should be teaching them how to hold the two ideas at the same time: that bad things are going on in the world, but that many things are getting better.
Teach them that cultural and religious stereotypes are useless for understanding the world.
Teach them how to consume the news and spot the drama without becoming stressed or hopeless.
Teach them the common ways that people will try to trick them with numbers.
Teach them that the world will keep changing and they will have to update their knowledge and worldview throughout their lives.
I didn’t read but I listened to the audio book actually.
I am following blogposts of Morgan Housel for some time now and I find them really insightful. Moreover, this book got enough good praise so it was due.
Some key lessons which I learned from this book are as follows:
Money might grow in short term but wealth doesn’t. Short-term thinking is good only for the short term. The longer one stays in the game, the more the wealth (not just money but it applies to everything else too) gets enhanced. There are some great stories shared in the book which tells about people who took their time in getting the returns out of their savings. while also some examples of people who spend too much away, too quickly.
Money means different thing to different people
I find this one particularly true. I belonged to a family in which taking risks with money has been a strict no-no as generations have been service class. Do your job, do it better, and let it speak for you has been the mantra. While some of my friends had money, stocks, Demat accounts, and businesses being discussed daily at the dinner table since they were kids. That conditioning plus an individual’s own mindset makes money appear differently. For example, a discount offer not availed is just a missed opportunity for me. While for one of my friends it was considered a loss.
Luck vs Skill
This isn’t given as much importance as much skill is given. But luck is highly important. An example of Bill Gates is shared in the book. Bill Gates is indeed a genius but we shouldn’t overlook that how lucky he was when he got access to a Computer in high school. This was the time when having a computer in a school was not even a notion anywhere in the world. People didn’t even think that Computers had a place in academia. The same lesson about how the skill in the market is just a pseudo-barrier created by some lucky people was told in this Podcast by Deepak Shenoy on Amit Varma’s The Seen and the Unseen.
This lesson is timeless and not obvious till you don’t have it yourself.
I found ‘The Psychology of Money’ by Morgan Housel a good and easy read but impactful in every sense. It is one of the first books I have ever read about money in general and I am glad that I started with this. It is not about investing or saving but just the thought that our perceptions about money are different than our perception about time. Increasing our wealth requires time, effort, and the ability to take risks. And of course, luck.
The Internet is full of vast amounts of knowledge and it keeps on bloating itself. We have got access to so much data that it is becoming increasingly difficult to find quality material that you can actually use. Then there are some gems that are available that once you stumble onto, you can not get enough of it.
The Almanack of Naval Ravikant, created, compiled, and edited by Eric Jorgenson is one such gem. This crisp book is one of the best things I stumbled upon this year. In fact, this book is one of the most hopeful pieces of gift or advice one can give oneself in this craptastic of a year.