The world is not made up of heroes and villains, like in Star Wars or a Marvel movie. Instead, like the Game of Thrones universe or a dark edgy comic book, the world is made up of antiheroes and villains. The kindest person you ever meet will have some moments of cruelty in their life; even the most upright and honest bend the rules once in a while; even people fighting for noble causes will have times when they’re selfish, arrogant, and greedy.
5. Financial independence doesn’t mean you stop working.
This idea is related to the previous one: Financial independence is a wonderful goal. But achieving it doesn’t necessarily mean you stop working – just that you choose the work you do, when you do it, for how long, and whom you do it with.
Those who retire early tend to come from one of two camps:
They hated their work but kept doing it to make as much money as they could.
They enjoyed their work but quit when they had enough money.
To each their own, but both look like situations where money controls your decisions. The irony is that some people who think they’re financially independent are actually completely dependent on money, so much so that they spend their days doing things they’d rather not because money tells them they should. Rather than using money as a tool, the money used them.
When I first started investing in equities, I decided to follow buy and hold strategy. I will buy quality companies and hold them for long term. There will be periodic reviews and some exceptions, but more or less very limited selling. Rather, slowly build position in quality companies.
Thanks to Birla, this strategy is now being put to the test.
Birla first targeted Asian Paints with the launch of Birla Opus Paints. The mere announcement of their entry into the paints business—and their subsequent doubling of investment—sent Asian Paints’ stock price tumbling. And with it, my returns in Asian Paints. Asian Paints is part of my buy and hold portfolio, a decision which was made looking in the rear view mirror. Not the best way to make investing decisions.
And today, Birla announced that they will be entering wires and cables business, directly competing with Havells and Polycab—two stock I own. Both, Havells and Polycab, have been consistent outperformers against Nifty indices, though my investment in them was relatively small. But it still stings that this news wiped off 6% and 18% of their market caps, respectively. I stayed put with Polycab even amid reports of a ₹200 crore tax evasion. But Birla’s latest move unnerves me.
I thought buy and hold will be simple. But it is now that I realise—in buy and hold, taking no action is also an action in itself. And more often than not, you will be taking no action.
If you look at the price to earnings ratio, which is a very widely followed valuation parameter, that has kind of come closer to the 10-year average or it has kind of fallen slightly below the 10-year average, which basically shows that valuation among large caps, those have kind of eased quite a bit and they are looking much better in terms of valuations. But now when we look at the smaller companies, the small and mid-cap companies, the valuations who are there, they are still much above the 10-year average. Even despite all the correction.
…
Despite that, many of the stocks are still trading above their averages. And yeah, there is still a fair bit of valuation concern in many of them. And that is the same point which ICICI Prudential, CIO S Naren raised.
He said that in a recent conference, where he said that the appetite for small and mid cap stocks, they have not subsided. People are still doing a lot of SIPs in that. And that is where he warned that you can’t do SIP, a systematic investment plan in an overvalued asset class.
In that, he actually was eluding to small and mid cap stocks. So over there, his suggestion was that, if at all you want to do a SIP, you should go for large cap oriented schemes or large cap oriented stocks.
Captain Raymond Holt—from the American television series Brooklyn Nine-Nine—describing what he has written for the speech to give at the funeral for Captain Seth Dozerman. Captain Holt is in fact describing his current emotional state after being assigned to the PR department where he spent weeks debating the name of the department’s mascot, which is a pigeon. And the reason I went ahead and put so much irrelevant information in this caption is that I have little to say about my journey with D Mart, except for—PAAAAAAAINNNNNN!
When I first invested in D-Mart, it had already surged over 600% from its issue price of ₹295. A dream run of nearly three years. I believed this dream run would last forever. While I was right for the first two years, in 2022 the dream run ended. And with it came a great deal of—in the words of Captain Raymond Holt—PAAAAAAAINNNNNN!
You see, when you buy in at the higher end of valuations—had I understood valuations back then, I wouldn’t be writing this—the slightest bit of bad news can trigger sharp declines. That’s exactly what happened in 2022. And since then, it seems the bad news just hasn’t stopped coming.
My XIRR went from a positive 70% to a negative 10% in 5 months—Dec’21 to May’22. While global economic factors played a role, a significant part of this drastic decline was my decision to buy the dip.
Post 2022, the returns—most of the time—have been hovering below zero. There was brief moment from Apr’24 to Sep’24, when the XIRR went to 20%, but it quickly fell of the cliff due to FII sell off and threat from quick commerce.
My investment in D Mart is very young, with 80% of it made in the last three years. So I have a long way to go. Whether it leads to rewards or lessons—only time will tell. For now, I only have lessons.
I have came across some interesting perspectives on risks previously over here and here. This post by Paul Krugman—where he quotes his discussion with Jim Chanos—particularly caught my attention. While the Nifty 500 has dropped 16% since September 2024 and showing no signs of recovery, Jim Chanos is talking about US stock market which remains strong.
The one thing I’ve learned after 40 years of running money is that my idea of where the markets are going is pretty much worthless. What you can do at any given time in market cycles is look at things like sentiment and valuation that give you an idea of what kind of risk you’re taking. It’s not necessarily a timing mechanism, but should anything go right or anything go wrong, what type of risk are you incurring? And right now, I believe pretty strongly that risks are pretty elevated for lots of reasons. We can get into them. But valuations are very, very high. And they’re very, very high on what are basically all-time high corporate profit margins, which used to mean revert, but don’t apparently do that anymore, as you know better than I do.
And then you’ve overlaid on this a really, really set of new political economic risks that could really take things in all kinds of different directions with unintended consequences. There’s elevated valuations on elevated profitability with a dynamic that is somewhat new in the political sphere.
A little later in the post.
…markets sometimes refuse to acknowledge what’s right in front of their noses, which seems relevant to our current situation.
…what can save the small car, frankly, is better roads. Because, you know, everyone wants an SUV largely because that’s the best way to survive Indian roads, whether it’s speed breakers, potholes. And that’s really the problem with the Comet.
The small wheels, you know, the ride is really choppy, it bounces all over the place. One small bump can, you know, kind of make it rock and shake. So we need to improve roads.
We’re getting good road infrastructure, but, you know, I think just the quality is just not there. Massive speed breakers, there’s just no thought given to that. As it is, EVs are generally low slung because the battery pack.
So again, you know, it pushes you again to an SUV where you have a higher clearance. So I think one thing to save the small car also is just we need to improve the roads.
Jason Cohen talking about our fixation to become like #1.
When someone insists you need to be “more like Google,” consider that perhaps it’s the only thing they know to compare to.
When someone insists you need to be “more like 37signals,” consider that almost no successful companies are like 37signals.
When someone insists you need to be “more like Apple,” consider that they probably have no idea what really goes on inside Apple, or whether they’re anything like you. Also, do they mean “Apple, today” or “Apply when they were 3 years old, like you, and doing hardware with the mindset of the late 1970s”?
No. More interesting is when someone suggests that you remind them of this other little company you’ve never heard of, but when you visit their website and try their product you realize it’s resonating with you, that this feels like a finer, more mature version of yourself, that you’re getting reinvigorated about your own business not because of their top-line revenue or celebrity status but because they’re inspiring you to become a better version of what you already are.
It’s fine to muse about being #1, but let’s not all strive to become just like #1.
For me, the fourth paragraph from the above quote is the key. Always look for people who give you feedback that resonates with you rather than someone who asks you to follow a pipe dream.
Like Ted Lasso says “For me, success is not about the wins and losses. It’s about helping these young fellas be the best versions of themselves, on and off the field.” Find someone who can be Ted Lasso for you.
In an episode that would be laughable if it were not symptomatic of a greater rot, a troupe of errant primates has reportedly plunged an entire nation into darkness. The Panadura Power Station, a facility emblematic of our fragile infrastructure, succumbed to an altercation among these unwitting simians, causing an island-wide blackout. The Ministry of Power and Energy, in its characteristic obfuscation, has assured the public that investigations are ongoing—a phrase which, in political parlance, often translates to indefinite inertia and zero accountability.
Ars Technica lists down the worst offenders for enshittification. What caught my eye was the inclusion of PDF.
But Acrobat was ultimately an Adobe product, with all that came with it. It was expensive, it was prone to bloat and poor performance, and there was no end to its security issues. Features were added that greatly expanded its scope but were largely useless for most people. Eventually, you couldn’t install it without also installing what felt like half a dozen seemingly unrelated Adobe products.
By building PDF capabilities into its OS, Apple allowed me to go Adobe-free and avoid some of this enshittification on my computers.
After reading the article, I realized the author was right. When I first used PDFs, I remembered how painfully slow Acrobat Reader was. Searching for alternatives, I found Foxit, which was blazing fast. I haven’t used Foxit in a long time, so I am not sure if it has also slowed down like Acrobat Reader.
When I switched from Windows to Mac, Preview became my go-to app for viewing PDFs. Over the years, I never once used Acrobat Reader’s features like commenting, signing, or annotating—not even once.
