BC BOOKS
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1/ There are a ton of books about Financial & Fundamental Analysis, Scuttlebutt and Technical Analysis. But there aren't many books 'taking risk'.

Among the few that exist, 'Zurich Axioms', written in 1985, is the best. Here are my key takeaways from the book.

 2/ A bit about Max Gunther's (The Author) background. He was an Anglo-American journalist and writer, who wrote 26 Books.

His father, Franz Heinrich, was the New York Head of Schweizerischer Bankverein, which later merged into the famous Union Bank of Switzerland (UBS).
3/ The 'Zurich Axioms' were a set of unwritten rules followed by a informal group of Swiss Bankers and Traders who used to socialize around Wall Street after World War II. Mr. Heinrich was one of the founding members.

Max Gunter formalied these 'Axioms' by writing about them.
4/ There are 12 'Major Axioms' and 16 'Minor Axioms' (Corollary to the Major Axioms) in the book.

But remember, this is MY key takeaways from the book and not an exact summary. So you might find quotes, phrases and links inserted here and there by me (Not from the Author).
5/ Axiom #1: In order to earn returns, you must take risk. Risk will make you worry.

Risk-taking and worrying go hand-in-hand. If you're not worried about an investment, you're not taking risk.

Spend half your energy towards earning an income and the rest towards speculation.
6/ “Every occupation has its aches and pains. If you keep bees, you get stung. Me, I get worried. It’s either that or stay poor. If I’ve got a choice between worried and poor, I’ll take worried anytime.”

— Jesse Livermore.
7/ Minor Axiom #1: Bet meaningful stakes.

Bet big, but not so big that one unlucky turn can wipe you out. Also, betting too little would lead to mediocre returns.

Bet enough to make you worry about a loss, but in an opportunity whose potential gain would make you very happy.
8/ This thread written by me on 'Kelley Criterion' and Capital Allocation might be a useful reference point for Minor Axiom #1.

Alright, back to it.

https://t.co/vzUSnjYgdr
9/ Minor Axiom 2: Resist the allure of Diversification.

Putting your eggs in different baskets is fine. But it's not ideal if you have too many baskets to watch over. Diversification can reduce risk to an extent. But taken to an extreme, it can also reduce potential returns.
10/ "Diversification may preserve wealth, but concentration builds wealth."

— Warren Buffett.
11/ Major Axiom #2: Take profits sooner rather than later.

Greed will always make you 'wait for more' even if you've achieved considerable returns. Always take your profits once you have acheived your target returns or made considerable amount of money.

Don't press your luck.
12/ Minor Axiom #3: Determine what you want before entring a trade.

Answer important questions like 'What do I want from this trade?', 'How much is enough?' and 'When will I sell?' before, not after entering a trade.

This makes exiting the trade so much easier.
13/ Major Axiom #3: When the ship starts to sink, don't pray. Jump.

Things go wrong eventually and many times over. Be willing to take a loss. The fear of regret, pain and the shame of admitting you're wrong will prevent you from doing this. Overcome them as quickly as possible.
14/ Minor Axiom #4: Accept small losses.

Whether it's holding through a temporary loss on a gainful journey or exiting a bad trade permanently, learn to take the sting of a small loss. Expect them several times in your journey.

Small losses are the cost of big gains.
15/ Major Axiom #4: Distrust forecasts.

Human behaviour cannot be forecasted. Distrust anyone or anything claiming to do the same.

“It’s easy to a prophet. You make 25 predictions and the ones that come true are the ones you talk about.”

— Theodore Levitt (Economist).
16/ Major Axiom #5: Don't look for formulas to get rich.

'Get rich quick' or 'get rich easy' formulas don't exist and if they do, don't work. Luck plays a bigger role in our lives than any of us would admit. So ignore all ready-made investment formulas.
17/ Minor Axioms #5: History doesn't repeat exactly the way we expect it to be. Don't believe in conclusions rooted solely on some historical event.

Minor Axiom #6: Future price movements cannot be predicted using past price movements (Might not be the favorite Axiom for many).
18/ Minor Axiom #7: Correlation is not causation. Our minds try to find patterns where none exist. Be cautious.

Minor Axiom #8: Beware the Gambler's Fallacy. Winning streaks or strokes of luck run out. The world isn't out to make you rich magically.
19/ Major Axiom #6: Don't fall in love with a speculative idea.

Minor Axiom #9 and #10 also go on to say: Don't latch on to an investment idea emotionally (Loyalty or nostalgia). Be willing to drop an investment idea in a heartbeat when a better one comes along.
20/ Major Axiom #7: A hunch can be trusted if it can be explained.

A hunch is something you know, but you don't know how or why you know it. So dig deeper and find out. If there is substance, you can go ahead with it.

But Minor Axiom #11 warns, don't confuse a hunch with hope.
21/ Major Axiom #8: God isn't out to make you rich.

God isn't out to make you rich, neither is a supernatural evil bent on making you poor.

Minor Axiom #12 and #13 dismiss Astrology and Superstitions. The major point is that you shouldn't take financial decisions based on them.
22/ Major Axiom #9: Differentiate between Optimism and Confidence.

Optimism means you expect the best to happen. Confidence means you're prepared to handle the worst. Know the difference.

Sucessful betting is all about being 'confident' and not merely 'optimistic'.
23/ Major Axiom #10: The popular opinion is wrong.

Disregard the opinions of experts, gurus, brokers, bankers and forecasters. In order to know something, you must analyze and understand it yourself.

As the Russian proverb goes, 'Doveryai, no proveryai' (Trust, but verify).
24/ "Nullius in verba." (Take nobody's word for it).

— The Royal Society's Motto.

This is one of my favorite quotes and it's also on my Twitter profile description. Very fitting when it comes to the world of investing.
25/ Minor Axiom #14: Stay clear of fads. The best thing to buy is something nobody wants.

This shoud have been a Major Axiom. The best time to buy something is when it's unpopular and vice versa while selling.

Basically 'buy low, sell high', but it's challenging to do it right.
26/ Major Axiom #11: If a bet doesn't pay off, let it go.

"If at first you don't succeed, try again" might be a good idiom for life, but not so much when it comes to investing.

Minor Axiom #15: Never average down on a trade you're convinced is bad. Cut it short.
27/ Major Axiom #12: Plan, but not too far out into the future.

Long term plans have the drawback of ignoring the role of unexpected events on your outcomes. Make sure your process is right and you're ready to take decisions on time, but never settle on a single plan for life.
28/ Minor Axiom #16: Shun 'buy and hold' investing.

This Axiom warns against 'buy and hold' type of investments. The future it unexpected. So expect things to go wrong often. Be ready to react quickly when they do.

Don't assume investing for the long term takes out all risks.
29/ That's the thread.

If you liked this, then you will definitely like the original book. Find it, buy it, read it.

I also loved this look-back on the Book by Philip Ryland for the Investors' Chronicle in 2014. Perhaps you will too.

https://t.co/oAINAZTdoB

More from Dinesh Sairam

Dinesh Sairam
Dinesh Sairam
@Dinesh_Sairam
1/ Howard Marks once said that before buying an asset, above anything, he wants to know “the amount of optimism that’s in the price.”

All investors can do this with a handy tool: The Reverse DCF.

I'll also leave a download link to my compact DCF Model at the end of this thread.

2/ We all know a regular DCF. But's what a "Reverse DCF"?

If we consider that a DCF is a Linear Equation, we could say the 'X' (The unknown variable) is the Intrinsic Value.

In a Reverse DCF, we start with the Market Price and try to find some other variable, say Sales Growth.


3/ Let's start by taking an example: VST Industries, a Cigarette-maker based in India.

I valued them on my blog a while ago. I'll be retaining the old assumptions, but using the latest financials.

So please note that the Valuation isn't accurate

4/ This is a "Regular DCF" of VST Industries. The Assumptions I've made indicate an Overvaluation.

The Intrinsic Value is Rs. 3,012, but the Market Price is Rs. 3,492.

Let's not dwell on whether this is correct, since we discussed earlier that this isn't an accurate Valuation.


5/ If we want to do a "Reverse DCF" instead, we need to pick a different variable to 'find'. Say, I will pick the Sales Growth numbers.

I will now remove the Sales Growth numbers from the Model and assume that Sales Growth is the same across the years for ease of calculation.
VALUATION
Dinesh Sairam
Dinesh Sairam
@Dinesh_Sairam
@abhishec_s @Sanjay__Bakshi The most rational course of action is to buy below your expected value, hold when it's between your expected value and overvalued zone and sell above overvalued zone (No in-betweens or holding extra cash).

But there are many impediments in executing each step.
WISE INVESTING
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Dinesh Sairam
Dinesh Sairam
@Dinesh_Sairam
@Gautam__Baid He laid down very similar principles a decade ago in his 1976 letter (Source: https://t.co/6Z5v0qEaIg)

What's amazing is how consistent he's been in following his philosophy even after nearly 5
VALUATION
Dinesh Sairam
Dinesh Sairam
@Dinesh_Sairam
1/ I've Valued 150+ companies using the Discounted Cashflow (DCF) Model. Far be it for me to say I am an expert. But if you've done this as much as I have, you start noticing certain patterns.

Here are 10 lessons I've learned from using the Discounted Cashflow Model.


2/ Every investment decision you make follows a Discounted Cashflow calculation.

You let go of X today to earn Y in the future. You wouldn't do that if you didn't expect to earn an expected amount of returns (r).

Nobody wants to let go of X and get back X years down the line.


3/ When you invest in a company, you hold claim over the Assets and the Profits of a Company. Without diluting your ownership, Assets and future Profits are generated out of one thing and one thing alone: Free Cash Flow to Firm.

FCFF is the treasure at the end of the rainbow!


4/ Combining the above two observations, a company may not always make Profits in the present. In fact, if it's a young company or in a new market, losses are a given.

Eventually though, future profits should be large enough to offset or overtake all the past losses in PV terms.


5/ For most companies, generating Returns falls in a spectrum: Have high Margins and generate lower Sales in relation to Capital Employed Vs. Turn Assets faster but have low Margins (Or somewhere in between).

For Indian context, compare the Business Models of D-Mart Vs. NESCO.
ALL , DCF
Dinesh Sairam
Dinesh Sairam
@Dinesh_Sairam
1/ Since "liquidity" has been the buzzword these days, here's an anecdote and a powerful lesson from history about printing unlimited amounts of money. Story time. #fintwit

2/ Our story begins with Mansa Musa or Musa I of Mali, an African king who consistently figures in the list of richest people in the world (Inflation-adjusted). One of his given names was 'Lord of the (Gold) Mines of Wangara'. Lest we forget, Gold was the 'Money' in those days.


3/ One fine day in 1324, Musa decided to go on a pilgrimage to Mecca. Of course, it was easier said than done. Mecca was ~8,500 Kms away from Timbuktu, Mali. Ultimately he did make that journey and it has been recorded in the script "The Chronicles of the Seeker" by Mahmud Kati.


4/ Famously, he took a ton of 'money' (Gold) with him to aid in his journey (Well in his defense, it was ~8,500 Kms). About 60,000 laborers and soldiers carried 2 Kgs each and their camels carried 13 Kgs each, bringing the tally to an estimated ~1,30,000 Kgs of Gold.

5/ Being a generous King, he donated Gold left and right to every poor person he saw on the way. Regions of Cairo, Medina and Mecca became instantly 'rich'. The estimated donation is ~32,000 Kgs of Gold or ~$2 Billion in today's estimate.
ECONOMY

More from Books

Deep Develop \U0001f9ec
Deep Develop 🧬...
@deep_develop
Here are some lessons I learned from reading this book:

Can't Hurt Me, by #DavidGoggins

Thread (1/10)


1. It doesn’t always go your way

Life won’t always go your way, so if you start thinking that it will, you’ll be disappointed and less effective

Instead of focusing on what you think you deserve, figure out what u want and be willing to pay the dues required to get it

2/10


2. The 40% rule

When your mind is telling you that you’re done, completely exhausted and not able to go any further, you’re only at about 40% of your potential

Keep fighting when you feel like you’re done, and that’s when you unlock the remaining 60% of your potential

3/10


3. No one is going to help you

Don’t wait for someone else to help you.

If it’s your dream, it’s on YOU. If you wait, you’ll be waiting until you’re on your deathbed if you don’t take action.

4/10


4. Callous your mind

When you’re ready to quit, stay the course. See how far you can go.

This will help you when things get tough. You’ll learn to work hard even when you don’t want to. That will pay off on your path.

5/10
BOOKS
Vidya
Vidya
@VidyaG88
1/16
Was reading upon #Biases & learnt a lot. Thought of sharing a few pointers .
Simply put Bias is a disproportionate weight in favour of or against any idea/thing in all aspects of life.
Few types of Biases ( out of the many) with not so random images. :)
+

2/16
The #DunningKruger effect now is fairly well known , wherein people with limited knowledge overestimate their competence, whilst the actually knowledgeable question themselves often .
"Ignorance more frequently begets confidence than does knowledge".
+


3/16
*#SelfServingBias*
A very interesting bias wherein we credit our successes to purely ourselves, but when things go awry we cite luck & external forces .
Rings any bells?
Basically a defence mechanism to protect our self esteem & eventually from personal responsibility.


4/16
* #ConfirmationBias *
We all favour ideas & beliefs that affirm to our existing ones' , rarely being open to contradictory opinions .
(Especially in markets !! 😬) Why?

Laziness? Mental block? Ego ?
No wonder, Birds of a feather flock together ... 😉


5/16
* #SunkCostBias *
As we know, sunk costs are irrecoverable , regardless of outcomes. (Eg Money expended towards R&D for a molecule which doesn't work out)
But this actually extends in any investment we make - Time,Money, Effort, Relationships ...😏
Interesting right?
BOOKS , FINANCE
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Andrew Duggan
Andrew Duggan
@ajdduggan
10 Powerful Lessons From the Book “The Art of the Good Life”

| Book Review Thread


1. Peak-end Rule:

You remember the high point and the end point of your holiday, but the rest is forgotten.

Remind to make them as sweet as possible.

2. Plans are nothing. Planning is everything.

A good life is not a stable state or condition.

The good life is only achieved through constant readjustment.

3. Inflexibility as a Stratagem

When it comes to important issues, flexibility isn’t an advantage – it’s a trap.

Use radical inflexibility to reach long-term goals that would be unrealizable if their behavior were more flexible.

4. Reality Doesn’t Care About Your Feelings

Accepting reality is easy when you like what you see, but you’ve got to accept it even when you don’t – especially when you don’t.
BOOKS
Universal Mind
Universal Mind
@univ_mind_
10 MUST-READ Quotes From the Book: "Think and Grow Rich"

By Napoleon Hill

\\ Thread //


1. “More gold had been mined from the mind of men than the earth it self”

2. “A quitter never wins-and-a winner never quits.”

3. “The starting point of all achievement is DESIRE. Keep this constantly in mind. Weak desire brings weak results, just as a small fire makes a small amount of heat.”

4. “Happiness is found in doing, not merely possessing.”
BOOKS
Andrew Duggan
Andrew Duggan
@ajdduggan
15 Powerful Lessons from the book "Antifragile"

by Nassim Nicholas Taleb

| Thread


1. The book is about decision-making under uncertainty/volatility.

- EVERYTHING either benefits or is harmed by volatility

- The FRAGILE is harmed (think a glass)

- The ROBUST is unchanged (think The Phoenix)

- The ANTIFRAGILE gets better (think The Hydra)

2.

- There is no way to accurately predict WHICH events will occur

- We CAN measure how fragile we are to events

- We CAN take steps to robustify ourselves

- When shit hits the fan, the fragile breaks

- This applies to the economy, politics, health, etc

3. Naive Interventionism

- Systems are COMPLEX

- Most are beyond our understanding

- When we intervene, we introduce potential harm

- These 2nd and 3rd order effects introduce MORE volatility into the system

- This makes systems even less predictable

- STAY in YOUR lane

4. Via Negativa: Removing is superior to Adding

- Less can be More

- Don't add, subtract

- Eliminate the Artificial

- Eliminate the Unnatural

- Eliminate the Unnecessary

Apply these in all areas of your life. When in doubt, SUBTRACT
BOOKS

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TESLA. TREATS. ITS. CUSTOMERS. LIKE. TRASH.

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Story of Thumba Poo and Shiva

Thumba poo is a tiny white flower which grows in all areas. These flowers are used for treatment for sinus. Small children who have polyps in Nose are told to crush tumbha leaves and apply in nose part.
There is an interesting story of Thumba and


Mahadeva. Thumba flowers were not taken for Shiva Pooja. Saddened to this Thumba prayed sincerely and Mahadeva appeared before her.
She was surprised that Shiva had appeared before her. Instead of saying that she wants to under his feet always, she said
@SriramKannan77


She said that her feet should be on his head. Shiva accepted her prayers. It is because of this Thumba flower is placed in the head of Shiva Linga.
Shambo Mahadeva
Om Namah Sivaye
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Corey Haines \U0001f4a1
Corey Haines 💡...
@coreyhainesco
I think I'm giving up on mainstream marketing content.

I'm giving up on social media consumption too.

So little substance.

Need to devote more time doing. More time creating.

Who needs another "5 ways to boost growth" post? I click and am disappointed every time. Not again.

I don't want to poop on content marketing, but marketers need to step it up.

Or at least, founders need to know that doing something is not always better than doing nothing.

Why is content marketing not as effective as it used to be? An innumerable amount of factors...

But one things for damn sure.

Things have to change.

Two of the chief sins:
1. Unoriginal research/story/study/etc
2. Not having anything more to add that's meaningful

Why blog/podcast/vlog/etc about something that's already been said? Already been done?

Do we really need another interview with founder of x hot startup? Do we really need another ultimate guide about facebook ads?

Not all content is like this...

Sometimes, you get an occasional piece that truly leaves you better off than you were before. That doesn't make you want to skim.

An original case study. A first time interview with a founder. An honest account of an experiment. An explanation of a change, shift, or realization.
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#Guruvayur_Krishna_Bhakthi  🕉
#Guruvayur
#Storytime
Beautiful Story of Guruvayurappan

Poonathanam Namboothiri was a great devotee of Guruvayurappan. One day Poonthanam was going to Guruvayur Kshetram. It was night time and eventhough Namboothiri was tired he continued to walk


Suddenly some thieves came and blocked his way. Poonthanam cried for Shri Krishna to help. Thieves snatched all valuables from him, but Namboothiri holding his Bhaghavatam book called Shri Krishna to help. That time a man came in a horse back and fought with thieves and protected


Namboothiri. Poonthanam thanked Krishna for helping him from danger and said to the man that "Shri Krishna has send you here and I don't know how to thank you".  The man smiled and told that he is Mangattachan, minister of  samoodhiris. Poonthanam once again thanked him and


gave his ring to Mangattachan as a token of thanks and continued his journey. He reached Guruvayur early morning for Nirmalya Darshan. Temple poojari came near him and told that Guruvayurappan came in his dreams and asked to hand over the ring to poonthanam.


When he opened Kshetra Nada poonthanam was surprised to see his ring on Guruvayurappan, which he gifted to Mangattachan. He understood that it was Guruvayurappan who came as Mangattachan to protect him. This is how Bhagwan treat his devotees.

Hare Krishna
🙏🕉🙏
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