This book is inspired from the Book titled “The Most Important Thing Illuminated” by Howard Marks. One line in this book was: “You can’t do the same things others do and expect to outperform”.
According Howard Marks: “First level of thinking is simplistic and superficial, and just about everyone can do it. First level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump the stock”. Second level thinking says, “The outlook stinks, but everyone else is selling in panic. Let’s buy.”
I have always believed in this philosophy. What Howard Marks calls Second Level of Thinking – I call it THINK HATKE (thinking out of the box). Maybe my Indian version of the same philosophy.
Think Hatke has been the biggest strength in my Advisory practice and has kept me in good stead in guiding my Investors as well as my Mutual Fund Distributor (MFD) friends during times of crisis in the Mutual Fund (MF) Industry.
Another Book and Author whose thoughts and philosophy I relate to is Morgan Housel and his Book “The Psychology of Money”. I have taken the liberty to reproduce some excerpts from his book and quote them at appropriate Chapters in my Book.
In this Book, I will share my experiences of more than 36 years in the finance markets and almost 26 years in the MF Industry (since 1995 when Private Sector MFs started becoming popular) and illustrate how did I Think Hatke under various situations. These will be real life stories and experiences. Hope readers benefit from these experiences.
Another legendary Investor who has inspired my thoughts and investment philosophy to deliver better investment experiences for the Investors is none other than Mr. Warren Buffett. Most forget teachings of Mr. Buffett in Bull Markets and remember them only during Bear Market corrections. I have ensured to remember his teachings in all Market conditions by incorporating them in my Smart Investment solutions (I have written about these in subsequent chapters).
This book was about to go in print, when I came across a Tweet by Mr. Kalpen Parekh – MD and CEO of DSP Mutual Fund. In that Tweet he had shared excerpt from the book The Craft of Advice – Essays 1995 to 1998 written by Mr. Nick Murray – an astute Investor and author of many books.
It suddenly struck me that he has said something very similar to what I have been propounding when I created Smart Investment solutions which helps Mutual Fund Distributors (MFDs) and Investors to control their emotions of GREED and FEAR. Also, I am a firm believer of the fact that MFDs are not managing funds of their Investors. They are only managing emotions (referred to as BEHAVIOR MODIFIER below by Mr. Nick Murray). Funds are being managed by the Fund Managers of the Mutual Fund houses.
Following is a basic summary of what he had written:
Let me tell you a couple of things my job is not:
- My job is not to OUTPERFORM the MARKET
- Nor is it my job to pick Mutual Funds that outperform most or all other similar funds
- My job is to be a BEHAVIOR MODIFIER – I help people to stop making self-destructive mistakes
- If I can close the hideous gap between Investment returns and Investor returns – I have performed an immensely valuable service
My B2B Platform viz. www.misterbond.in which is created to empower the MFD community and help them manage their own emotions and emotions of their Investors through Smart Investment solutions created by me (these will be discussed in subsequent chapters) is also promising the same: we are not promising outperformance v/s traditional Mantras of Buy & Hold and SIP Karo Bhool Jao; we are only promising a) Downside Protection and b) Being in the right Asset Class at right Valuations. Outperformance can be a by-product of our strategy and their discipline to follow these strategies by controlling their emotions of Greed and Fear.
Readers will realise, that common thread and theme in the entire book is to concentrate on giving better Investment Experience and Journey and bridge the HIDEOUS GAP (as stated by Mr. Nick Murray) between Investor Returns and Investment Returns.
Who should read this book and why? I believe anyone who is an Investor and wishes to move away from traditional Mantras propagated by the Investment Industry should read this. This book and my philosophy of investment strategies aim at one single minded focus of delivering better, smoother, risk adjusted investment experience for the Investors.
We have been told: for Higher Returns – one needs to take Higher Risks – in the bargain also digest volatility attached to these investments. It is easier said than done. I am saying just the opposite: how can one have better risk adjusted investment journey even after taking Lower Risks? If you wish to know this Secret, this book is ideal for you.