Investing and Bhagvad Gita

 

For a cognizant man, knowledge flows from left, right, and center. As Aristotle said, "The ultimate value of life depends upon awareness and the power of contemplation rather than upon mere survival". A person who is aware of his or her surroundings can find life lessons while shopping for vegetables and investing lessons while reading the holy Bhagavad Gita. That's what we are going to do today. Even though this holy book isn't the best book ever written on investing, it still has lessons that we can resonate with. Over the years, Gita has been a secret of the victory for many great personalities in the world. Bhagavad Gita is a dialogue between the warrior price Arjuna and Shri Krishna during the battle of Kurukshetra between Pandavas and Kauravas. This itself indicates that knowledge can be acquired where there is the will to inculcate it. So, without a further ado, let's get the Gita rolling. 

1. "IT IS FAR BETTER TO PERFORM ONE'S DUTIES PERFECTLY THAT TO IMITATE SOMEONE'S DUTIES". I know this sounds a bit contradictory to what I said in my last blog, but copying someone, at least when it comes to investing, won't pay off. Copying someone's ideology is fine but trying to imitate someone else's trade is like digging your own grave. I will give you an example. The late investor Mr. Rakesh Jhunjhunwala was known for his "le fata fat de fata fat" trades (quick buy, quick sell). Even though he was known for his investment skills, he was famous for his trades. There are so many people who follow his ideology.

 He was one of the most optimistic people ever. Yet, some of the biggest money that he printed was by shorting shares. Keep that aside. How many people have the courage to buy company shares even at 30X valuation? Rakesh Jhunjhunwala bought his first lot of Titan shares at an average price of Rs 60. He bought his last lot at an average price of Rs 900. Most of us might sell a share if it goes to Rs 900 from Rs 60. Yet, he still bought it, and today, Mr. Jhunjhunwala has a net worth of $5.8 billion, and almost $3 billion of that comes from Titan alone.

2. "O PARTH, THE QUALITIES OF THOSE WHO POSSESS A DEMONIC NATURE ARE HYPOCRISY, ARROGANCE, CONCEIT, ANGER, AND IGNORENCE".  While managing finances, little growth in no time can make you feel proud. But it can soon develop into arrogance for possessing talent or skills for making wealth. The desire to be praised by others, imagining themselves to be superior to others. If such investors don't contemplate soon, a volcano of demonic qualities can erupt, such as harshness and arrogance, eventually making such a person ignorant. Stay away from ego trips, develop the habit of staying humble, and be a constant learner. Exchange ideas from your fellow traders or investors, learn from your mistakes as well as your partner's mistakes, and maintain poise. 

3. "THEREFOR, O BEST OF THE BHARATAS, IN THE VERY BEGNNING BRING THE SENSES UNDER CONTROL AND SLAY THIS ENEMY CALLED DESIRE, WHICH IS THE EMBODIMENT OF SIN AND DESTROYS KNOWLEDGE AND REALIZATION".  It is an old saying that desire is the first deadly sin of investing. Just like Krishna is teaching Arjuna about the ill effects of desires, likewise, many successful investors have time and again advised newbies to keep emotions away from investing. Entering the markets with the intent of making wealth sounds rational but, entering markets just because you enjoyed "Scam 1992" is again like digging your own grave. Do not let the desire to make money overtake you, because if it does, congratulations, my friend; you are on the way to being the next Bernie Madoff or Jessy Livermore. People jump in the markets with the intent to double their money in 25 days. You definitely can make that happen, but luck won't favor you all the time. As Jhunjhunwala said, "Have rational expectations about returns. If I make a 15%, I am a king, and if I make a 25%, I am the emperor". 

4. "ELEVATE YOURSELF THROUGH THE POWER OF MIND, AND NOT DEGRADE YOURSELF, FOR THE MIND CAN BE THE FRIEND AND ALSO THE ENEMY OF THE SELF". In this verse, Krishna gives a powerful message by saying that in order to progress higher, you have to lift yourself with your own efforts. You are your own friend if you succeed, and if we don't, you can become your own enemy. In other words, our success and failure are entirely in our own hands. No other person can help you. Therefore, as an investor, you have to train yourself to head in the right direction. Sharpening your skills, your network, and your knowledge are all baby steps toward becoming one of the very best.

Staying tuned to economic welfare and political news will give you a broader picture of market movements. Also, have a strong idol and inspiration from the industry. Don't copy their style of investing. Develop your own ways through their knowledge. Just like how Arjuna fought the war with the help of Shri Krishna's wisdom but through his own archery skills. 

5. "ONE WHO IS NOT DISTURBED BY THE INCESSENT FLOW OF DESRIES - THAT ENTER LIKE RIVERS IN THE OCEAN, WHICH IS EVER BEING FILLED BUT IS ALWAYS STILL - CAN ALONE ACHIEVE PEACE, AND NOT THE PERSON WHO STRIVES TO SATISFY SUCH DESIRES".  Just as Shri Krishna's life teaches us, seizing the right opportunity at the right time can yield extraordinary results. This principle holds true in the realm of investments as well, where identifying favorable market conditions and making timely decisions can have a profound impact on long-term returns. Much like Shri Krishna's counsel to Arjuna, advising him to remain composed amidst the chaos of battle, investors should exercise patience and stay focused on their long-term goals. It is crucial to resist the temptation of consistently buying and selling based in short-term market fluctuations. 

6. "NOTHING SHOULD BE ACCEPTED BLINDLY; EVERYTHING SHOULD BE ACCEPTED WITH CARE AND CAUTION".  When Krishna teaches Arjuna the difference between knowledge and intelligence, he explains that intelligence is the ability to analyze something by oneself. Knowledge refers to the ability to distinguish between atma (the soul) and non-atma. Non-bewilderment means to be devoid of perplexity. So, he says, to be intelligent, don't blindly accept anything. Don't ever "fall in love with a stock." If you do so, you are likely to lack focus and caution when analyzing a stock. Therefore, always try to apply healthy skepticism when buying a company. Questions such as:

1. Am I sure that the earnings rate will improve?
2. Why is this company not profitable?
3. Is the industry really as great as it seems?

This skepticism will prevent you from accepting ideas blindly or falling for a value trap. While an investor can control what he or she buys, they can't control the volatility or the price of the investment in the long term. Successful investing requires careful planning and understanding of the business. But it also requires one to remain calm. If your investment collapses and you think it is a good business, continue to add. And, importantly, markets are not casinos. As Buffet has said, "Buy great business and leave your stocks alone. Let compounding do its work. Don't unnecessarily ruin it". 

Happy Investing.