Complicated Vs Keeping it Simple

_*Talk, Think & Act*_

_*Democratization of Advice*_

Six Simple Variables, but yet so Complicated?

The 6 variables to be juggled for a happiness filled money life; but, over 95% of people get stuck miserably managing these.

Why?

Do people not understand?

Do people understand but, don't care?

Do people think, "they understand", but in reality, they don't?

Where is the gap?

Family makes it complicated

Friends make it complicated

Society makes it complicated

Governments make it complicated

Media makes it complicated

Books make it complicated

Universities make it complicated

Oneself makes it even more complicated

So simple to understand & manage, but yet, it's always projected to be so complicated.

Who's going to make it simple?

All the tonnes of material on personal finance & investing is just not worth a pinch of salt if people at every level of the human wealth pyramid, commit & keep repeating the same & similar errors on each of these 6 variables, time and again, for centuries.

The human avoidance of money misery, lies in embracing some very basic elements of money management, but alas, it's too Simple to practice....and so the money life gets as complicated as it can.

_*Investing, Sidelines & Investing*_

When the market was at a new peak in Jan 2020, _I wish NOT to invest as the markets are at an all time high_

When the market collapsed by about 40% by March 2020… _I wish NOT to invest as the markets have suddenly collapsed & they are doomed_

When the market rallies back by about 37% from the bottom of March 2020, _I wish NOT to invest as this might just be another illusion_

_*I DON'T KNOW THE FUTURE OF STOCK MARKETS*_ 😌

But, I know for sure that...

_*Doing nothing will NOT take one, anywhere*_ (ahh....except, after Investing 🤠)

_*Waiting for the RIGHT TIME to Invest?*_

_*We'll, it's is never going to come*_🤷🏼‍♂️

_Act yesterday, today & tomorrow, too_ 😌

_*Credit limits, Umbrella & Support*_

👆🏼 I get this kind of a message from a couple of banks of which I hold credit cards

The lesson to remember here is......

_*One gets these emails only when he/she is NOT using the given credit limits & has never ever delayed paying the bank back*_

Just to reiterate an old saying....

The umbrella is given only on a nice sunny day 😀

When the rain comes pouring, it's taken back 😂

_*the person who needs this support doesn't get it but, the person who doesn't need the support gets all the support*_ 😂😂

_*Unknown & Known*_

_*What we don't know is that, we don't know anything*_

but

_*What we know is that, we know everything*_

_*Life & Money ECLIPSES, start here & end here*_🙏🏼

_*Risk 'On' or 'Off'*_

Every decision or choice we make in our Money & Life has a certain degree of RISK associated with it; & is reflected in the outcome of that particular decision, as a deviation (positive or negative) from the expected result
Sometimes, we can estimate this risk, but other times, we just don't have a clue.      
       
Can we ringfence or control these 'risks'? YES & NO - e.g. we can possibly minimize the Income Risk / Investing Risk / Liquidity Risk but, can we do the same for Life Risk (eventually, all of us press the exit button) / Time Risk / Unknown Risks? 
So, should we or should we not take Risks? – ha ha, there is no 'one' choice. Every decision made in the frontal lobe of the brain has 'a risk' associated with it.    
       
Risks as I depicted in the above illustration -
       
Career Risk - Always at the mercy of a third party. Is this a necessary evil? an essential evil? or a habitual evil? At the end of the day, everyone needs Money & aspires to make a comfortable living. But, can we ringfence this?   

Investing Risk - all that happens in the journey of investing. We keep discussing this all the time    

Liquidity Risk - not having 'enough cash' at disposal, especially when needing it the most; is the worst possible situation for one to end up with.    

Life Risk - "The Inevitable", but, when does this inevitable happen to us? That is the important 'time variable'. Can we ringfence our family against this loss? Can we ringfence ourselves?   

Routine Risk - the daily grind risks. Apparently, an adult makes approx. 35,000 decisions in  day. How do we handle these routine risks? Can we keep thinking about pros & cons for each of these 35,000 decision making points to continue with life ?

Time Risk - the ability to not do the right thing at the right time, Money or Life decisions. Time Never Stops, but, "the risk of not doing is far greater than the risk of doing something positive in Money & Life decisions"

Unknown Risk - "The Never Known", it just hits us from any direction, in any way, onto  either our Money or Life, or as a package. Nicknamed, black swan, blue swan or grey swan etc.; our life is shattered, if one is not mentally prepared for this.

Succession Risk - 'Time in our Life is converted into Money', & then, that Money is not distributed as it needs to be. What is the plan here? Let it get squandered? Let it get decided by the whims & fancies of agencies / other people/ entities / law etc.?

Health Risk - anything to do with the 'not so' normal functioning of any human's external or internal systems. Health is Wealth, too.  

Income Risk - Wake up one morning to find that, there is 'no income' coming from this day, week, month? Have we designed a contingency plan? Is it executed? How long more do we need to struggle for the daily rat routine of finding the cheese?     
       
Bottomline, Nothing in Life is worth without taking risks. As I came across a speech made by the Hollywood actor, Denzel Washington - If you fall, fall forward & Aspire to make a difference & not to just make a living.

Risk - Known or Unknown - One has to face it & handle it (with care)  

_*Spending - before, during & after lockdown*_

Whether one tracks their  investments or not, they should definitely track their _*SPENDING*_

Yes...this is one of the foremost impact variable in Money tracking, that has quite a serious repurcussion on one's future Money & Life.

The enclosed table depicts a very simple exercise to make visible & then introspect on some facts from our lifestyles.

_*Am I above the Spending line*_ (serious introspection needed) 🙄🤔

or

_*Am I below the Spending line*_ (better lifestyle management needed) 😊

or

_*Am I comfortably 'on' the Spending line*_ (just keep going, managing to spend with wisdom) 😌

_*Returns - front-ended, in the middle or back-ended?*_

An illustration depicting the same 👆🏼

_Returns can accrue to an investor during any phase of the holding period_

Sometimes, they start to accrue immediately after one invests, some other times, during the middle phase & in some instances, they accrue only during the last phase of the holding period.

Does it really matter when these returns are accrued, as long as the average CAGR return is achieved?

It doesn't 😌

_What matters is the end result_

All that happens along this journey is an experience in itself.

_*Stay the course*_
_*Stick to the holding period*_
_*Keep the journey intact*_

_*NO TIME, LASTS FOREVER*_

_*Feelings, Emotions & Investing*_

Pls view this in a landscape mode 👆🏼

_*Investing is all about FEELINGS, in addition to the science & art associated with it*_

I tried to capture the feelings we went through, week after week, in the months of Feb / Mar 2020 in the Bear part & Mar end till date, on the Bull part 😀

The bonus....

_I've also added the feelings on Saturday & Sunday....if only the markets were to be open_ 😀

_*Benjamin Graham, The historical fact & Lesson for us*_

Benjamin Graham.....as Wright brothers are to flying, he is to Investing

We'll, just to feel good , let me dive a bit into history...

1926 to 29, he had a fantastic run in his joint stock company 

He covered all his shorts towards the end of 1929

And then..

_*thinking that the worst is behind us, and the market was too crazy on going too low on stock prices, he went All In. HE USED MARGIN TO LEVERAGE, what he thought would be terrific returns.....and then, he had his worst ever year LOSING 50%. HE WAS PERSONALLY WIPED OUT IN THE CRASH*_

In the 4 years from 1929 to 1932… Graham lost over 70%

👆🏼Extracted from a book (Big Mistakes)

Lesson.....

How ever careful / intelligent / analytic / research oriented, blah blah....one is........... _*no one is immune to the short term (1 to 3 yrs) movement of the stock prices*_

The faster we accept the fact that there are _*INNUMERABLE VARIABLES*_ impacting the stock prices, the better we are positioned in Investing.

Trying to Guess & Outguess these variables is an _*ABSOLUTELY FUTILE EXERCISE*_

None gets it.

None gets it.

None gets it.

And if Anyone gets it....it's by _CHANCE_ than by design

_*WHY DO WE SPEND TIME WORRYING ABOUT THESE VARIABLES?*_ 😌

_*JUST KEEP BUYING THE DIPS or OTHERWISE*_

_*JUST KEEP HOLDING*_

_*The last 2 months, Pessimistic in views but, Optimistic for the future*_

The best & the least one can do is...... _*stick to the plan & stay the course*_ ; but also keep revisiting every now & then, to re-evaluate the state of cash flows / future needs.

If we keep _*reacting*_ to what the market is doing..... We're always *behind it*

Btw......

Almost everyday in March & most days in April; I received only _*NEGATIVE*_ news / forwards

_*the world is doomed*_ (eg. Nifty will hit 5500 etc. Maybe it will 🤷🏼‍♂️)

_*health care EXPERTS, economic EXPERTS, market EXPERTS - all had a single tone of voice - future is bleak*_ 😔

_*human race is going to get into very serious troubles*_😔😔

_*equities are going to get finished*_🥵

_*fixed income is dead*_🥵🥵

_*only GOLD will save us*_🤠

_*countries are going to get bankrupt*_ (there were/are/will be many) 🤐

_*companies will go bust*_ (Yes, Many will) 🤐🤐

_*we have entered the greatest depression in a century*_ 🤔

_*every NEWS headline / coverage was / is / will continue to be NEGATIVE only*_ 🥱

But, What happened from then on?

We only progressed forward in many many ways...😌

We innovated. 

We adapted. 

We trained ourselves to the new situations. 

We reworked on our financial issues (if any). 

We continue to do so.

We're starting to save

_*Dooms Day theories are for pessimists*_ 😁

And now.... _*there might be No Second Wave & Thrid waves*_..... Atleast I hope & pray that we don't 🙏🏼

As I always say...... _*Everyone has a view but no one has a clue (about the future)*_ 😎

_*Conversations & Quality*_

Let's keep this simple 😊

_*Quality Conversations*_ 

_are Purposeful & Deep_

_with Honest & Truthful words_

_highly Consistent in Thoughts, Words, Approach & Language_

_always in a Listening, Learning & Sharing mode_

_discussing on Reality with Objectivity & Rationality_

_revolve around; *What one NEEDs to hear, than, What one WANTs to hear*_

_and, end in a Cordial way, but, with Respectful Disagreements, if any_

At the end of such conversations, one should be able to answer a very simple question - 

_*Am I (Are We) Going To Be Fine?*_ with absolute Clarity in Mind

_These are not idealistic adjectives used to pen this note, but this is the *PHILOSOPHY* of the Real Conversations one needs to work with, for any positive end result_

Be it a Well Wisher / Advisor / Professional / Family / Friend / Employee etc. 

It's the same for all 🙂

_*Do You Have Quality Conversations?*_

_*Snakes, Ladders…Ups, Downs & Investing*_

More of board games - after Monopoly & Chess; it's Snakes & Ladders, now 😊

_*Snakes and ladders*_ .... You'll surely win (reach the top square) if you stay put on the board & keep rolling the dice; no matter how many snakes gobble you up or how many ladders push you up. _Just stay put on the board, & you'll definitely reach the last winning square._ 

_*Investing Snakes & Ladders*_.... You'll surely win if you stay the course for a long long time & keep rolling the investing dice; _no matter how many 20,30,40 or 50% snake corrections push you down or how many equivalent ladder upsides push you up_. _*Just stay invested on the Investment board, till you reach the last square of Succession.*_

_*Stock Market or run of the mill Astrologers (in relation to markets & predictions)*_

_Disclaimer: Outlier Astrologers are in every field & my full respect and admiration to each of them_

Well, I'll believe in what the collective wisdom or non-wisdom of what _*today's stock markets are telling me about the future than rely on the economic & stock market expert astrologers*_

Let me give you a classic example.....

None told me in mid Jan 2020, that 23 March will be the date of the recent bottom 🤔. Did anyone say that to you?

And 

None again, ever ....mind pls.... ever....said a word about a pull back like what we've seen from the 23rd March bottom 🤷🏼‍♂️ till date. Again, Did anyone tell you anything about this bounce back?

Btw....

_Markets fell the worst, even before our first lockdown started_ 😂

_Markets bounced the best, all during the lock down period_ 😂😂😂

So, did the fall happen due to the anticipated _future_ lockdown?

Or

Did the bounce back happen to the anticipated _future_ opening up the economy?

_*Will this sustain?*_

Yes

No

Maybe

All possibilities exist because, we _*just don't know the future on what will the markets do from here*_

But right now, the market is telling....ok, I'm seeing something positive for the future

Well, the market discounts & also attaches a premium 😀

When reality strikes....it just adjusts again, for the future