February 2008/ 007

Editorial
Bears are just as lovable as the bulls. Neither
must be feared by anyone, least of all the
sao , investors. There are umpteen examples of
millionaire investors who have made money in
a bearish market. This issue has an article on
stock market fuddy-duddies who allow fear to
overtake their abilities to make money in the
market. This article gives some vital tips on the
difference between what is convenient and
what is right.

This issue reaches you in a week that is known

as the 'valentine week'. So what could be better
than to include a poem that the poet has
dedicated to his wife. I am sure you all will enjoy
reading this poem that is in Hindi.

A very interesting thing happened as I was

walking towards Gulab Bhavan this morning.
There was an office-goer putting his motor-bike
on the stand. After the bike was parked, he
noticed that it was jutting ahead of the line of
two-wheelers parked there. so he simply went
to the rear of his bike and started pulling it
backwards. it was hard work and could be
damaging to the stand too. I stopped and told
him:
‘Listen, in the first place you must position your
bike correctly and then park. If you realise it
late, don’t yank it so violently... just take it off the
stand, align, and re-park. Simple.’ This has a
few lessons for us all...

No, I will not talk of the lessons right now... you

will have to wait for the next issue where I will
convert this incident into an article.

Happy reading. Happy valentine’s day!

Valentines Day Valentines Gifts Valentines Cards Valentines Poems

The above is a chart of the weekly search-term share of internet-traffic to all
categories for valentine’s day. It shows enthusiastic demand for poetry. This is
the reason for including the above poem for you all!

“You have to think for yourself. It always amazes me how high-IQ people mindlessly imitate. I never
get good ideas talking to other people.” - Warren Buffett

The Learner A small newsletter that reads big!

 Should I define fuddy-duddy right now or wait until you’ve read stocks... and they seem like geniuses!
this article? Hmmm… let me give you the meaning right away
Get in the swing of things... buy a new house (a metaphor for
because I know that if you still do not go through the entire
investing wisely and timely in stocks); just claim that you earn
article you have a pretty high probability of being somewhat like
more than you really do...and don’t worry, the appraiser will go
a fuddy-duddy yourself. Simple, isn’t it? Well, the guy who sticks
along...and you’ll be able to borrow as much as you want. Then,
to investing only during bullish times feels like a hopeless fuddy-
you can ‘take out equity’ just like everyone else.
duddy... a loser and a chump. This kind of investor looks for
value in the stock market – and can’t find a thing. As compared
When the time comes for the correction... you, as an investor,
to those who will analyse the market differently and brace
will not look like such a dope after all. Always and
themselves for more investing, this ‘fuddy-duddy’ will simply get
everywhere, you can do what seems convenient...or you
into introspective depression and blame the entire economy for
can do what is right. Sometimes it is hard to tell which is
all that is happening.
which; often it is not.
The recent market volatility may yet continue, and we
When the Japanese invaded China in World War II they used
can't know what will happen in any given day or even
water-boarding against their prisoners – holding them under
week. However, given the strong stimulative nature of the
dirty, soapy water until they were obliged to breathe the water
expected new equity stimulus packages, it is believed that we
into their lungs. Then, they hauled them out, punched the water
are close to a market bottom rather than at the start of a
out of them...and laughed at their prisoners gasping on the
bear market.
floor. What useful information they got from their victims, we
don’t know...but we have no doubt that they justified their
It pays to be naturally conservative; just prefer to take a sizeable
tortures with the familiar excuse: it was useful.
profit whenever it presents itself. That is one beautiful way of not
being a market fuddy-duddy! Why should you worry about
In that same inglorious epoch, the Germans and the Soviets
short-term opportunities like these? Why not just stick
both invaded Poland. The
with your long-term positions? The reason is that
poor Poles were doomed. The
you can make bigger returns.
Bolsheviks rounded up the
Polish officers and
The rally in
systematically murdered
them... and then tried to pin it
ARE YOU A
?
on the Nazis. It wasn’t a very
nice thing to do, but it would

STOCK MARKET have been damned

inconvenient to allow those
officers to live... and possibly
FUDDY-DUDDY pose a danger to Soviet
control later on.
fin
ancials will Likewise, the Germans went
continue for a few more to work on the Poles on their
weeks. Expect plenty more side of the frontier... and later
opportunities like this in the weeks ahead. in all of Poland. They rounded
Pay attention to every little opportunity, analyse the up the communists... the
movements, and try to scoop out opportunities in trade unionists... the religious
certain stocks, including financials – as well as those leaders... the Jews... and the
that will do well once this mini-financial rally ends. troublemakers. They did not
hold back from torture either –
Let us all understand that in the long run, it pays to save not if it might save the lives of
your money... make your investments carefully... work German soldiers! Then, they
hard and avoid unnecessary spending. Capitalism moved on – to murdering
does ensure a reward for you. It is a ‘system’ that millions.
rewards virtue...and punishes lapses of
judgment. But there are times when it seems like lapses of The magic sutra of making it big in the world of wealth in
judgment pay off. When prices run up you begin to seem like a the stock market is to wait for the right opportunity to
bit of a fool if you stay out of it. It is as if a wild party was going on strike! Once you allow yourself to do what is convenient...
down the block... you feel left out if you don’t go. And the people instead of doing what is right... you are on the road to Hell. Take
who are having the best time are the people who have let the right step at the right time and avoid being a stock market
themselves go. They’re drinking hard... and dancing on the fuddy-duddy!
tables. They buy houses they can’t afford... and make money
when prices rise. They buy subprime debt... and earn higher An article by Arvind Passey ©
yields than more solid credits. They speculate on Chinese

Arvind Passey
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