Understanding Positive Thinking (Part 3)

One of the reasons why positive thinking is difficult is because of the education system and patterns that we follow.   Let me explain.

We have been conditioned to think in terms of extremes, opposites and absolutes.  If a thing is not good then it must be bad.  If something is not white, then it is black. If a thing is not lovable, then it is to be hated.  Antonyms make good and challenging questions for children and schools, but to believe that it reflects life would be an exaggeration.  Nothing in life is cut and dried like this and put into compartments.

So, let us take an example of fear of failure as a negative mindset.  If we were to treat this positively, the mindset would not be that of “an assurance of success”.  This is being silly and not positive.  A positive way of approaching this would be “being confident of doing the best we can”.  This kind of positive thinking is nurturing and not a trip to Wonderland!

The core strategy of positive thinking lies in your ability to avoid the extremes in thought.  The positive thought is not necessarily an ideal state.

©Nitesh Kotecha

Your Broker As A Cheat (Part 9)

The News channels are flashing that SEBI has finally cracked down on companies with shady IPOs.  Readers of the blog will not be surprised as this was mentioned in my earlier write up on December 23 2011.


The entire IPO process is being reviewed.  The companies are being banned from raising further funds and some merchant banks may be banned too...  Let us hope that there is some integrity in all this.


Below are two links


http://www.moneycontrol.com/news/cnbc-tv18-analyst-markets/sebi-cracks-down7-recent-ipos_641041.html

http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/sebi-bans-7-firms-from-fund-raising-pg-electroplast-one-life-slips-over-10/articleshow/11289624.cms

If your Broker did recommend this IPO, do have a word with your broker and study all the justifications provided by him/her.


Happy Investing!!

©Nitesh Kotecha

Your Broker As A Cheat (Part 8)

There is a joke…

Two women were walking through the woods when a frog called out to them and said: "Help me, ladies! I am a stockbroker who, through an evil witch's curse, has been transformed into a frog. If one of you will kiss me, I'll be returned to my former state!"

One woman took out her purse, grabbed the frog, and stuffed it inside her handbag. The other woman, aghast, screamed, "Didn't you hear him? If you kiss him, he'll turn into a stockbroker!"

The second woman replied, "Sure, but these days a talking frog is worth more than a stockbroker!"

Newspapers have reported that Equity NFOs (New Fund Offers) have reached an 8 year low.  I’d say that is good news.  You all will remember the NFO craze of 2004-2008.  This was a ridiculous time in the history of India.  There were NFOs every month.  The fund houses were advertising them like crazy.  And Indian equity investors poured out crores of savings in these schemes.

Here is the deal on scam behind the NFOs.

The SEBI allowed the fund houses to 6% of the NFO collections to be debited to the expenses account for all NFOs.  This allowed the fund houses to immediately “transfer” certain expenses to the NFO.  The fund houses had a major problem about retaining their fund managers on account of their fees.  The fund managers were in high demand at all fund houses.  An NFO would permit the fund house to nominate the name of such a fund manager and thus give a window of opportunity to indirectly hike the compensation to the fund manager.

The NFO would allow the fund house to market the NFO along with the name of the fund house.  This advertising expenditure of the fund house would be borne by the NFO and its gullible investors - the fund house would not have to debit the advertisement expenses to the existing funds.  The existing fund investors thus profited at the expense of the new fund investors.

It was a rarity if the NFO was significantly different from the existing funds in the fund house’s portfolio.  The fact that the NFO was not so different from the existing portfolio is a hint to all investors of the real intention of the fund house – basically redirect expenses to the NFO and make the existing funds more profitable as a result.

The stock brokers and the middleman played a very clever game in the marketing of the NFOs.  The standard marketing line offered to the investor was that the fund was offering its units at a NAV of INR 10.00.  Any investor worth his salt should have figured this one out as the NAV offer rate could be any amount as it makes no difference.  The investors were fooled by the perception that they were getting equity at INR 10.00 in a booming market.  The stock broker just played their clients like a song.

There are other tricks in the NFO business but the above should suffice.  SEBI cracked down hard on the mutual fund industry and thus we see that fund houses are rarely advertising their existing funds and those NFOs are rare.

Ever wonder about the crackdown on the mutual fund industry?  Is it for the investors?  “Aaah… humbug!” as Ebenezer would say.  However, I leave it to you to figure it out and ponder over the holidays.

In an unrelated story, the Times of India reports that a stockbroker in Mumbai was killed by four of his clients.  Below is a link to the story

http://timesofindia.indiatimes.com/city/mumbai/Share-broker-hounded-to-death-by-4-investors/articleshow/11287123.cms

Happy Investing!!

© Nitesh Kotecha

Understanding Positive Thinking (Part 2)

The desire and obsession with perfection can mar your thinking pattern and create a cesspool of negativity that one can drown in.

There is no problem with aiming at perfection.  It is a good way to work with your goals and objectives.  However, the pitfall lies in interpreting the outcome when things don’t shape up well.

John Lennon said that “Life is what happens to us while we are making other plans”.  There you have it – truth from one of earth’s profound poets.  Things don’t go as planned – so what?  You make amends.  Wallowing in self pity is symptomatic of our lack of understanding of the process of life.  Rolling is the dirt is not the best way of becoming clean.

Positive thinking is not about fooling yourself or rationalizing all the important feedback that you get from your friends, peers, colleagues, school, and college or from home.  Feedback has its value.  A disease is a feedback that you have not been paying attention to how you have been treating your body.  Failure is a feedback showing you that you need to prepare for something. Positive thinking is about assessing the feedback in a motivating manner and without any ridicule to oneself.  We are our harshest critics, as some say.

It’s a harsh world. There is no need to make it more so with ridicule to oneself.   However, there are times when it’s ok to Thank God that elephants don’t fly!!

© Nitesh Kotecha

Understanding Positive Thinking (Part 1)

There is a lot of talk out there about positive thinking.  There are zillions of books that talk about this.  I am taking the opportunity here to say something about it

1.        Positive thinking, first and foremost, requires that you look at your past with satisfaction and not with regret.  This means that, all incidents in your life would require you to transmute the experience from one that of gloom to that of a possible growth opportunity or learning experience.  The events may range from a divorce, death of a loved one, disease or even simple disagreements that we may have blow out of proportion.

2.       Another aspect of positive thinking is not to project the past into the future.  Negativity implies not only such projection but also a significant amount of certainty that we may tend to associate with the possible outcomes.  The mind has a task – to ensure our survival and it may be a natural tendency for us to exaggerate and stretch the possibilities of the outcome.

3 Have a sincere friend with whom you can have a chat so that you may be able to realign your own thoughts and develop a fresh perspective on the matter at hand

© Nitesh Kotecha

The Well Is Not Interested In Your Thirst

A well is filled with water.  However, it is not interested in your thirst.  You have to get the rope, the bucket and the wherewithal to access the water and quench your thirst.

Any pursuit will require initiative.  Here are the characteristics or mannerisms that indicate our ability to take initiative:

Becoming a self starter – A person with high initiative is a self starter.  He does not wait for problems to push him.  A leader sees a situation and takes control of the situation WITHOUT SPECIFICALLY BEING ASKED TO DO SO.  He sets the ball rolling.  A self starter need not be dictatorial or dominating.  He needs to clear the dust so that further action can be taken.

Contagious – A person with initiative is the envy of all.  Not only is this person proactive in terms of action, he is also contagious in the spirit of the matter. The high initiative on display unshackles the chains that bind others and propels forward a spirit of enthusiasm.

Independent – A person who takes initiative is independent of the mindset of other people.  Our ability to take initiative comes from our conviction of the relative importance and relevance of the matter at hand.  The person with initiative has the necessary nerve to take action, despite all odds.

© Nitesh Kotecha

Your Broker As A Cheat (Part 7)

There is a joke...

A centipede with arthritis sought the advice of a wise old owl. ”Centipede,” the owl said, ”you have a hundred legs, all swollen up. Now if I were you, I would change myself into a stork. With only two legs you will cut your pain by ninety-eight percent, and if you use your wings you can stay off your legs altogether.”

The centipede was elated. ”I accept your suggestion without hesitation” He said. ”Now just tell me, how do I go about making the change?”

”Oh,” said the owl. ”I would not know about the details – I only give general advice.”

Equity markets, especially when booming, breeds these kinds of general advice mongers. Brokerage houses will set up advisory services and engage in the business of selling advice.  This is something you do when brokerage is not kicking in from the volume of transactions.

Soon there are times when stocks are out of fashion.  Guess what – the advisory services have other things to you advise you on.  Commodities, Forex, Precious metals, Debt, International Collectibles, Property and what have you.

The proliferation of such junk advisors creates and environment of mass conformism which gives you the feeling that if you are not getting any advice, then you are left out.  The perception of “ being advised” (and consequently better informed) created by the advisory services gives you the illusion of being smart and actively participating in intelligent decision making.

The advice given by the advisory services suit the broker’s own philosophy and of the brokerage - not your personal goals.  The broker has a burning desire to be right.  He has a further desire of creating conformism within his clients so that there is a collective consciousness that acts as a unifying force protecting your broker’s deficiencies.

There is another thing.  It is a lot less risky ADVISING OTHERS than to put your money on the line of investments based on the advice you just doled out.

There is no better advisor than you.

© Nitesh Kotecha