Eight investing mistakes

I just received this message on my mailbox:

“Eight investing mistakes you should avoid this year. Don’t wait to find out if you’re making costly investment errors. Instead, download the latest report … called “The Eight Biggest Mistakes Investors Make. Even if you avoid just one of these mistakes, you’ll be glad you acted now! Click here to download your report!”

I haven’t read the report yet… but- here are my top eight investing mistakes for this year

1. Investing

2. Investing

3. Investing

4. Investing

5. Investing

6. Investing

7. Investing

8. Investing

: )

Common Knowledge

Its funny how we learn unexpected things in a strategy course. I just watched a webcast of game theory. I learnt that, in philosophy, the technical term describing a situation in which two people get into an infinite spiral of “I know that you know that I know that you know that….” apparently is “Common Knowledge”.

For the sake of argument

Every personality test I’ve attempted seems to suggest that I like to argue simply for the sake of argument. I knew this intuitively. Recently, I put my intuition to test on three different occasions : ) Firstly about why I believe European Union will disintegrate due to the current financial crisis, then about why Piracy is ethical and I won’t even dare mention the third communist idea about blue and white collar jobs : )

On the outset, all the arguments are flawed. It’s similar to proving 1=2 by assuming that a=b. Most people don’t realise that it is a flawed assumption and end up pondering how did he just prove that : ) Yes, It’s cheap thrills, but I must admit I seem to like arguing just for the sake of argument.

One of the advantage seems to be that I have absolutely no emotional attachment to the case which I’m arguing for because I myself don’t believe either in EU disintegration or the ethical values of piracy. So, these arguments end up being a wonderfully process of exercising rationality and creativity : )

By the way, just in case you forgot how it was done, here is the proof : )

Razorblade model

I wrote a while back about perfectly inelastic demand and it was quite a long post

(http://honestrooster.wordpress.com/2008/09/26/demand-for-ipod-docking-station/).

Today, I heard a term in class which summarizeds the whole stroy in two words : ) RAZORBLADE MODEL!

(http://www.investopedia.com/terms/r/razor-razorblademodel.asp)

Barber of Siberia

Last week, our Russian classmates arranged for a (Russian) movie night. We watched “Barber of Siberia”. Many have probably heard of this movie since it is an academy award winner. One of the hallmarks of a great movie is that it means different things to different people and is almost impossible to describe in a way that appeals to all. This movie was a great love story, aritistic, funny, melodramatic, patriotic etc etc. To me, it was a beautiful poetry all along. It is one of the best movies I have watched in a long time.

Four or Five days!

If god were to grant two wishes, my first wish will be to keep my mom safe and happy. I guess its because I constantly worry about how she is doing without me. My second wish is equaly important, but then its not important for this post : ) My mom’s happiness is wholly my responsibility. One of the metrics of “how much my mom misses me” is how frequently she calls me. Before I left India, she told me we should talk atleast once everyday even if only for a few seconds. But lately I’m realising that its always me who calls her. 

Yesterday aswell, I called and asked her why she hadn’t called me in 3 days and she said, there was nothing important to talk about!! Well, after the conversation, before dropping the phone, I told her to call me the next time. Her reply was – “OK, I’ll call you in 4 or 5 days”. I dropped the phone and burst out laughing : ) Such a reply was unimaginable a month back. Is her happiness indeed more independent of me? Did god grant me my first wish? or is just that I dont understand women at all? Most likely it is the latter.

Incredible. Yes, Incredible indeed and that’s why I dont beleive it.

Bandwidth

I just realised that knowledge gained can be measured in terms of Megabits/day. Watching a one hour speech by Daniel Goleman means access to 200 MB of knowledge in that hour. At 15kb/sec, it would take about 3 hours and 47 minutes to download this video, at 250kb/sec, it takes about 13 minutes.  I now live in a place where I can download information at 250 kb/sec, which means  I get to access knowledge almost directly from some of the most incisive and visionary thinkers of our time, whenever I want!

Now imagine what it means to have access to knowledge of 200 MB per day and the multiplier effect of applying my own imagination to that entire knowledge. If I assume I will watch 3 high quality videos a week, retain only 20 MB of information in each video and assume a multiplier effect for my modest imagination at 2% per week, I’m better off by at least 5.3 GB of knowledge at the end of the year. In IPod terms, my comparative advantage over a person with 15kb/sec bandwidth is greater by nearly 700 top quality songs!

Without experience some fuzzy realities can never be understood clearly. Logic told me that the “Digital divide” means that some parts of the world have access to information and others don’t and this is bad. My understanding was that “this is bad”!  How wrong was I? Very wrong. Now that I have experienced the power of higher band width first hand, I can see that this divide is actually catastrophic to nations left behind. And I’m still only talking about a small divide in terms of bandwidth, whereas the reality is that that digital divide cuts across users and non-users of computer!

Credit crunch

I think this video pretty much tells everything that you wanted to know about credit crunch. Truly funny and informative : ) Not sure if at the end you will understand what CDO or SPV mean, but you sure will have a good laugh.. I’m amazed that this video has less than 20000 hits so far!

Quick learner

You: Are you a quick learner?

Me: Yes!!

You: Can you prove it?

Me: I learnt to make the best chicken biriyani in the world in one week without a coach

You: Really?

Me: You are invited for lunch at my place : )

Evolution

I just finished the easiest exam of this MBA year: Introduction to accountancy. I was hoping to complete the exam in an hour.. turns out, I needed the entire 2 hours!! Not because of accounting, but because of arithmetic. It took me more time to add and subtract than to figure out journal entries. Its amazing how, since I began using computers, my math skills have deteriorated drastically.

I wonder as we evolve, thanks to excel sheets and cash less transactions, if we will completely lose our ability to make sense of numbers the way we used to before. I mean, I would have needed 10 seconds to solve a problem like (9573 + 87809 – 86) without paper, but now, I don’t even know where to begin.

Lose arithmetic ability? Silly thought, but a thought nevertheless..