원문 보기
Welcome to Subramani. Please click the bell icon, subscribe, share this with your friends. Today I'm going to review a book called Debunking , it's another book by Ken Fisher; but I think he used other support, like, uh , Lara Hoffman's book. And very importantly, what I like about Ken Fisher's books, whether it's "10 Paths to Wealth" or " Only Three Questions to Ask," [is] they're all very practical.
You can use them, and they are written by a practitioner. That's another advantage, you know; he was there, did that. So the debunking, I think, is that he took about 50 myths and dispelled them, but I'm not going to do all 50 myths that he just gives away, debunking the whole book. So he's saying that basically, uh, a lot of widely accepted investment truths are actually expensive myths, and, uh, you can't be very, uh, you can't be sure that they're going to work.
The book does not offer a step-by-step system. And, uh, his main thesis is that investing is a game of probability. So, first of all , I don't like to call it a game, but he calls it a game. So we'll start from that. Even professionals often make mistakes. Therefore, you should know that you will make mistakes when investing.
So, if you can make 60% or 70% of your decisions right, you have succeeded. You are a genius. Simply genius. By reducing your personal error rate through debunking, which is, uh , debunking some of the myths that systematically challenge popular ideas, you can improve long-term results and protect your wealth.
This is absolutely true because you will monitor your portfolio and find stocks that have performed very well and will soon become 10%-20%-25% of your portfolio. This is a good time when people say, "Oh, now you have to reduce your risk." Well, if you've never sold, well, you could do it, you could be right, or if this company goes bust, you could be ridiculously wrong.
So either could happen , but you have to be prepared for it. So, first I'm going to dispel the myths about, uh, I'm going to debunk things about, uh , a simple bank to fail. Right? This is what he calls the first part. So, that's five parts. So, I'll do five, at least two or three videos. The first is that bonds are safer than, uh, stocks or bonds are safer than stocks.
This is over a long period of time. But people don't realize that the stock of, say, HFC Bank, uh, compared to the bonds of some completely unregulated company, is actually safer with HDFC Bank stock for 30-40 years, not 2-3 months, and 2-3 years for 30-40 years, it will be safer, it will give you a better inflation-adjusted return.
So, bonds are safer than stocks. You can only say that after you find out it's the same company. So, Tatast Steel shares vs. Tatast Steel bonds make sense, and that's over a short period of time when you're not too worried about inflation. So, if you're, say, in 2026, and you want to save money until 2030, which is 4 years, that's a time when you don't want to take risks, uh, with stocks.
Then bonds are safer than stocks, but that's it. So, you have to understand everything in this context: well- rested investors are better investors, which means you make more money in the long run. This is true, but sometimes the P/E ratio ( profitability) of an entire industry can change. And if you hold onto shares that were once valued at 80p, then 70p, then 60p, then 40p, hoping that one day the P/E ratio will recover, you will suffer.
So being overly comfortable can lead to you allocating too much money to that particular asset class. Similarly, in the short term, debt is safer than stocks. So, if you have money for 30 years and you hold it in some kind of income fund or guilt fund, chances are you will earn a lot less than you would in equity.
Again , retirees should be putting less money into equity, and 100 minus age should be in debt, right? So, if you are 70 years old, it should be in equity. Sorry, 100 minus 70, only 30% should be in equity. Not true, because it is a very simplified line. It depends on your age. Yes. But it also depends on the total amount of your wealth, whether people depend on you, etc.
So you can afford to invest 90%, like someone like my mom would invest 90% in equity and maybe 10% in debt. That's all she did. Retirees should be conservative about their age. Assets minus is something you need to decide, but I disagree with this myself. I mean, here's what Ken Fisher says: you should expect average returns.
Markets are not average, so, uh, thinking that you will get average returns over long periods of time is true, but over short periods of time it may not be true. So you may have to buy shares of an index fund and hold them for an extremely long period of time. Another thing people tell you is " trust your intuition," uh, but that's wrong because your intuition might be, uh , trying to protect you instead of creating wealth .
Creating wealth is not something your brain is interested in. Your brain is interested in safety. Therefore, you should not trust your intuition and hope that you will be right. Uh, this is the first category. The second category, of course, he calls Wall Street wisdom, and Wall Street wisdom , of course, will depend on what makes money for Wall Street and its players.
So the first thing he criticizes is that stop losses don't actually stop losses, they actually turn into a gain in the stock. Here I strongly disagree with Kenfisher because he is a bit confusing investors and, uh, investors and traders. Traders need stop-losses, which can be very tight depending on their trading strategy.
But investors need a stop-loss strategy. If I bought a stock at Rs 100 for trading, my stop loss might be at Rs 90, which suggests that I cannot afford to lose more than 10%. But if I'm an investor and I'm very confident about a stock at Rs 100, and I might have a stop loss at Rs 75 because there's something I'm not seeing that the market is trying to tell me.
So I mean he's in his debunking. He says don't put a stop loss. I have stop losses and I take them very seriously and I get out of stocks on a 10% or maybe 15% drop and I get out for whatever reason. Yes, there are times when you feel like, oh, you could have, but after the drop, if they drop another 5%, I go back through my old notes to see what I did right and what I did wrong.
So I do it. Then, uh, he also refutes the fact that, uh, a lot of people would come and tell you, especially if you have a decent- sized portfolio, that you should do covered calls. This brings in a lot of money. These strategies also limit growth potential. You need to know this, and it puts you at, uh, significant downside risk.
Therefore, you need to understand covered call options much better before participating in them . He, of course, says don't do that. Uh, then there's another argument that dollar cost averaging reduces risk and increases returns. That's also not true, and I personally know it's not true because, uh, it might work, but it's not a miracle.
Instead, I would argue that the more money you can put into work over longer periods of time, the more money you make. So that's not what he's talking about. But yeah, so the understanding of what, uh, why you do dollar cost averaging or rupee cost averaging is that the money is coming to you every month.
So you invest every month, not because...If you had 10 crores, if you had 10 crores for 30 years, I would ask you to invest the entire 10 crores in stocks today , right? I wouldn't be too worried about, well, investing them in small batches, especially if I know you're in your 30s. Yes, he says that dollar cost averaging does not improve profitability, which I completely agree with.
Then he's also a critic of, well, variable annuities and stock index-based annuities and so on, and, well, I've seen him talk about it many times, that, well, it's not the best way to invest. Then, well, part three, he says that everyone knows, so everyone knows that, well, you buy in January, you sell in May, and then you leave and all that other stuff .
So, the seasonal trends are weak, inconsistent, and, well, not a very good trend to watch. Um, a strong dollar is good, which means a strong rupee in India is good. No, well, low P means low risk. No, complete nonsense, and, well, you need to focus to accumulate wealth . Well, uh, I think a lot of wealth was created through concentration .
So, whether it's Nazim Premi, Warren Buffett, or Mkkesh Amani, concentration helped them create wealth, and after creating wealth, they diversified their assets and reduced risk. So, concentration should also remember that the risk increases dramatically. So if all your money was in Satyam Computers and the company's shares fell to Rs 5, Rs 6 or Rs 20, from Rs 300 to Rs 20 and back to Rs 500 or Rs 800, whatever the price of Mahindra Tech I is now, I have no idea , but that's the kind of fluctuation you'll see and that's the concentration risk you're exposed to.
So there's no magic number of shares, but, um, I've seen investors like Roshi Jain or fund managers like Roshi Jain all swear that you only need 30 shares . So, depending on what you want, that means you can't have all your wealth in one stock, even if you 're a business owner, right? Your market cap is 100,000, say one lakh crore, 100,000 crore, it doesn't mean all your money can be in it; you will have to gradually reduce your, ahem, concentration.
Uh, then he also says, "Don't fight the Fed," totally agree. Then history lessons, he goes to history lessons and says, pray for a budget surplus, a surplus. He usually says that budgets are not good. Surplus budgets are not good for stocks. High employment is a market killer. Uh, well, high and high unemployment is a market killer.
True , sometimes true, and sometimes not. So no, uh, not entirely true. Uh, what gold, uh, your gold oil stocks, everything can go its own way. So sometimes it will be gold, sometimes it will be stocks. For me, it was always stocks. For the past few years, gold has been the money maker in my portfolio.
Uh, consumers are kings, presidential cycles and all the rest don't matter. So stop believing all these things. Right? Then he also says it's a big, bad world , or he says it's a big, big world , so you need to have foreign stocks. Simply investing in the US is not enough. So you need foreign, uh, international diversification helped.
Uh, and this is today's era, right? Don't follow what Sir John Templeton did. John Templeton didn't do much diversification. He went to Japan. He visited many small markets, and many others made money. People like Buffett didn't go outside their country, and they made money too. So choose what you want.
Uh, a lot of debt will hurt the American economy. He says it's a myth. I have no doubt. Er, trade deficits create scarce markets. He says no. The trade deficit doesn't really matter. But it can reflect strong domestic demand, economic health, competition, and a country's ability to buy things. And then he says that GDP makes stocks go up and terrorism terrorizes stocks.
Partly true. He says that the markets have shown, but the markets have shown extraordinary resilience to many shocks. So what does Fer recommend? He says that first we need to think globally. Put the numbers in context. Um, ignore common sense, uh, or check these, uh, things, and a lot of these things can be illogical.
Check the history, and, uh, that's it. What are the key takeaways from the book? So, first, investors lose money not because of failure, but because of repeated mistakes. Uh, markets are stable over time. There is absolutely no doubt that long-term stock ownership, especially globally diversified, makes a lot of sense.
Annuities and many other productive assets, such as, uh, short-term products, won't protect you much against inflation. Uh, success comes from reducing mistakes, and I think a lot of great investors have said that. So I think you all should read this book. Thank you.
Comments 0