Moneylife Events
Moneylife Investor Club Launched

The inaugural event was a scintillating presentation by Prof Sanjay Bakshi, an expert in value investing

On 23rd January, Moneylife Smart Savers’ Network (MSSN) launched its initiative, Moneylife Investor Club, at the majestic International Convention Hall of the Bombay Stock Exchange (BSE) with a superb presentation by Prof Sanjay Bakshi, a well-known blogger and a professor of behavioural finance and value investing. The programme was sponsored by the Bombay Stock Exchange and Kotak Securities.
The event started with Sucheta Dalal, director of MSSN, welcoming the guests and highlighting the objective of the Club, which is to encourage long-term investment in stocks. She then requested the guest of honour, Ashish Chauhan, MD & CEO of the BSE, to share his thoughts. In his speech, Mr Chauhan highlighted BSE’s commitment to and active role in catalysing retail investments into equities and promised to support the initiatives of the Investor Club. This was followed by a brief introduction of Prof Bakshi by Debashis Basu, director of MSSN. Mr Basu highlighted the personal and professional struggles of Prof Bakshi for a few years, after he came back from London in 1994. All he had was Rs3 lakh in savings, lots of wisdom, and a degree from the London School of Economics, after having qualified as a chartered accountant in India. 
Prof Bakshi gave a scintillating talk, based on his personal experience of investing over 21 years during which he learned what not to do as a result of personal as well as vicarious experiences. Through video clips, images, charts, innumerable stories and loads of humour, his key message was that we should always try to avoid risk-seeking behaviour. 
He exemplified the first through a shooting scene from Expendables 2 that involved throwing a live grenade in water, to create an explosion. Stuntman Kun Liu, only 26 years old, died in the explosion. If you keep indulging in such risk-seeking behaviour, you will end up like these people ultimately, he said. 
But why do people indulge in such behaviour? His answers covered insights into human psychology, such as overconfidence, anchoring effect, incentives, commitment bias, social proof (‘others are doing it and getting away with it’) and deprival super reaction (‘I don’t want to miss this chance’) combined with the rules of probability. 
Prof Bakshi said, “While investing, we can avoid unnecessary risks by avoiding leverage, seeking protection from nature and being wary of false pitches and promotions.” He explained how leverage causes financial and psychological stress. He learnt this from his personal experience. Long-term buying and holding of quality businesses, bought at reasonable prices, is something that works. He explained his personal experiences with derivatives humorously calling them ‘weapons of mental destruction’. The drastic consequences of leverage can be gauged from the fact that Long Term Capital Management (LTCG), a hedge fund, whose board members included Nobel Laureates Myron Scholes and Robert Merton, failed. The failure was the result of combining complexity, leverage (levered 99 to 1!) and stupidity, according to the professor. 
From an investor perspective, the closer you go to pure commodities, like ores, minerals and metals, the more you are playing with fire, said Prof Bakshi. The whole game becomes extremely unpredictable because there are too many variables. Cautioning against putting complex, but ultimately optimistic assumptions, in Excel sheets, as analysts often do, he remarked: “The most popular software for writing fiction is not Microsoft Word but Microsoft Excel.” Finally, he explained how astute salesmen of financial products use a combination of psychological tricks to push financial products because they are paid huge incentives to do so. 
The session ended with Prof Bakshi answering questions from diverse areas of investing such as diversification vs concentration, number of stocks in portfolio, investment mistakes, prospects for the airlines sector, etc.


Moneylife Foundation at Management School
Management students learn how to manage their money and invest smartly
Moneylife Foundation held yet another seminar on safe and smart investing, this time for finance students of Guru Nanak Institute of Management Studies at Matunga, Mumbai. While most of the attendees, who are students of business administration and finance, would be expected to have a good grounding in matters of finance from a theoretical perspective, there is little in management education syllabus that prepares them for the intricacies and the realities of managing their own money. Moneylife Foundation’s seminar on being “Safe and Smart with Your Money” prepares them for just that. 
The first session was conducted by Sucheta Dalal, managing editor of Moneylife and founder-trustee of Moneylife Foundation. She pointed out to the students how they can avoid financial mistakes so they do not lose money. The second session was addressed by Debashis Basu, editor of Moneylife and founder-trustee of Moneylife Foundation. He articulated the simple steps for investing smartly. 
Mr Basu explained how to keep the task of managing one’s savings and investments simple, while understanding returns after tax and post-inflation. As college students have time on their side, he advised them to invest in equity mutual fund schemes and stocks with an investment horizon of 15 years or more and asked them to stay away from gold, real estate and insurance products.


Pulse Beat

Salt May Not Be an Enemy

Anew study showed that patients who are salt restricted with heart failure did not do as well as those who took normal amount of salt. The study showed significantly less deaths in the group that ate normal salt even in the presence of heart failure. 
This is the danger of believing in reductionist studies that form the basis of our modern Western medicine. In practice, I see a significantly increased number of elderly patients getting admitted to intensive care units with low salt syndrome and coma, at times. This was almost unknown during my younger days. Now, we are using more potent diuretics and are also restricting salt in hypertensives and in heart failure. I must hasten to add that there are a few salt-sensitive individuals who might do well with less salt but they are few and far between.


HPV Vaccine Founder Says It Is No Good!

The founder of the HPV (human pappilomavirus) vaccine, Diane Harper of University of Louisville, feels that the currently used HPV vaccines are not safe and effective. Even if the HPV vaccine does prevent cervical cancer, and not just HPV infection—an outcome that has never been proven—it is unlikely to have much effect on cancer rates.
The other problem is that we do not know how long the antibody levels last after vaccination. If young girls are vaccinated, as is being done in third world countries, thanks to the high-profile claptrap, the vaccine effect might wear off before the girl becomes sexually active. In 98 of the 100 patients having sexual activity, HPV is killed by vaginal secretions. It benefits only the 2% that we are talking about, to vaccinate 100%! Well, even that would be sensible, if the vaccine is absolutely safe. According to the United States CDC (Centers for Disease Control and Prevention) 0.034% of the girls vaccinated would die! The independent researchers put this death figure at five times that number.
These vaccines did not have any human studies before they were administered to poor Adivasi girls in India aged nine years and above and should have certainly been classified as an experimental study, to test the safety of the vaccine. It is no surprise that those experiments did show the death of some girls. The vaccine looks as dangerous as the cancer it is supposed to prevent. In the reductionist paradigm of Western medicine, predicting the future of patients is a common pastime. But it has no scientific validity in the real world, as no human disease can be predicted for the dynamic human system that does not follow the linear laws.


Seasonal Variation in Depression

We used to think that depression presents severe symptoms in some seasons, especially in winter. A new large cohort study of depressives has confirmed that there seems to be seasonal variation in the severity of depression. 


Side-Effects of Chickenpox, Shingles Vaccines

Recent studies have indicated that the chickenpox and shingles vaccine might have unacceptable side-effects and they might not be as effective as claimed.Vaccines seem to be a very good business and the whole world becomes the customer for vaccines. However, it does not look good, as the basic foundation of artificial vaccine protection does not seem to be a very good idea, to begin with.


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