While I am not very active in the equity market these days, I am, as always, an eager student of finance. My own equity strategy has changed a lot.

Initially, I used to be over confident of my equity analysis skills and used to dabble in individual stocks quite a bit (well, I certainly did the hard work – spent 2 years reading everything I could from 2005-07. Few books, I have recommended here).

Just like most people, I mistook the overall good performance of the market as my ability to be a good investor. I used to even maintain a finance oriented blog and discuss equity analysis (I did spend quite a bit of time teaching myself equity analysis, balance sheets and basic accounting).

Then one day, I picked up “Where are the customers’ yachts?”.

Things changed since then.

The book basically ridicules the entire financial industry and its mechanism. It talks about how the interests of the brokerages, agents, fund houses and just about everyone is not aligned with that of the customers’.

If you are very active in the market, the more you buy and sell, the more commissions these guys make. But good investing requires you to do the opposite – these guys will do everything to make you trade more irrespective of whether it is good for you or not.

It talks about how futile it is to try to predict the future. It talks about how people mistake intelligence for what actually was chance.

I took a step aside and looked at the financial industry – and realized how much noise there was and how much I was getting sucked into it.

I made quite a few changes in my style. I stopped being a very active equity investor. Instead I replaced it with simple non-time consuming strategies.

One such is to invest in the index in a planned manner.

Before we even go into it, please note that

• I am neither qualified nor compelled to be right on this topic.
• It has worked for me in the past, but might not in the future.
• Anything involving an index means… average performance. You are neither trying to beat the market nor trying to be clever, but you are riding the average. Average returns dont satisfy you, please look elsewhere! You can’t become Rakesh Jhunjhunwala following this strategy! But, this is average performance for nearly zero effort.

Okay. Here we go.

1. Go to http://www.nseindia.com/products/content/equities/indices/historical_pepb.htm
2. Choose CNX Nifty (if for your own reason, you want another index, you could change it)
3. Choose whatever dates you like for from-to fields.
4. Check All option and hit ‘Get Data’.
5. Now, you get the historical P/E, P/B, dividend yield of the index

Now, the simple rule I have followed in index investing is:

1. Index P/E < 12 : invest like a madman, for a 5+ year period, risk is pretty low (of course, if you look at post 1929-depression Dow Jones performance, you will disagree with me.)
2. Index P/E between 12-15 : its still good. Invest in the index.
3. Index P/E between 15-18 : Hmm. You could slow down a bit, the market is warming up after being low.
4. Index P/E 18-22 : stay put, but don’t commit fresh funds
5. Index P/E 22+ : start selling, but don’t regret if the market hits new highs after you sell

The other indicators – P/B of about 2.5 or lower and Div yield of about 1.5 or higher is another plus for me.

To buy an index, my chosen option is Nifty Bees (ETF).

This method has worked well for me. Zero research, considerably lower risk than individual stock investments. If you take any 5 year period from 1998 till date and work this out, you find that you made a profit even during bad times.

That said, in a good market, the PE is definitely going to be higher than 18 and you are going to sit it OUT. It could frustrate you for not being in .

Also, when the P/E is about 12, it probably is bear market time. You should have the guts to invest at that point – remember October 2008, did you invest in equities at that point or did you run away? If you ran away because everyone lost his shirt, you probably lost a great opportunity.

Again, like I said, any index is about average performance. So you should be happy about not being better or worse than the average, but the average itself. Of course, you should know that a lot of fund managers fail to beat the index (esp in developed markets).

I do invest directly in stocks, but its a much lower percentage of my savings than it used to be. Importantly, I DO NOT USE the above strategy to invest in individual stocks. For individual stocks, just a look at P/E is definitely not enough.

As of today, I notice that the index is just around the 17 P/E. Except for a few individual stocks, I have been out of the market for a while. (I am quite active in a bear market though, cherry picking time).

For the trolls:

From the experience of having run a financial blog for 2-3 years, I know a few I-know-better trolls will write stuff against having any such strategies and how past performance is not an indicator of future and blah, blah. If your opinion is such, please don’t waste your expertise here.

The post A simple index investment strategy appeared first on Prem Sagar's blog.

Well, immediately, people think I did a lot of programming.

Actually, no! All I did was handle tools for Data warehousing / Analytics projects – mostly Informatica, Business Objects Data Services, Web Intelligence, Cognos BI, SAP BI, etc.

While I did learn databases out of interest to do my job well and could handle complex stuff (rather, give me anything with databases and I could get it going), when it comes to programming in languages such as PHP or Python, am just a novice. All the stuff I learnt in college is long forgotten.

Now, I find it extremely annoying to be limited by not knowing good programming. I am tired of reverse engineering and applying patches to stuff. Yes, I could hire people and get things going. But, I enjoy programming and would love to be able to build things that I need.

So, here I am learning PHP and a simple, lightweight framework called CodeIgniter. Now, the code at rentals.tapprs.com is maintained by me (Asok built it for us). Slowly, I have started getting a hang of a MVC framework and seem to get better every time I try to add more functionality to our backend. I am also just about beginning to start learning another framework called Laravel, which is a bit more comprehensive.

I realize there are a lot of people like me.

To expedite my learning, am thinking of creating a small learning group consisting of entrepreneurs or wanna-be entrepreneurs who want to get good at coding. 

In the next few months, I intend to

• improve my server side programming (PHP) quite a bit
• get more comfortable with a MVC framework like Laravel (already using Codeigniter)
• improve my CSS/HTML/Javascript to handle the frontend
• build a web application from scratch

If you are interested in joining a peer-program-and-learn group, do let me know.

That said, if you are a total newbie or someone who is not too keen on being a programmer, it might not be good for both of us. If you know some stuff and want to improve, just leave a comment below and we could get in touch. It could be even better if you are an entrepreneur or a wannabe entrepreneur.

The post Learning to code: Setting up a small learning group appeared first on Prem Sagar's blog.

That’s waiting where the rainbow ends.

I searched and searched and searched and searched

And searched and searched, and then—

There it was, deep in the grass,

Under an old and twisty bough.

It’s mine, it’s mine, it’s mine at last….

What do I search for now?

— Shel Silverstein, Where the Sidewalk Ends

The post Search appeared first on Prem Sagar's blog.

Here is a note I had written in my journal in Sept 2012 and I thought I will share it here.

Was thinking of minimalism today.

I think its not about owning the least number of things.  It’s not obsessing over owning less.

It is simply about making more room for things you really need and enjoy by getting rid of those that you don’t need.

It is simply about 3 things

• stuff you really need
• stuff you really enjoy owning
• in quantities that ensures its optimal usage

Or maybe in 1 sentence – “make everything count”.

Also, it is really okay to indulge in things that you truly enjoy owning. If it’s going to make you pretty happy, you know you really need it and will use it, its worth owning.

Rest could be mercilessly downsized.

The downsizing process: remove stuff that you

• no longer need
• no longer enjoy using
• have too many quantities of (until the quantity is acceptable)

Note 1:

I (we) gave out a lot of stuff in the last 3-4 months including expensive clothes, books, gadgets, kitchen items and a ton of random stuff that we had accumulated over the years. The house feels much lighter now.

I am actually enjoying my current lifestyle of owning less. In fact, almost all my personal stuff could now be stuffed into a backpack. [Items shared by family not included, like TV, table, etc. Of course, add my car, bicycle and cycling rack to my stuff, I can't live without them ].

Less is good. You are aware of what you own and get to enjoy owning it!

Note 2:

I neither follow any minimalism blog nor like any as of today. I used to like Leo Babauta’s mnmlist.com, but of late started feeling that he’s turned a minimalist for the sake of being a minimalist – if you get what I mean.

For a more meaningful view of the kind of minimalism I like, I would recommend reading One man’s wilderness by Richard Proenneke. 

The post My thoughts on minimalism appeared first on Prem Sagar's blog.

A lone candle cut through the darkness.

The Coracle Man, as he had done always, sat in his filthy hut at the river bank. Sitting at the same desk from where he had awaited patiently for  30 years, for passengers to ferry across the bank.

It didn’t matter to him that the river was in full fury with the rain lashing hard. Rain or shine, he had been there, moving people from shore to shore.

The river was known for its unpredictability. Calm sometimes, devilish mostly. A lot of men had tried being a boat man… only to be devoured by the might of the river. Only this guy had survived.

The villagers said he possessed ‘special skills’. All these years, he had effortlessly ferried people across the ill-mannered river. Through raging torrents, he had taken people across safely, always.

Though people always felt safe ferrying with him, no one dared to have a conversation with him. He was notorious for not replying to anyone and giving a cold stare to anyone who repeated a question!

‘The only one he talks to is the river’, they said subtly implying that he could as well be half-insane. ‘Doesn’t get any better, you know’, said the village headman.

The villagers knew that they needed him. No one but him had lasted for more than 6 months in the ferrying job and people were scared of the river.

He was now in his 70′s. The prime of his body now gone, the arms and legs no longer strong, he still managed to get his job done well.. only because he now relied on his will power.

Something in him wouldn’t let him retire.

There was some sadness and longingness in his eyes. His cheeks bore the strain of a man who had lost much in life. With every passing day, it grew intense.

“He always lived alone, never had a family”, the villagers said.

The oldest man in the village, through his failing memories, recalled that something bad had happened 30-35 years ago in the Coracle Man’s life and ever since he had lived alone, refusing to talk to anyone.

That night, a stranger who seemed to be in a hurry appeared at the Coracle Man’s hut.

In the dying light of the candle, with a commanding voice, he said he wanted to go to the other side.

Without uttering a word, the Coracle Man got ready. The rain and the river were still having a bout of violence.

The next morning, an empty coracle came floating on the river. The Coracle Man and his passenger nowhere in sight.

Up and down the river banks, the villagers searched for them. No sign at all.

The river was unusually calm that day.

The police came a day later in search of a man who had gone missing. The cops had a photo, an old man in his 60′s or 70′s. No one had seen him, the villagers said.

Few days later, when the villagers cleaned up the Coracle Man’s hut, they noticed a newspaper clipping preserved carefully in his desk. It was the story of a girl who had been murdered and thrown into the river, the accused being an affluent lad from the city.

There was another clipping. This one said the same lad had been acquitted as there was no witness to the murder.

Someone in the crowd mentioned how surprised he was by the silence of the river.. something he had never seen for years.

The post The Coracle Man appeared first on Prem Sagar's blog.

Always in search of better, more and self-gratifying stuff. Like most of you might know already, that is a never-ending search.

Last few months, I have been reading (actually trying to read, rather) Thoreau, esp Walden. And I stumbled upon Richard Proenneke few days back and have managed to read 2 books and watch few videos about him.

I should admit, I truly admire Proenneke now – his craftsmanship, work ethic, simplicity, self-sufficiency and his ability to break free from societal confirmity. Importantly, being at peace with himself all the while, nonchalantly.

Very importantly, he was not running away from anything. He was not an escapist. He was not anti-social. He simply wanted to live a self-sufficient, simple and content life. Unlike Chris McCandless, who we all have come to sympathise with, courtesy “Into the wild“.

Reading about Richard Proenneke was very refreshing and helped me reflect a lot on my own (philosophy of) life.

Now come to think of our own lives these days. Let me know if you think we’re being programmed by things around us – instigated to do stupid things.

I am guilty myself many a time. My Facebook and Twitter feed is excessively narcissistic. These social media tools have made paper-philosophers out of us. We blurt out things and forget it the next moment… continuing to do so without reflecting on what shit we are writing. Fleeting momentary thoughts that we think makes us look nice and cool in front of others.

In reality, we are living empty lives – chasing wrong things. Why? Because we don’t know what we need. And we are chasing stuff driven by peer pressure and societal confirmity.

The society is trying to make you a consumer! A holy effing consumer!

We go to schools and colleges to earn a degree. So that we stand good chances of a high paying job. So that we get the ability to buy more stuff. More consumer power!

We end up doing just that… buy more stuff. Irrespective of whether we are capable of paying for it or not. The society has methods called credit cards and EMI. Buy now, pay later… for many years.

When you are buying something, like Thoreau said, you are exchanging a chunk of your life and time for it. If you are buying a house worth 50 lakhs and if it takes 8 years for you to save 50 lakhs… you are exchanging 8 years of your life for 4 walls around you.

8 years… imagine!

Yes, you need a shelter. Can you do with a smaller one? One that costs maybe half of it? Maybe.., only you can answer for yourself.

Now pile up the fluff… fancy designer clothes, kitchen decor, gadgets, TV, a car, imported cycle, DSLRs… how much of it is a need? And how much is simply externally driven want?

No, I am not questioning your DSLR or Trek bicycle (or any xyz) that you own. I have both and think I really really need them. But there are tons of things I didn’t need, yet purchased. I am just asking you to think how much fluff there is in your life.

I had a ton of fluff that I threw out in 2012… and yet still have quite a bit more of it. We are living in a society where it is easy to simply throw money at stuff without ever appreciating it. Online shopping, huge malls, advertisements, etc encourage us to do just that.

The other day I told my wife how we don’t appreciate the food we eat and the dress we wear. Yes, it only costs a small part of what we earn. So we feel empowered.

Imagine the farmer who took pains to grow the plants that feed us. Those grains of rice! The hardships he went through to make it happen on your plate.

The time it takes to grow them. Time.. can you buy time?

Imagine the same for your dress. The cotton that was woven into thread and eventually into a bit of cloth. If you really understood the value of creating something, would you throw away things? Why not mend it? Or at least, give it to someone who needs it?

We have buying power.. yeah, but does it make us better than the farmer who toiled in the sun? Maybe he’s living a better life than us… our buying power notwithstanding!

There is value in being self-sufficient, simple and frugal. In being a net-producer and not a consumer!

There is value in working on your fitness and overall wellbeing. Good eating habits, good sleep, exercise, creativity, at least some discipline, craftsmanship (what better happiness than in being a good creator of something nice) and deliberate living!

All of it is lopsided.. in our pursuit of more power and wealth. We are turning more and more dependent too.

Yes, we need money to survive in today’s society. I would feel totally insecure without enough money (How much is enough is another debate!). At the same time, it is easy to get lost in that pursuit and devalue the important stuff. It’s easy to get stuck into a life of excess – the society programs you for it.

Now, very important, I feel, is to not be an escapist! I don’t want to be a Chris McCandless and run away from things or run towards things in a fleeting momentary decision. This is something that you have to face head-on, take the time for, live through it and realize what you really need and work towards it… slowly, brick by brick.

Yes, its a painfully slow process.

It is easy to say that you are tired of the society and its consumerism / confirmity and that you will turn your lifestyle into a simple, self-sufficient one. However, if you are not aligned with that type of thinking, you will surely come back… addicted to those even more! I am trying to avoid that.

It’s a slow process of de-addicting yourself from those unnecessary things the society has created.

I am trying. Lets see how it goes!

PS: All references to ‘we’, ‘you’, etc are all intended to be references to point towards only ‘me’. I didn’t write this post for others, but for myself. To come back and read it a few times over the course of next few months and see the changes.

The post Breaking free from consumerism appeared first on Prem Sagar's blog.

People will say bad things about you.

At times, no one will ever say anything about you.

You will make mistakes.

Things will be up. Things will be down. (Actually, that’s better than things being average).

Just have a thick skin through your journey!

The post Thick skin appeared first on Prem Sagar's blog.

One that probably has no destination.

How the heck do you march ahead then?

One step at a time!

The post One step at a time appeared first on Prem Sagar's blog.

Drive moves you forward.

Courtesy: Founders at work article

The post Resilience and drive appeared first on Prem Sagar's blog.

Whatever drains you, stop doing it.

Courtesy: Derek Sivers

The post The doing appeared first on Prem Sagar's blog.