304-Big Mistakes-Portfolio Metrics-Macro-Crypto-News-Charts Analysis

Cool. All right. So, uh good morning, good afternoon, good evening depending on time zone where you're joining from.

Uh welcome to our weekly uh Saturday discussion uh all around investing.

The topic that I want to talk about today, I think there are two main topics. uh one is definitely I want to

topics. uh one is definitely I want to go through some learnings from the mistakes of the great investors. you

know these are the investors that we we admire not just I mean the whole investing community admire and uh this

is basically a summary of learnings from the book uh big mistakes uh and I would rather learn from the mistakes

of other than uh you know learn from my committing the mistakes and hurting my own portfolio though everyone will pay tuition fee to the market no one is asking escape the tuition fee but we'll

try to avoid as much as possible so learn some lessons from it [clears throat] go through that uh I also want to share I think last week uh Aditya you had

asked for in terms of um what kind of a portfolio metrics so yes I plan to do you know the the end of a year review

for my own sake uh and I will share in terms of what kind of a metrics do I plan to track and maybe we can go back and forth on What else should we track,

right? Uh because I'm a I'm a stickler

right? Uh because I'm a I'm a stickler for if you if you don't if you can't measure, you really don't know where you'll end up and where you are going.

So >> measuring your performance is important, right? Uh and I'm not saying compare

right? Uh and I'm not saying compare with XYZ or any other person, but you should know what and how you are doing, right? Then you can make an make an

right? Then you can make an make an intelligent decision. So I will want to

intelligent decision. So I will want to share some of the some of the metrics that I track and maybe we can come up with a comprehensive list.

>> Uh so those are the main things. Of

course we'll look at briefly what happened in the market and uh yes I also want to cover one of the topic that I uh told last week. We'll start our

discussion [snorts] with is um skill versus luck. So here's a homework for

versus luck. So here's a homework for you all. uh pick up one stock in your

you all. uh pick up one stock in your portfolio um that have done good for you in which you think it was because of your skill

and then one stock which you think you got lucky right and and this may not be completely black or white uh it could be fall somewhere in the middle of a

spectrum saying hey I thought I had a skill in identifying this company or this stock but gosh Gosh, I think I got lucky because this has become like 10x

20x which is which is you know uh out of my wildest imaginations.

So either way uh be ready with the one stock in which you feel you had skill involved, one stock in which feel uh you got lucky. So, so we'll discuss that. Uh

got lucky. So, so we'll discuss that. Uh

that's that's on the agenda today and uh then we'll open it for you know uh breakout rooms. We'll have whatever open discussion on anything else that

you want to talk talk through.

Jay is thought yeah Jay generally has a great charts to share during the breakout rooms. So [clears throat] that's one room which is very populated.

Okay. Anything else you want to talk about?

I'm also taking it a little easy.

Is that it? Sounds good.

All right. So, let's uh let's get started. As always, everything that we

started. As always, everything that we discuss here is only for education. So, don't go and trade based

education. So, don't go and trade based on solely on what you hear.

So, [clears throat] let's start with skill versus luck.

Right. And um especially as an investor, it is especially in in investing it's not always easy to identify it is skill or luck. There are there are some there

or luck. There are there are some there are some areas where it is very easy easily known whether it is skill or luck. Chess is one game which is purely

luck. Chess is one game which is purely purely skill right. uh and uh I was surprised to see

right. uh and uh I was surprised to see this comment from Michael Moerson [snorts] which says there's a quick and easy way to test whether a activity

involve scale. Ask yourself whether you

involve scale. Ask yourself whether you can lose on purpose. What

if it's not that you can win on purpose but ask yourself you can lose on purpose.

Uh for example, chess is skill because if a if a master chess player can lose on purpose to anyone, right? Whereas

lottery is is pure luck, right? [snorts]

Even though we may pick any number, there may be a slight small probability that may get lucky, I'll still win. I

can't if I'm picking lottery ticket, I can't lose on purpose, right? So,

so that determines you know whether it is skill or luck. Another example comes in. So, investing falls somewhere

in. So, investing falls somewhere between pure skill and pure luck because in the short term there is so much noise in the system. We have no idea whether it is because of of our own skill or

because of our own luck. And [snorts]

later on when we'll review uh the mistakes of some great investors, one of the big mistake is people uh or

investors they uh mistook luck for skill, right?

And uh we generally see that happening uh in uh in the bull bull runs. We saw

that happening in 2021.

Um probably in 1999 wherein everything you know you invest in just becomes gold and we thought oh gosh we you know we all are great

investors 2021 everyone when they get up in the morning and look into the mirror they are seeing Warren Buffet right uh but [clears throat] so during the golden night is very easy to confuse.

So especially over a short period of time it is much more matter of a luck than skill.

So the question that I have is can you lose it on purpose in the market? It's

seem probably easy. Come on I can lose it. I can pick some bad worse companies

it. I can pick some bad worse companies in the market penny stocks companies with no revenues

etc. and probably can underperform. and

I can lose.

So there is actually an experiment done on this uh and let me know just share that way.

It was uh ask 71 on associates to pick 10 stocks that would underperform the market in the second quarter.

Only 19 of them succeeded.

So 73% tried to lose on purpose and uh they couldn't.

So so shortterm it's a lot more function of luck than skill. So even if you want to lose on purpose

you might have picked some meme coin but that meme coin could become 100x who knows you could still not lose on purpose. So that's why investing

purpose. So that's why investing short-term it's always it's lot more of a luck and then if you're evaluating any fund manager or or financial advisor

that's why it is it's said right look at a look at a long-term performance don't look at the screenshots that are floating around where the account

started from January 2023 starting from January 2023 even a monkey will succeed in the market really need to see how how the how the

same people performed uh during the bare markets that that's where the real differentiation will come out. Anyway,

so getting back to it, uh wants to share one stock in which you think you had a skill involved. Uh share the stock and

skill involved. Uh share the stock and what do you feel when did you buy that stock? anyone seeking volunteers

stock? anyone seeking volunteers who want to talk about a stock in your portfolio which you think you had a skill involved

in it in identifying the stock. Uh,

Vivic.

>> Yeah.

>> Uh, I believe it was CNBC they uh before the Tik Tok announcement, they said Oracle is uh negative cash flow next

year, but Broadcom is like 20 times next year's cash a very positive cash flow.

So, uh any thoughts on that? I mean I'm sure their figures are right but uh so what they were saying Oracle was vastly

overvalued and Broadcom was uh marginally val was adequately valued or maybe even less so any thought so so

they are looking at one part where is called c which is based on cash flow and we know why Oracle's cash flow are um

basically will be constrained is because of their investments in uh in the data centers right so that's why they're going to get into cash flow negative uh that's why they raising debt whereas on

a broadcom uh they are cash flow positive they generate good amount of cash flow but the concerns on the broadcom is is a margin compression right so overvalued undervalued I don't know I've not looked

at any of those companies but if you're evaluating uh from an investment perspective think through uh in terms of your your valuation criteria Yeah, right. Uh

[clears throat] some companies may be just cash flow positive. Uh but you have might have to

positive. Uh but you have might have to dig deeper and say how they are cash flow positive. Is it that they are you

flow positive. Is it that they are you know not investing in in future growth or is it that they've already uh you know they they have done their

investments and still have lot of amount of cash uh left in it. [snorts] So I have no comments on both either Oracle

or uh or Broadcom. I don't own any. I I

was thinking maybe Oracle may be a good buy at this point of a time. uh you know especially after it has it is down what

30% etc or more than 30% right from from its uh jump after I guess that was Q2 earnings right it was up like 30% after

Q2 earnings but um yeah you have to double click and

see what um how you want to analyze with the data that CNBC is providing would short Oracle current levels more downside. I am generally I don't

downside. I am generally I don't generally want to short a company direct uh direct do a short stock. I generally

don't short a company as a principle.

I'm if I really want to do it um maybe I'll sell a call spread, maybe I'll buy a buy a put or a put spread. That's a

second preference. But I don't sell uh naked shorts. I've seen many so-called

naked shorts. I've seen many so-called great investors losing because they become too cocky uh and sold the company short even though it's a crappy company

but markets can stay rational longer than your portfolio can stay solvent so I I just don't want to take that risk there are many other ways to make money right why why want to go and uh try a

such a tough tougher route to make money so I won't short it not because I've uh I'm not because of the prospect of the company just because I think that's a

that's a game I don't want to play.

There are people who love to play that game. You know where successful short

game. You know where successful short sellers are there. I just don't want to play that game. [snorts]

So I won't short Oracle. I mean for that matter I I won't even short uh Palenteer. I mean if I have a stock

Palenteer. I mean if I have a stock maybe I'll sell a call against that.

Maybe if I do delta reduction, I'll do a call spread, but I won't make it short Oracle or or Palenteer or for that matter any stock.

Oh, look at Oracle. Now it's it gave up all that bump back to where it was.

Okay, coming back to skill versus luck.

Anyone wants to share any stock where the skill was involved?

It's not an easy game.

running through your portfolio. Is it

not easy to identify or we'll come back to this question later? What do you say?

Come on. [snorts]

Uh Nyanka says Palanteer. So yeah. So

what is it? A skill involved or was it luck?

want to talk about it, Nyanka?

>> So, it's just the luck, right? Um, you

talk about it. I like the company at that time. I invested some and it just

that time. I invested some and it just ran drastically upwards, right? So, um I know the number it doesn't make sense, but it's keep going up. So, it's just a

lot. I feel it's a lot. No, I think if

lot. I feel it's a lot. No, I think if we identifi if if we are looking at a stock and our reaction is gosh I want to buy because this sucker keeps going up

it is just luck. Yeah, it's still uh it's it's some luck uh some skill and some luck combined. Yeah, I

I yeah, I think there are very few stocks uh you know, unless you're just buying it because you heard it from your friend which uh or you know, you just read it somewhere and you didn't do any

any uh your own due diligence, then it is like yeah, you just got lucky, right?

Um so I don't think I'll have any stocks which are like pure luck uh because I have spent time in trying to understand it. There are some stars

for me uh palent also I put in the luck bucket. It is because hey

bucket. It is because hey [clears throat] it's $7 it was a skill after $60 or $65

it's all it's all luck beyond that there's no skill involved in in investing in uh Palenteer. So we were um

call it lucky because we already studied the company knew what the company does etc. So when the opportunity came when the stock was in single digits yes that

was a skill now it's all luck.

Uh Shrar I think I use skills and I always like that he finds the outcomes even if the outcome is negative.

Uh yes. Um I don't know short-term yes maybe shortterm the outcomes are but then are we running into I forgot what's

that cognitive biases is which is yeah all the success is because of my skill and all the failures is because of a bad luck but you are saying even the good uh

even the successes and the failures both are because of luck >> I know sometime I feel like that just probably just me >> sure uh any stock you want to talk

about?

>> Um the the Corby one >> it just jumped up and uh yeah that one I

never thought it would go up.

Uh >> so you got you got lucky in Corv.

>> Yeah, that's what I would say.

>> Okay. Okay. So those who are in investing in any of these little digressing from because I I uh was something I want to share um

[clears throat] those who are invested in any of these uh Neoclouds so-called neoclouds core NBS

uh Iran um and I know Jim Chennos he shot on Iran uh he was recently on uh on one

podcast. That podcast is not on my

podcast. That podcast is not on my regular podcast, but it showed up on YouTube. Just just search for Jin

YouTube. Just just search for Jin Cheno's maybe plus iron plus cori probably it will show up. Uh listen to the podcast in terms of the thinking of

uh you know I I like the thinking process of Jim Chennos in terms of uh thinking about the business fundamentals of these data centers. Right. Right now

all these AI data centers or the companies that are basically these are kind of a REITs right who are providing a data center space for AI to for AI

companies uh or hyperscalers to to use. Um the

business model that uh you know and the mechanics of how those companies should be valued is is very different than what

the market uh is currently valuing it.

So go and just listen to that if you're invested in any of these new clouds, right? With a disclaimer that Jim Chenn

right? With a disclaimer that Jim Chenn is short, so he will probably uh won't have any favorable comments for it, but I think I really like the thought

process of of his analysis. By the way, I I've said it multiple times. I like

the short uh sellers analysis lot more than the long uh analysts because they they do a lot more in-depth uh analysis

of a company uh than the long ones.

Yeah. Uh Kevin says skill and luck are only two dimensions. Third is emotion. I

think for me emotion is is is number one right?

uh because that's why I spent so much time on on personal side of investing because I realized ear uh earlier in my

investing cycle is it's easy it's not that difficult to pick a pick a good company cuz

you know you hear it from good investors either CNBC's or so on conference you know look at [snorts] you can you can you can Identify

looking at how the world around you is changing and identify what companies probably are going to survive or will be relevant 10 15 years and going to grow

their market. The worst the the the

their market. The worst the the the worst thing which I have found is staying with once you have the shares holding on to the shares for the long

term which is nothing but just an emotional game. So [clears throat]

emotional game. So [clears throat] and uh that's way way way more difficult than identifying or doing all the IQ

related work. Right. So the that's why

related work. Right. So the that's why say investing is more EQ than IQ.

[clears throat] Uh Kevin well said they are just reads collecting rent. Everyone wants to

collecting rent. Everyone wants to collect rent. Yeah but they are not AI

collect rent. Yeah but they are not AI companies. Right. [clears throat]

companies. Right. [clears throat]

Adita I lost patience with uh Intel and now Intel I mean I I don't know what's the size of a portfolio on Intel because Intel is a turnaround story. So

if your sizing is as per um you know it should be for a turnaround story you can still play the game. I mean I still I'm still holding my Intel shares

even though they are underwater but uh it's a turnaround story strategic it's just like a Boeing player for me uh it's strategically important for us so

probably won't you know won't uh go bankrupt so but even if it goes bankrupt it's a small

part of a portfolio so who cares yeah go ahead Yeah, I don't know about luck or

um my uh intuition or whatever it is.

I've been doing this trading for a long time. I'm I'm not I'm very poor at

time. I'm I'm not I'm very poor at picking the stocks. I listen to other people and try to say, "Okay, I'm willing to take a chance with that." And

I do options and basically let the market decide what it wants to do. If it

wants to come down and give it to me, I'll hold on to that particular stock for quite some time. If it goes against me, I'll be willing to stay short for

some time and try to adjust that by selling the puts and doing the opposite side of the trade that I have and I have been successful doing that for a long

time.

>> Yeah. So you're telling me so you tell me whether I'm lucky or I'm I'm uh skilled in picking those stocks.

>> So I think you looks like the skill is in the in the process that you are following right and not per individual stock. You probably do it for multiple

stock. You probably do it for multiple stocks that you have in your portfolio.

>> That's right. And and the skill is I have identified a process that works for me and I'm going to stick to that process and I'm not going to get swayed

by someone else who saying oh you know maybe do this kind of a trade do that kind of a trade works for you great good luck live with it for me this is what

I've identified that works for me and I'm going to stick with it and you become very skillful in following that and not deviating ating from what has

worked for you. Uh I think that that's that's a matter of skill.

Now within within that process sometimes does some of the trades goes against you. Sure. But then that's where the

you. Sure. But then that's where the skill lies. I'm not going I'm not going

skill lies. I'm not going I'm not going to just change because of one or you know because of a few trades which I have lost. As long as you you follow the right process outcome

could be different. outcome I think someone said right outcome always shr was saying outcome invol always involves some sort of a some sort of a luck but I guess sticking identifying what works

for you and sticking to that that's great uh Kevin you're skilled in riding the waves option surfer [gasps]

Mike isn't there mathematical formula for determining if an active man is skillful or lucky this is only determination of 16 quarters So, so if it has 16 quarters, I think

for to me it seems like a very small period because 16 quarters then I can call myself I'm skillful of beating my benchmark index. Uh but I think it's a

benchmark index. Uh but I think it's a it's it's still a small period four years. What is four years in

four years. What is four years in investing journey?

Uh but yeah, Wall Street is uh doesn't Wall Street doesn't have a long-term horizon. So for them, maybe 16 quarters

horizon. So for them, maybe 16 quarters probably is good enough.

All right.

[clears throat] Anything else? Uh Rajie

says got lucky in BMR. Are you still lucky in BMR?

>> No, I got out of it. Uh

>> okay.

>> Luckily. [laughter]

So lucky was to enter and get out. Yes,

I I I was lucky to get out in the triple digits.

>> Oh, okay. Yeah, you did say okay. Got

out before they crashed. Yeah. Okay.

Yeah. Oh, you got you you got out at triple digits. So, that's been very

triple digits. So, that's been very lucky.

Uh and Google felt undervalued at 150 when I got in. Uh that's that's good.

[clears throat] Yeah, Google. uh I think some of the

Yeah, Google. uh I think some of the stocks that I hold in portfolio or I think I got uh some skill involved and majority of the time when I'm trying to

identify it is I consider it a skill involved when I'm going against the grain right when the market is saying oh this is not happening and you're still

thinking why why is market saying like that like Google was one such stock um Alibaba was one such one such stock in 2023

where it is available else at such a cheap valuation. Um, Jumia is one such

cheap valuation. Um, Jumia is one such stock even though it has got you know roller coaster ride but if you look at quarter by quarter I'm like yeah they

are changing and you know maybe it'll take market for to catch up in terms of what's happening with them uh with the stocks. These are few stock which I

stocks. These are few stock which I realized I had some uh skilled involved in it because no one else was

you know holding a similar opinion. It

was like contrary to the market opinion.

I was holding the opinion which was yeah contrary to the popular one. Uh

Palenteer I got lucky initially started with skill then I got lucky. Um which I would say I think TSM and these are probably consensus trades. Microsoft is

consensus trade.

uh meta buying a little bit of a meta in 2022 I think at $100 probably some skill

involved or maybe call it got lucky because I got a put assigned to me and then I thought okay anyway got it assigned so I sold some kept some probably if the put did not have got get

assigned maybe I would have bought it I don't know call it lock or skill but but yeah it's a good exercise.

All right. Uh

[clears throat] are the position sizing best practices that people use?

Uh I do have my sizing but it I don't think there's any thing which is um set in stone.

Well, it depends on uh for me it it is based on what helps me sleep well.

That's that's my overarching motive when I determine my position size.

I really don't care about you know some people say 15% 25% for me it's a sleep factor.

So based on you you can determine what's your what should be but I am a fan of at least having

you know 15 25 tickers in our portfolio right um uh to to diversify and I know some study shows that more than six

uh tickers in your portfolio give you enough diversification uh after that the the the effect of diversific the benefits or diversification has a diminishing

returns. I don't care. Uh I want to have

returns. I don't care. Uh I want to have at least 25 uh stocks in uh tickers in my portfolio including stocks, ETFs and all that stuff.

Shar [clears throat] I'm just trying to be disciplined stay in regardless of outcome. Yeah. I think again coming back

outcome. Yeah. I think again coming back again and again discipline is is is most important.

Okay. Uh

talking about the market, uh we had an inflation surprise.

Inflation came out to be lower than what the market was expecting. But I don't know should you even believe these numbers because looks like some of the numbers were not even considered uh like

0% housing inflation in October due to missing data. So I'm like whatever who

missing data. So I'm like whatever who cares. We don't even have a numbers. And

cares. We don't even have a numbers. And

then because of that the the inflation numbers came down. So I don't even know what to do with it. Uh so let's skip it

because this was I I know on Friday market was higher for whatever reason but um yeah I I I just don't put too much

emphasis on this inflation number. Yeah

Sam go ahead.

You have a question? Uh yeah. Uh Friday

I ca Okay. I I came back with my first uh opened um open um what do you call that? Call earnings. I'm going to earn

that? Call earnings. I'm going to earn like $5,000 from it. um Alibaba,

but I asked the lady if I had bought uh a hundred shares at 85 uh cuz you know I keep a you know some

amount of money in my account. Back then

it was 200,000.

Well, we didn't know if Alibaba a year ago was going to go up or not. So was it safer that I bought calls or should I

have bought the stock at 85 and it's being exercised at 90 uh yesterday?

So depending on so so between calls buying buying calls and the stocks my my my thesis is still the same if you're buying calls

if you uh buy out of a money call depending on what delta calls you're buying. I'm not a big fan of buying out

buying. I'm not a big fan of buying out of a money calls because if you buy out of a money calls then you want stock really really has to work hard to go up.

So you really need to have a very good conviction that the stock will move in your favor because you are paying uh you know whatever price you paid for the

call is all extrinsic value it's going to disappear. Uh [clears throat] I have

to disappear. Uh [clears throat] I have bought calls but those are generally deep in the money. It is because I want to use uh as a cheaper substitute for

better capital uh usage. So I don't know what call you bought but if I were in your position either I would have bought the share or

I would have sold a put or I would have bought an let's say 80 delta call right so that that's what I would have done

>> so I think the stock was probably at 89 and then I just bought a or 91 well it was barely out of the money so then I just bought the call.

Yeah, it's not too much out of the money. If the stock is 89 and about 91,

money. If the stock is 89 and about 91, that's still okay. It's maybe around, it's around 40, you know, close to 50, close to 50 delta core. But but

remember, whatever premium you paid is going to get decayed. So you need to really know, you know, what's the duration, how long the duration uh of

days to expiration it is, etc. So [clears throat] I I prefer buying it if I'm doing a stock substitution trade.

>> Uh Vivic, China has been known to throw to uh to close their uh market leaders.

They did that. They do that occasionally and we we back then we were not sure Alibaba would come back or not.

>> Yeah. Yeah. That risk on is is always there. I still have um overall my China

there. I still have um overall my China pace portfolio within the my position limit for China. So that is irrespective of whether you want to buy the call or not. So b if you bought some auto money

not. So b if you bought some auto money call you're trying to get lucky. It's a

lottery ticket works out great.

Otherwise hey I only lost whatever the money that I put in in buying that premium right? Yeah you can play this

premium right? Yeah you can play this game once in a while. You can't run a business buying lottery tickets.

All right. Uh looking at uh the market we are start to see some rotations happening right. Uh and

shouldn't be surprised because in November we saw you know market correcting especially around the bigger uh tech uh companies they were correcting because now the also market

is moving to other sectors. Still

the the NASDAQ is trading at a higher forward P ratio than this 10-year average. There are still some sectors

average. There are still some sectors which are which are not that highly valued, right? So and we are it is good

valued, right? So and we are it is good to see that the market is now broadened right because one of the big concerns that uh economies or what market

commentators have about the market is it is too concentrated. it is driven by only top max. I mean not the case anymore.

It it's good to see that the market is now start to broaden out. We are also seeing a cyclical uh sector midcap etc.

Now they're coming back to their average valuations right and hopefully what what I also read somewhere was even the the earnings growth but the forecast for the

2026 is also broadening out um and you know they be looking more positive even for those non tech companies etc.

So which is which is which is good in a long term. So I'm still hopeful around

long term. So I'm still hopeful around 2026.

Will there be companies? Again, it

depends on what happens to the whole AI theme. Um so far all this GDP growth uh

theme. Um so far all this GDP growth uh is largely driven by the investments due to AI theme which makes a little

concerned uh but uh we'll see and that AI this is a I think the challenge

currently which we are facing is even if you go outside the tech so-called tech companies you're trying to identify another company and say you I'm going to

invest in this HWAC company or this electrical components company or this materials company. Uh I think now what

materials company. Uh I think now what we have to do is do another why this company is now going have why the revenue is going if it is all tied to the same theme as a AI theme.

Essentially we are betting on the on the same um you know I I would say same factor which is AI.

If you already have enough stocks which are driven by AI or largely dependent on how the AI where the AI win moves do you really want to have one more stock in

your portfolio? That's a decision that

your portfolio? That's a decision that you have to make. I become very conscious of looking at it. Do I want to add more [snorts]

uh which is related to AI or not? Do I

have enough of AI related stocks? I I do want to add something more in my portfolio which is nonAI related, right?

Which is which is not going up because there is an AI tailwinds behind it. So I

want to have that diversification. And I don't know what

diversification. And I don't know what do you call it theme diversification whatever in my portfolio because if you look at my portfolio my top holdings are

still like all are driven by AI but you got a except the first one which is Marcado Libre I'm like the number two is

Google u then you got a meta amazon and the QQQs they're all AI ones so I'm like I don't want to add Ethon or

I don't want to add uh um you know G Vernova these are great company these are not uh NASDAQ or not the tech companies but

these are you can call it as you know on industrial companies right but then I'm looking at it these are called industrial companies but are all driven by the same AI theme

do you really want to add it or not you you have to decide for yourself now we are so when when we see that the uh whether you know here in the market that

it is broadening because now you'll see materials going up, industrial sector going up, energy sector going up and if you hear the

market commentator saying you know the rally is broadening I would like to take a pause and see is it really broadening sector wise it is broadening thematic

wise is it really broadening and do I want to play with it or not?

I'm not saying anything is right or wrong, but you might want to evaluate for what's where your comfort lies.

Right? And maybe I want to play this team. I want to go I'm a Stan Duckl

team. I want to go I'm a Stan Duckl Miller. When I see a I shouldn't say

Miller. When I see a I shouldn't say Baba because we never know it's a bubble, but Stan has said, right? If I

see a bubble growing, I want to run into it.

I don't know.

So uh so even though the chart says it's broadening you you really need to go one level below to to figure out what

broadening means. So Kevin is has a big

broadening means. So Kevin is has a big question Kevin you want to talk through it I don't is it for me or was it this for uh Adita premise of the talks growth

investing value investing [snorts] >> yeah it's for you >> for me every investing is I think value investing growth is part of value I just

don't want to classify or differentiate between growth versus value so and I know this goes I mean traditionally Generally fund managers do

classify themselves as I'm a growth investor or I'm a value investor means I'm going to buy low PE companies you know uh but over years I think every

investing is value investing eventually I'm buying the shares which are buying the businesses which I feel will become more valuable later right now uh so I

don't I I I consider myself as a rational investor and every for from me Favorite investing is value investing.

It could be at a higher P. I don't care because some of the businesses will grow. [snorts] Traditional value

grow. [snorts] Traditional value investors you would know Benjamin Graham is hey I'm going to I'm going to buy the companies which I think the valuation is

100 and currently they are trading at 80. I'm going to buy that company and

80. I'm going to buy that company and when it becomes 100 I'm going to sell it. Do I have such companies? Yes. But

it. Do I have such companies? Yes. But

growth investor is going to buy the company at 100 today because they think in a future that could be 120 or 130,

right? Do I have some companies that I

right? Do I have some companies that I own like this today in my portfolio? Of

course. But I that's a traditional definition. And then the and if I'm a

definition. And then the and if I'm a growth investor, you know, then once it reaches your whatever 130, are you going to sell it? No, I'm going to look at it.

If it continues to grow, I hold it. So I

just don't me personally, I don't want to box myself into value growth investing. I just I think every

investing. I just I think every investing is just value investing. You

want to pay less for what the company will be worth or valuable in future.

So that that's that's my thought process. Day trading, momentum scalping,

process. Day trading, momentum scalping, I don't do it. [snorts]

I don't do not for the with the intent of momentum chasing or gamma scalping or day scalping. Have I done one or two

day scalping. Have I done one or two trades sometimes? Sure. But that will be

trades sometimes? Sure. But that will be like one out of 800 or,000 trades that I've done for the year, right? But no, I

don't do it. My my my thought process is great companies reduce cost basis and just ride uh the wave right now.

Reducing risk in portfolio or cost basis is where options come in picture.

Uh Mike say I see GARP MU, AVGO, AMD, Nvidia all are AI players.

Sorry, was there another question?

No, I was just commenting that uh today based on my you know I have a Python tool with scripts and determines and

these uh have unusually um a good um I guess under over undervaluation relative to the broad market I guess and no

matter that you think they are part of AI world that's how their growth prospects are and that's why they are undervalued relative to their their growth prospects.

So yeah, Nvidia has become surprisingly more attractive in last four weeks relative >> Nvidia. Yeah, Nvidia Nvidia became more

>> Nvidia. Yeah, Nvidia Nvidia became more uh Nvidia became cheaper after their stall price went higher in 2024 I guess.

>> No, no, but I'm talking about last four weeks.

every four weeks every day. In fact,

what I'm commenting to myself is Nvidia's uh perceived undervaluation has increased in the last 3 4 weeks. So, in

other words, not only has I guess its price come down as you've seen in the last few weeks on Nvidia, but also the analyst estimates on the growth have increased

in the last four weeks. So, anyway,

that's my >> Yeah. Yeah. So Nvidia is not

>> Yeah. Yeah. So Nvidia is not it's is not super expensive. So when

someone says is Nvidia the next is a uh next Cisco not not currently.

>> But the key is that every day these analysts are revising their consensus estimates and if when somebody can actually write a tool or whatever to find those changes you can actually

effectively frontr run the pricing moves. I don't know. I used to be I used

moves. I don't know. I used to be I used to track analyst report but I've stopped doing it because many of times I see that they are just chasing the prices.

>> No, no, no, no. [clears throat] Have you Okay. So, uh have you visualized what

Okay. So, uh have you visualized what these analysts job is? They're sitting

at this desk. They have a very extensive Excel model based on like you what you do DCF and discount discounted cash flow analysis. Every day they are charged

analysis. Every day they are charged with attending to that model simply and basically any changes they perceive through the channel checks or whatn not must go in there and that's how they

come up with the number.

>> Yeah.

And I don't know who said it right all models are wrong some some are useful.

Uh anyway, I think this is a neverending >> that's how like in the 1920s they used to say there are no statistics there just damn lies and there are lies and

>> I mean my my concern is >> and the world has changed so much that neural networks which absolutely use statistics are so accurate that people

actually running towards them. My my my only gripe around the whole analyst community is because I've seen personally gone through the experience after I started looking at the individual stocks and owning it for a

few years is if the stock price falls down for 10 15% because something happened in the market right I would start to see that the analyst you know uh reducing the price targets and I'm

looking at there's nothing changed in the business yet maybe the other one has changed what additional information are you talking about it right and then if the stock price goes up they'll start to

chase again. So I'm like you know what I

chase again. So I'm like you know what I don't have to chase uh these analysts prank I need to come up with my own thesis around do I you know how the

company is doing at sector and then then build my own conviction because there are many hold my portfolio that analysts have downgraded it and say

oh it's bad is nothing going to happen China is uninvestable 2023 because uh Chinese equities were down and know when the Chinese equity start to go up. China

became investable again. Nothing changed

in the Chinese government between that period.

>> So I hear your perspective. So I I gather you are basically a pure fundamental person and that's what I was and people who are schooled in financial education are trained to be which is just don't look at the charts or

technicals. So I bet you don't look at

technicals. So I bet you don't look at technicals. The philosophy that I'm

technicals. The philosophy that I'm talking about is is when you're trying to kind of peek ahead at what the analyst SMA says is the thesis that

actually the market as a whole is uh its undercurrence is what you want to divine upfront. So that's what the thesis of

upfront. So that's what the thesis of technicals is right you look for MACD crossovers which means you're saying the market is saying hey money is moving in here. So no matter what is driving that

here. So no matter what is driving that change, you go in.

>> Yeah, I I do look at some technicals, but that's not my that's only if I when to initiate a position. That doesn't

drive my thesis around the company.

>> I've in the last two years come to recognize that my failure in decades was because I ignored the technicals. That's

why I stayed out of the S&P 500 from 2016 to 2019. [laughter]

Oh my gosh, we're coming from opposite spectrum.

I think I thought gosh, I should have focused more on the companies and businesses to start with. I would have done much better. Anyway, this is why it's fun, right? Stick to whatever works. So, I've sticking to hey, this

works. So, I've sticking to hey, this worked for me. I'm going to stay with this. And uh and if if technicals are

this. And uh and if if technicals are working for you, great.

Uh no it is it is the same way like uh the Fed is adjusting the rate interest rate after the market has already paved

the way and then they catch up. The

market analysts are the same way also to a great extent. When the market goes down they say okay it's time for us to go down it it's time to bring the prices down.

>> Yeah >> and things like that. And because

sometimes they also have a they have a career risk, right? So let's say if the stock is trading at $100, again we're diggressing, we'll come back to it.

Stock is but it's an interesting discussion. Stock is trading at $100 in

discussion. Stock is trading at $100 in the market and you know analyst at the $100 price right now. The stock is at 80.

If the analyst keep if they don't downgrade it or how do you explain to your clients that you should buy more or you should buy more, right? Either you

go and tell your client side say you should buy more or other thing is you downgrade the stock. So unfortunately we

don't have a career risk. We can make independent decisions.

There are when analyst is given the rating there's lot more stuff involved than just business decision. Analyst will very few

business decision. Analyst will very few analyst will put a sell rating.

Why? I mean if you can go back and look at it there was some study done like 75 more than 75 80% ratings are all buy ratings. Why?

ratings. Why?

Because if they put a sell rating they'll start to lose access to getting invited to do investor conference and talking to management or doing things.

So I don't know there is it's not purely based on the business fundamentals they might and sometimes I'll say it is underweight

right it is moderate by what you even mean by moderate buy as a rating it's a soft by hard I don't know I mean

soft by means what I should buy when I press the buy button I should press the button softly Are you trying to tell me that I should sell the stock or not add without

actually using the word sell?

So because they have a career risk that could I'm not saying that I mean don't they're not they're not lying but that could

cloud in terms of how they're presenting the data and that's my and and I've seen especially on the stocks that I own

ratings coming back and forth and you know stock goes higher the analyst ratings will go high they'll immediately jump up the jump up the price target and and let's If you like the company, nothing has changed in the company,

stock has gone down by 20%, you should be buying handover fist and not saying okay, hold on to it. Why?

So, so I that's a concern I have and this is purely based on what I've seen happening to the stocks that I own in my portfolio. It's not a generic comment.

portfolio. It's not a generic comment.

Maybe I own the stocks which are in which analyst that follows are are you know not the best analyst. Who knows,

right? And I like I talked about jum earlier right I used to jump into earnings call not even single analyst will be on the earnings call not even

one yeah it's a it's a not it's this company is not being it doesn't get followed on the wall watch but the moment you know stock price start to go

up now I see some now there price target which is coming at $18 right and the same Wall Street was sitting on the company where it was

stock was down at $2. They say, "Oh, it's a bad stock to buy." Come on.

If there's nothing changed in the trajectory of the business for one quarter you had uh the company didn't perform for that particular quarter, you should be adding

to your portfolio. If the long-term is still intact, why did you downgrade the company after it has fallen down to $2?

And I bought at $2. Now it has 12. I

don't know. I think now it has $13 or something. Now they're coming with a

something. Now they're coming with a price targets of $18. I know where you guys were in in uh May etc.

So that is like cuz I again this is never ending discussion. I

used to read through Barons and their their recommendations and all that and start following it after I saw a report from Barons where they compare their recommendations and how the stocks did.

It's like a 50/50. I think it's 2022.

Uh they had like year end they had the comparison. I'm like guys if you are

comparison. I'm like guys if you are like a coin toss that there what's the point? So anyway this is my personal

point? So anyway this is my personal experience. So I don't blindly follow it

experience. So I don't blindly follow it but I do look at it in terms of uh in terms of the growth projections. I look

at the number in terms of what they're expecting in terms of the revenue growth or EPS growth, but I'm not going to follow the recommendations of buy or sell or the price targets

that I'll determine myself. Again,

that's just me.

Uh, and now we got some uh 2026 outlooks uh from banks. Again, this is one another classic uh example of um S SNP

outlook uh which um Wall Street will put up at the end of every year and uh it's all over the generally it's all over the place. I don't know. I have not

looked at I think I do have a chart here uh which talks about uh the Wall Street uh analyst you know the the estimates

but remember during the um whatever the liberation week Goldman Sachs they used to change the estimate like

every week guys just say that situation is fluid and we can't give you estimate what's the point of freaking estimate which you keep changing every week how is anyone

going to make any investing decision based on your estimate which are going to change next week because the situation was fluid right Donald Trump says something Goldman Sachs will come

and update their estimates for year end S&P 500 I don't even know what you know where they eventually ended up in but was so frustrating to see can you guys

not just keep quiet why you have to put in a but there are some career risk involved and and all other stuff which I think at is you and

I we don't have to worry about and uh that that's my thought process but I I don't I do want to read the reports in terms of the business find

out how they are doing but the decision of buy or sell has to be uh with All right. Uh coming back to the

All right. Uh coming back to the markets, uh in 2025, we had 336 IPOs as of December 17th, which is way better

than what we had in 2024. 2024 was

almost a dead market. This is not still I thought 2025 will have more uh IPOs, but probably not. The market is still not opened up yet. But the notable IPOs

were Core V, Circle, Figma, Clara, Chime Fermy.

Which one did I miss? Any other big IPOs in 2025?

These are some of the ones that we have talked about.

Any other uh you you guys uh anyone invested in any IPOs?

I think we recently had Medline, right?

So, it's like a 70 year old company. It

recently went IPO uh uh this week.

Parm brought it back into to the markets.

I'm not a big fan of investing during IPOs. Uh Rai says Clara. [snorts]

IPOs. Uh Rai says Clara. [snorts]

How did that work out? I don't know. I'm

not I don't own CLA.

Oops. Uh well, at some at one point because of chance they will be right.

Okay. So, that's our analyst. Yeah. Uh,

Chentan says it got IPO at Figma.

Okay. So, yeah. Jesus. $32.

None of the companies post I not I shouldn't say none because we only looked at to Core Ve.

Okay. Cor is still better from their opening price. Not

opening price. Not as too good. I mean that was the initial runup with an excitement and then

we see it coming back to earth.

Uh what else? Uh we got circle crypto stuff.

Eh not much doing back to where it was in an IPO. So if you miss the IPO train there are a lot of stocks that are available at cheaper than where they

were from uh IPO side for me for me is I think new is isn't this >> I generally look at IPOs almost 6 months

after 6 to 8 months after the IPO because IPO initially they are super hyped and look at Figma from 33 it went up to like 10 and something and then it

came back down to 40s right less than 30 right now >> less than 40 right now so >> so my I want to at least give a year for

a companies to come back come to the market show me their performance for at least four quarters uh and before I even decide to you know

do I want to put my money in them or not and you're absolutely right because IPO time and I've been through this process

of of company IPO So an IPO time is wherein management wants to clean up all the numbers, make sure we put up the best face in front of uh in front of our

investors.

Uh and uh we have a very little advantage when it comes to uh IPO. We are hyped up to the best. If

IPO. We are hyped up to the best. If

there are any negatives, we'll probably shove it in the bag. we'll deal with it later and uh then 6 months down the line you

start to have those uh lockup period will start to expire a lot more shares will come in the market and so unless you are like I don't even know in in what condition should you

invest in unless we become greedy sing this company is going to continue go up and up and I want to ride get in now

yes we we could all do ourselves is a lot good if we can wait for the company to show us that they can perform in public market.

Fermy FRM isn't firm a nuclear energy ra is that the company okay nuclear energy. [snorts]

What else went public? Uh I think Nand was another AI related stuff.

Yeah, that much [clears throat] I think Medline has done well. I shouldn't say done well on the day after IPO it has done well. We'll get to see what what

done well. We'll get to see what what happens later. [snorts]

happens later. [snorts] Uh 2026 probably big one. You got to get SpaceX at least one company has put on uh they put on feelers that they're

going to go IPO in 2026 maybe $800 billion. There are talks around maybe will open up at $1.5 trillion.

That'll be interesting one. It's going

to reinvigorate the IPO uh market. I we

haven't had even though we had close to 336 what we got another week to go.

Maybe we'll get to max 370 375.

Not that um big an IPO year this one. So

maybe 2026. We'll see.

>> Wait, check out MCTA, Charming Medical Limited. It is up by 633%.

Limited. It is up by 633%.

MCTA, >> right?

>> Charming.

$2 like that. I think there was some other

like that. I think there was some other uh there is a chip company or China like around up around 600% on a day.

What what does this charming media MCTA >> it's a medical company?

Yeah.

It's a biotech.

Now they provide a wellness and postpartum uh services brand name in Hong Kong. So I get little worry about a lot of companies that are

listed that have their operations um it Hong Kong, China or some of the other overseas market because there is a very

well and I think this was covered was it in financial times or was somewhere there is a very well organized records

of uh this pumping up these stocks.

So I will always always be careful where this company >> there is a >> yeah go ahead >> sorry Vic there is a documentary called the China hustle I encourage everybody

to watch that the China hustle >> yeah that >> basically yeah and they I'm sure you have for the

larger audience I guess um but there is a very systematic way of going public through Cayman Islands and some of those uh relatively

um you know trusted or trusted jurisdictions for us and then obviously they out most their entities through there and then register on these exchanges and I mean there is no

recourse if an investor gets defrauded so got to be careful >> yeah so so from that perspective I think that's definitely the case uh but even

let's say companies like Alibaba etc the bigger company you still don't have any recourse because Chinese government and that is why I'm like hey I love Alibaba as a company but

I can't have make it as a big part of my portfolio. The Chinese government

portfolio. The Chinese government doesn't allow any foreign investments directly into Chinese companies uh something like that. So it's like that

if you own Alibaba like I own Alibaba shares I don't have any operational control on on Alibaba. I could become a 50% owner of Alibaba shares and still

have zero control on it because when you're buying Alibaba shares or pick like JD etc any companies you're not

buying a stake in Alibaba which is operating e-commerce business in China

you are buying a stake in something called VI variable uh investing it's variable entity

it's a vie form come on I I covered it long back um >> v variable interest something >> entity something like that yeah so so

what these all these companies have done they've created entities in one of these offshore uh you know uh jurisdictions

variable interest entity And they are issuing a shares which will trade on part you know at a same economic

uh you know match the how the Alibaba share gets traded on on Chinese stock only thing that you have is economic

exposure and this VIE structure under which all these Alibaba ADRs JD ADRs you know all these Chinese ADRs are listed and trade on US exchanges. is if

Chinese government wishes, they can declare it illegal.

So if you're investing in any of these Chinese stocks, you have to be really really careful and you have to understand what you are buying into.

All I when I'm buy Chinese Baba's ticker on my portfolio, all I'm buying is a promise from a VIE

that this thicker will basically EDR will trade basically trades at at that

price. I have a no operation control

price. I have a no operation control on how Alibaba will you know run its business even if we become 50% owner of

it zero protection that is the case with all the Chinese ads that are listed so that's an overarching theme

what I was referring to like some of these stuff is one level below wherein even if you have these type companies.

There is a wellestablished practice of some of the fund managers, some of the wealthy individuals how they come

together and you know buy these stocks generate a price hikes and how they was a great study done and I forgot was it Wall Street or Financial Times

when I read this I'm like okay that's why I only stick to very few companies um you know on China I have five or six which I hold but still make sure that

the overall exposure to this Chinese company doesn't become too big part of my portfolio because of that overarching concerns around VIE and all that stuff and of

course you know if you are investing in any Chinese company uh you are in bed with uh CCP and they can come and close down the business anytime that they want

to which they did in 2021 2022 they scuttled the whole IP of Alipe So all those risks are there you know

>> I'm willing to take that risk with a small portion of my portfolio.

So uh 2008 there was the top uh consumer electronics company. Sorry I don't

electronics company. Sorry I don't remember the name but then the government because they were in the wrong they had the wrong sponsor. the

government got pissed off at him and they shut it down uh for uh number uh so uh for the number

two company and also whenever US companies go to buy like uh Amazon bought the fourth largest company they

just shut Amazon and uh Joy-Yo down that's what Chinese government does.

>> Yeah. Yeah. So you if you're operating or investing in Chinese company, you are you're under the thumb of uh of the government plain and simple and be aware

of that risk. I'm not saying you know then you decide how much you want to put the capital in. So when I'm putting capital in I know that this risk is there. This capital could vanish any

there. This capital could vanish any time but that's why I can't make it a bigger part of portfolio. I think we talked about it when I was looking at Delhiab

it's available if it was and I think I did make a statement if it is a US if it was a US-based company I would have made it as a biggest part of my portfolio but

I just couldn't because of it's a based in uh China and all the other risk it's

[clears throat] anyway so here's a the chart from uh Wall Street around S&P B forecast from current level of 6870.

This chart is probably a little where is S&P right now. I don't know if it is a probably not the Yeah, not too not too bad. Not too far

away from 6835.

Uh Bank of America says it will be up 33%.

Capital Economics is 16% and everywhere is somewhere in between. I don't see our usual bull Tom Lee. What does he says?

Um, any other big names I'm missing?

Uh, Vina, you have a huge list, but I think they're all pointing to LinkedIn proof um post around these, but [clears throat]

any anyone else says any, you know, any other um estimates from WASI that stands out, it goes with almost to 8,000.

So we could be anywhere or maybe we'll have a negative one. We

have absolutely no idea.

>> Well, this is based on the current snapshot of macroeconomics, right?

>> And in the intervening time if there are changes to that which is called a shock, >> then it'll draw down and so it may not at the end point maybe instead of 8,000

might be 7,000. Who knows? And and last week when we were meeting, I think someone had asked around, you know, uh

this whole uh yen stuff, right? That BOJ

is going to raid uh BOJ uh hide the interest rates this week. Now they are like 30 week 30 year 40ear high interest rates. And they said, how are we

rates. And they said, how are we preparing? What happened to the market?

preparing? What happened to the market?

I'm like and markets were up after that.

like we never know how the market is going to react to it. I think Hallmark says this beautifully, right? Even if

what you predicted is right, what the outcome would be, we still don't know. We can't always be confident

don't know. We can't always be confident of what the outcome would be. This is

called second order effects.

So what you what you thought this is going to happen this economics number would be this is the company uh you know if you are talking about earnings this is how the company will report the

earnings this is how they'll report the uh the guide etc. Now how the market will react is still up in the air.

So we knew that B is going to do the interest rate hike. We knew that there is a yen carry trade. We knew that last year August it blew up. We knew that the

capital will move in all these point of oh the market should see some weakness and market was higher.

This is why I love the market because it's so dynamic you know.

You never know what's going to happen in the market.

So like you rightly said, this is all based on that day and what their models showed.

Week later things will change.

Everything will be up in the air. We

have no idea what's going to happen.

But but the analysts have to come and talk about it.

>> You know the analyst predicting 8,000 is one standard deviation from the current level. So it is nothing alarming or

level. So it is nothing alarming or anything different. So you know they are

anything different. So you know they are not making any big estimation or anything different over there

>> looking at one uh standard deviation for looking at how how far back because I I just pulled this >> one year time period. So they're saying right

>> go to anal analysis and go to uh the probability analysis and you'll see that >> okay okay I can look at probability of con >> yeah that's what I'm saying

>> the general thing is like S&P over decades goes up 14% per year average so I'm looking at uh oh we are looking at

one year down the line right so oh yeah >> okay out of price.

>> So you don't have the probability analysis on the simulated trades >> and the probability must analysis must be done on the returns i.e It changes

from month to month or whatever rather than on the absolute price levels.

>> I'm looking this is the estimate by the option traders option programmers 16.

>> Oh, you're looking at implied volatility of the SN spy can use the SPX also the same thing.

>> Yeah. So look at this in April going back here.

There you are getting there. 360 5 days somewhere around that.

>> December 27. Yeah. 8058. Oh, sorry. 8.

Sorry.

>> December. December 26.

Go to December 26.

>> Oh, I'm 20. Oh, jeez. I'm 27. Sorry.

Sorry. Uh 21st August, October, November, December 8,00 December is 80. Yeah, close to 8,200.

But they are not talking about the downside.

Downside we're looking at 6067.

>> Yeah.

>> One standard deviation out.

>> Everybody is giving a a beautiful picture that you are going to have at least three person. It might not be true. Be careful. [clears throat]

true. Be careful. [clears throat]

>> That's right. Uh yeah, we can't we can't just depend.

Well, I mean basically I Okay, so if you have been through the markets from 1995 through 2000, every single year it

delivered 25% or something return per year. And what my thinking is if there's

year. And what my thinking is if there's a fundamental underlying secular shift in the economic system like it is

said that AI will bring then higher returns than normal are expected. That's

the way I >> Are you looking at more than 25% return?

>> No, no. I'm just saying that it's it wouldn't be unusual to Okay, so on the average S&P is expected to deliver 14% per year with the volatility something

like anyway. So if there's a theme I

like anyway. So if there's a theme I mean under underlying macroeconomic move happening like internet days of 5 years

of non-stop penetration of internet technology in the world from 95 to 2000.

So I I wouldn't find it unremarkable if it also increases 30% next year. The S&P

I think >> future is uncertain. I don't even know.

>> No, I'm not I'm not projecting it. I'm

good for you. [laughter] I mean, a remark like this is me. I'm just saying that this is how the economic system in America has evolved over 200 years.

>> There were railroad years there were when electricity was discovered things like that and in all those years those boom years the boom meant this.

>> Yeah. Yeah. Yeah. And we will I think >> what is meant by boom and correspondingly there's also a bust years [laughter] >> and we will we have to have this boom

and bust for any technology which is actually life-changing.

Now again taking a look at all these analysts prediction the 16% is the highest amount that they are talking about and they know that the technology

AI and all of those things are already in the works. So why are they not predicting much higher than that?

>> So keep that in mind. in in 2023 every analyst in Wall Street were predicting we're going to get a recession and markets we were like up like 24%.

Who cares?

Anyway, uh looking at the long-term historical returns at current I'm not sh I just share some of the charts which I find interesting. You know it's not that

find interesting. You know it's not that you should just follow these and make your investing decision. No one knows what's in future.

So uh hallmarks are talked about this I think at length is going back to the history of the markets

ever since we started collecting data whenever the forward P of the market is above 23 we have a 0% return for the for

the next decade it's a lost decade right now I saw this chart coming from Apollo chief economist which basically puts

this in a statistical way. uh so they did a S&P forward PE and subsequent 10-year annualized returns right so

at the day your return is based on what the price that you pay and if you look at 2022 23 23 onwards

this all has been zero or negative like less than zero this is what Max has talked about today morning while doing dishes I was listen I put on a YouTube

video wherein someone from JP M the the host was showing a chart from JP Morgan which is a similar uh statistical chart

maybe they had the same chart and now they put a JP Morgan label who knows I mean it's not difficult to create this chart the JP Morgan analyst or their equity strategies team had a similar

chart where it talks about if a Ford P is or this history of the markets we have we never had a 10year annualized positive return.

So remember this says 10 year annualized returns.

So do what you want to do with this.

Uh but currently we are having what's S&P 4p I think it is above we are looking at above 25.

So where is >> power is about 23. That's what I heard on a radio show.

>> Okay. So, we are right at there where which is the break even point of it is about 23 >> right?

>> Uh there is a lost decade. So

that doesn't mean that we not it doesn't say that it start to degrade from now onwards. Maybe we'll go 20% up 30% up

onwards. Maybe we'll go 20% up 30% up and then maybe we'll have 80% crash 60%.

Who knows? Or we'll probably not have it. Maybe we'll have anomaly etc. But

it. Maybe we'll have anomaly etc. But depending on and what the exercise which I've started to do is is basically um I got all the returns of S&P 500 from 1928

onwards every yearly return. You can go to Ashwad the Modern website and download it.

And uh I'm trying to look at okay what if I'm in 1999 or 1996 and then run scenario of okay let's say now next 10 years how the market

performed if market perform similarly what happens if I'm in 1999 then what will happen to my portfolio again it's a very crude way but I just

want to make sure I keep enough cash on the sideline to pay my bills in case I don't know are we sitting in 1999 9 >> or I was sitting in 1996. I don't know.

>> One should always have cash. I always

keep 5% cash.

>> Yeah. Yeah.

If I had my W2 income, I wouldn't have worried about it so much. But now I have to start thinking about the scenario and say, okay, you know, where will I end up?

>> Vivic average PE PE before 2014 was 13 and now it's 22 or 23.

>> That's that's okay. I'm not too one sec I need to draw the curtain too much light. That's okay. I'm not too worried

light. That's okay. I'm not too worried about why the PE has changed because if you look at the constituents of the companies, the big companies that drive S&P 500 that have changed the businesses

are much more capital efficient. They

are very they're much better in generating cash flows. They are much capital light with quotes because nowadays those are becoming little

capital heavy but so the >> but 10 points 10 points average PE so

from um from uh 19 whatever to uh about a 100 years the PE was uh 13 and now it's 23 for the last five years. Isn't

that kind of scary?

>> No. No. So I'm not even talking about those 13 different companies real you can't compare the if you're comparing maybe we should compare for last 20

years where the more internet based companies started to come in that the nature of the businesses and the nature of the companies that formed the S&P has changed so I can't compare with S&P

which was loaded with oranges and now S&P which is loaded with apples and now trying to figure out hey why are these two different the constitution of S&P

has changed. So the the argument which I

has changed. So the the argument which I see sometimes on uh by in in media as oh S&P historically has been no you just can't compare it. Maybe we can look at last 20

compare it. Maybe we can look at last 20 years when we are similar type of companies and then start looking at it is an is S&P from a PE perspective overvalued. Sure,

then we can have a meaningful discussions around it. But there is no point in discussing S&P which used to have steel

steel oil companies as their top holding versus the S&P which now have a Google's and the and the apples and much different businesses as their top

constituents. We are just not talking

constituents. We are just not talking about the same things.

Oh, another thing, Vivic, um is um US big tech or US investors still think the US is going to beat China. When I tell

them in in Shanghai, which is not Shenzhen, I was uh able to you or I was uh dep I didn't was refusing to use the

latest it. So, in China, they're using

latest it. So, in China, they're using public works to use the latest it. I

never got on to WeChat pay or Alip Pay, but uh I would have starved if I was there during the lockdowns. But what I'm saying is here we still use a checking

system in the money order system and uh the the government doesn't really adapt to the latest tech.

>> Uh government I rather have government stay out of it. Uh and incumbents they'll get disrupted. Uh but but if you

if you have incumbents is the the growth is always slower and that's the issue that we have a big incumbents here >> uh with the banks and all that and they

will try to um you know >> Vivic we had LED street lights in 2017 and in 2016 my friend was working as a

CFO for a California uh uh startup company in Shanghai for LED lights. It's

these things. We want the latest, you know, a better, more efficient. That's

what I'm saying.

>> Yeah. Building something fresh hopefully will build build it with the latest tech rip and replacement is always difficult and we have seen doing a professional

especially on the software and fixing the code is always the tech that is always painful rather you build a fresh you'll probably build directly on AWS.

But >> another thing is uh the only thing you San Francisco Bay Area has is new is uh electrified Calrans and that doesn't

even help the whole bay and that's not even new. I rode the highspeed rail in

even new. I rode the highspeed rail in 2011.

>> Yeah. Yeah.

Let's not even talk about public transport here in US.

It's worse. All right. Uh coming to some of the other some some innovation that is happening at least and which is now Coinbase

crypton exchange is now becoming full financial services company.

They expanded their offerings of prediction market, stock trading, equity, PES and futures, you know, perpetuals, full text integration, uh, integration,

borrowing against your assets, uh, Bitcoin, Ethereum assets, new payments, advisor.

So, essentially, Coinbase is becoming Robin Hood, Robinood is doing crypto, Robin Hood is becoming Coinbase and all of them are now becoming banking

services. So there is

services. So there is I think few years down the line we'll all just talk about financial service.

There is no crypto or versus cryptoy or tradi right it's just going to be

one which is hey this I mean today we talk about we talk about crypto in non-crypto traditional as a two separate ones they're going to get merged together eventually and I don't know

where that leaves sofi uh because that's again one of our favorite retail stocks I see sofi being discussed a lot during on on on

Twitter or on X it's not Twitter anymore it X but uh yeah these all going to become a big financial services

that they all once wanted to disrupt today morning I saw another uh fintech company you know banking as a service company called Mercury they filed

charter to become a full charter regulated bank I mean these guys wanted to they started with all this bad software saying the banks are slow they are

regulated they can't move fast so hence we are the new you know uh tech company we are the disruptors now the disruptors are becoming

um the old regulated banks so so eventually I guess everyone will become a financial services company and you could and and on the other side

we have seen the traditional banks moving into crypto space with PNC. I

think they PNC and Coinbase last week I shared they joined hands together to offer their customers that they can buy uh Bitcoin from your

banking interface directly. Now with OC and Fed giving green light to these financial institutions to start play with in the crypto assets uh this is

bound I mean sooner or later this will happen. So I'm not surprised um that you

happen. So I'm not surprised um that you know both cryp Robin Hood and crypto Robin Hood and Coinbase and on the other side the traditional banks they all

going to 10 years later they all look the same.

If they don't uh then they some of them will just die down. Okay. So there's a I think there's a 90 minutes video. I'll

just put in a link where they introduce a lot of these features.

We're going to go you can look at it. Uh

says while looking at a coin versus hood to my surprise coin has done much better in terms of revenue growth user. Okay.

[clears throat] coin is creating alternative for crypto holders. When it crashes, they panic

holders. When it crashes, they panic sell. Now they can buy the stock right

sell. Now they can buy the stock right here. Now if and then they the stock

here. Now if and then they the stock crash, they'll panic sell that. I don't

know. [snorts]

NASDAQ wants to become round the clock.

Uh yes, it is 24 by I think it's going to be 20 23 by 5.

Uh you'll have a 1 hour of bio break. uh

and then 23 5x5 NASDAQ could again it depends on how much is the liquidity will be there do you even want to play

in that or not crypto has been 24 by7 right uh but when there are some degenerates who want to trade

continuously on crypto exchanges sure go ahead do it NASDAQ wants to cater to the crowd that wants to stay glued

to to your screens Sure.

Or it will be useful for those who trade on NASDAQ but are outside the US time zone right?

You'll have to put your own boundaries.

Uh it is now becoming like 24 by7 office is open. You have to put your own

is open. You have to put your own boundaries. Okay. I'm going to work only

boundaries. Okay. I'm going to work only from this time to this time. After that

my phone and the laptop is stashed. I

don't want to look at it. It will be difficult. Emotionally it's going to

difficult. Emotionally it's going to become more challenging but uh I have nothing to do with it. Uh

[clears throat] I'm saying it right now.

I don't know once you know starts to happen and we got a much bigger liquidity at that point of a time. We'll

have to see how how liquid the market is during so-called overnight hours.

[snorts] We'll skip this uh and now let's look at uh let's maybe look at the portfolio metrics then we'll jump onto the learning from the mistakes of great

investors. [snorts]

investors. [snorts] So few of the metrics that I started to put together and well I'll track for my own portfolio. Um now we should have a

own portfolio. Um now we should have a discussion on what else we can track is of course best and worst month. Um so

I have my trading accounts which is non-retirement accounts on which I trade options then I have my retirement accounts which is mostly I don't do too much on it.

So there are few things which I trade track for my when I say option m these are all my nonretirement accounts on which I have

options enabled and I regularly trade on this is best and worst month right in terms of uh return which month

I had the biggest gain or the worst loss. Okay. High

what's the overall high uh which day?

What's the what's the max draw down?

Right. I had in my uh trading portfolio.

What's the max daily change up or daily change down? Probably it will could be

change down? Probably it will could be close to the liberation um I think the the daily change up will be after the liberation day. I think it was ninth

liberation day. I think it was ninth uh where the market went up anyway uh win loss trade in terms of how

many trades what's the percentage percentage of win percent of loss option trades they held for how long did have I held my option trades now this

could include all strategies or could be a strategy specific if I'm looking at a hedging trades because hedging I will do it weekly wise. How long did I even hold

weekly wise. How long did I even hold those trades? Right on an an average of

those trades? Right on an an average of all the trades.

Uh unique triggers, that's fine. Uh

percent of profitable tickers. Um net

option premium earned on each ticker.

Top 10 profitable strategies in terms of the dollar value.

uh total number of strategies versus the trades how much I did where uh top 20 tickers ranked by dollar value of option premium basically top 20 tickers top 20

profitable tickers when it comes to the options um I don't know what was the days analysis I looked at I think this is how

many days did I trade how many of them were profitable days how many of them were losing days right

what's my median on daily income in terms of which which will basically be total option income for the year. Uh you

know look at daily basis and and see on what's my median income, what's my average one, max income day,

uh max loss day.

It's all related to the the option trades.

Uh what else? Buying power used is very important in terms of overall which tells me how much have I exposed myself

in case of a market goes crashing draw downs etc. Do I run into a risk of you know uh margin calls etc. Right? So I so I want

to look at and I track this buying power at end of every month. I'll see how much of uh buying power I will consume. So

for every month I have a list of it. And

then uh finally the portfolio uh volatility is basically I have a long chart from right from day one all the way till the end of a year and you can

look at it. Okay daily profitability.

Do I see a big spike and right now I do see a spike both on the downwards uh which is on the liberation day and then huge spike on the up direction

which is on u again just right after the liberation I think 9th of April. I also

download the data of S snp change on everyday basis that I basically plot it against and see okay how was S&P doing that some of the stuff that I just want

to look at it [snorts] again uh overall portfolio which includes a retirement account I don't does anyone

have retirement accounts fidelity can you get your daily net liquidity value I've never asked them. So for my trading accounts which

them. So for my trading accounts which is with shop and with tasty works I have access to get the daily account balance

right which will which drive lot of these stuffs like portfolio volatility uh I can get from there uh because I know at the end of a day what my balance was in these accounts.

I just never try to look for it in for my 401ks. So for 401 kits like end of a

my 401ks. So for 401 kits like end of a month I have those statements so I'll know what's my best and worst month maybe do your YTD gains

overall portfolio maybe performance under overperformance with respect to benchmark uh probably that also account uh that

also goes for the trading accounts as well. What else? What else do you track?

well. What else? What else do you track?

Something which is you think we should be tracking and is completely missing here. I know one thing which I used to

here. I know one thing which I used to track which I stopped tracking anymore.

Let's see. You can guys can find it out which many fund managers do track.

>> A VC.

>> Yeah. Um I personally track like um you know what my uh project my projected um uh percent return per per week or per

month. That way I can see like okay like

month. That way I can see like okay like if I'm more of a frequent trader or monthly trader I'll say okay if I want

to say make 20% a year or or 10% a month or whatever it is I'll have the projector on like one column that you know so that it's more like you know if

I were to compound this type of results over a year or two years I can see what path I'm on and then I see what my actual results are per day or per week or per month and that way I can see

Okay, if I were to do this consistently, okay, am I behind? Am I ahead? So, I

like to track my portfolio that way, like what my projected uh whatever my rate of return I want versus what my realize is.

>> Okay. So uh you I kind of do it on the end of a month basis is I know my I do it on a daily but end of a month I

think the balances and see okay what's my year-to- date performance has been and then if we annualize it I know if I continue on the same path the annualized

performance will be this I guess >> yeah so I I guess what I mean was like have a target goal it helps me kind of like keep my eye on the big picture.

Okay, this is my target. Okay, am I trailing it? Am I behind it? And it kind

trailing it? Am I behind it? And it kind of makes me, you know, just to make sure that I'm in the right risk parameters.

Am I achieving my target? Like if cuz I'm a big proponent of you don't if you don't know specifically, you know, smart goals, right? You have to be measurable,

goals, right? You have to be measurable, attainable, all that stuff. So I create a goal and say, "Okay, is this a smart goal? Okay, is this realistic?" And then

goal? Okay, is this realistic?" And then I look at my performance and if it's not, then I got to readjust my goals or whatnot. But it just helps me keep track

whatnot. But it just helps me keep track more more detailed like okay what am I doing?

>> Yeah I don't uh uh start with a a goal but that's just me. I don't start with okay I have to

me. I don't start with okay I have to make 20% this year but I do track what I'm making but I don't have a I don't start with the goal. Actually, you're

you're right. Like with a bigger account like a IRA or like if you're trying to do it for a living, it's probably harder. But maybe if you do it like a

harder. But maybe if you do it like a smaller account that you have maybe like 10,000 20,000 and you're like, "Okay, I'm going to try to grow this, you know, maybe more aggressive goals. Maybe that

that's what I do it more for." Yeah.

>> I mean, yeah. So, I mean, it's not wrong. That's just that that I'm not

wrong. That's just that that I'm not doing it.

>> Okay. Uh, how do I measure this? Uh, no.

I I measure it myself. Asset class split overall portfolio plus return asset class.

So asset class split I have it on monthly basis. Yeah, I don't know what a

monthly basis. Yeah, I don't know what a year uh like end of year but maybe I can end of a month I know when I

let's say asset class stocks bonds cash these are the three assets that I

track. uh I also

track. uh I also look at in terms of my country exposure you know which country I have what

exposure um but that I have my date like monthly data I have against each of the stocks that I have listed and then I know this

stock US-based or China based etc. [snorts] Vive the buying power changes from day to day. Which number are you using?

to day. Which number are you using?

>> End of a month. End of a month.

>> Okay. That does not help you.

>> Yeah. So end of a month is like my generally an activity because I'll go and look at my thoughts. How much is the current buying power and I'll say yes.

It doesn't exactly >> if you use it at the um the third week of uh every month it is it's going to be

the best uh buying power effect that you can see in there.

I mean you're you're essentially the options are expiring or something of that nature. So you might see less of

that nature. So you might see less of the buying power used but in between the time period you will have a significant changes in the buying power uh you know

based upon the movement of the stock underlying.

Yeah, could be. But I think I had to take a make a call between how much of over >> I understand but I understand but that

is not a that's not possible for you to monitor those things that buying power used.

>> Yeah, >> you can get an idea but it is not really the >> uh on the regular time basis.

>> Yeah. So I just want to make sure I'm not using too much of it. at the end of a month I'll go and just look at it where how much of buying power I've

consumed. So I know now if I look at for

consumed. So I know now if I look at for this year and I'll look at you know let's say April will come a you know let's say end of April month and I know

that oh come on mid of April probably I had used another 5 10% more than what it is currently showing but it'll give me an idea of okay that is still within my

parameters or not that that's the only stuff. Yeah, sounds good.

stuff. Yeah, sounds good.

>> Okay. Anything else? No one talked about sharp ratio.

>> Draw downs.

>> Draw downs. I have

>> Okay.

>> I have a draw downs. I have Okay. How

many new highs did I have? Account

highs. Uh what's my max draw down? Sharp

ratio I don't do anymore. I used to do sharp ratio earlier. I've ditched that because that's me personally. I don't

think that's a that's a indicative of uh risk because traditionally if you look at from a wall street uh side volatility

is risk I am started to move away from that concept that volatility is risk so earlier I used to subscribe to that

saying volatility is risk and hence I used to track sharp ratio and I've stopped tracking sharp ratio Because that's one thing which people will ask you moment you say okay you

know what's your sharp ratio and like now I'm not doing it anymore cool all right uh let's uh >> one question so basically do you just

export the account statement from think or swim and do these numbers in excel Uh that is correct

>> right and that that view gives you enough information to calculate all these metrics

>> for for individual stocks if you look at for for option trades etc. So that I I

journal my trade, right? Like if you look at my website, for every trade that I do, >> right?

>> You know, I I journal it. So I know exactly um my option numbers will be. Now when

it comes to the other stuff around the account balances etc. I just look at account balance at the end of a month. But all these stuff

because the journal my trades and then I can just I have the data available. I can create whatever view I

available. I can create whatever view I want to from the data or or whatever analysis I want to from my data.

>> Do you have a max risk per trade that you abide by?

uh at the back of my mind, I used to have it when my portfolio was smaller

uh and not think about it too much because now I know that I don't do big trades anyway. So, it's a number that I could

anyway. So, it's a number that I could track it, but it's more of a academic exercise because I become a lot more conservative in terms of my buying power. Now, my portfolio much bigger.

power. Now, my portfolio much bigger.

So, like $5,000 max rep won't make or 10,000 doesn't make too much of a difference.

So, I've stopped tracking max risk per trade. But, do I put in when I do

trade. But, do I put in when I do journal my option trade, do I put in what's my, you know, the max risk on it or the buying power consumed? Yes.

I'm just curious um like let's say um a back like an event happens and let let's say we have a big draw down or the market you know who knows actually becomes >> we had draw down right we had draw down

it's not theoretical exercise we had draw down in liberation week >> yeah like how do we how do you manage how would you advise like okay the portfolio because we've been in such a bull market everything's but what

happens if like all of a sudden boom something hits like how do you approach that like do you just like does your portfolio just take big hit and you just kind of suck it up and kind of like like how do you uh take that type of

situation?

>> So first is I don't want to be margin called away. So that's why I keep a very

called away. So that's why I keep a very close eye on where my buying power is and I also stay conservative.

>> So when the market crashed 34% in co I didn't have to lose sleep because I had enough buying power available still available in my account. So I got zero margin calls nothing else. Right now

when the market corrected 30 like 34% some of the hedges they minted money for me but you're you're still down so now I can then I could start selling calls and

reduce the risk and do the regular stuff right but keep an eye on in terms of how much of your buying power you've already

consumed that has helped me in going through these draw downs we had what 20 22% draw down during liberation week fine the portfolio does get a hit but

then you continuously reduce your delta.

At end of a day I think it's a game of how much bullishness you want to have in your portfolio. Uh if you are too

your portfolio. Uh if you are too bullish [snorts] then if the market goes against you you are hurt more. I'm never too bullish.

So I would always have some of my hedging uh trades uh available uh in case of the market goes down. Yeah. Or

portfolio will still go down, but at least not as much as if I did not have those hedges. Right.

those hedges. Right.

>> What What type of hedges do you do you do?

>> I sell I sell naked calls against QQQ, SPY XSP.

Um >> Okay. So, naked calls.

>> Okay. So, naked calls.

>> Yeah. Or covered calls against my own. I

don't all cover calls as hedges but mostly at the portfolio level is a calls um on um on these broad market indices.

>> Would you ever short like futures or anything like that?

>> I don't know I'm not on futures.

>> Okay.

>> Yeah, you could do futures because they'll give you a lot more uh bigger val you know the numbers the the notional value is higher. I just have not haven't tried futures.

So um I can get my work done through this indexes.

>> Yep.

>> Or indices ETFs itself.

>> Okay. The idea is to figure out what works for you. Just don't you shouldn't be taken out of the market if the market trash 30% 40%.

>> No. And

>> that is why I'm okay to stay conservative and not use everything that I have available in the arsenal when market is bull. I never know when

the market will turn around.

>> Do you on your portfolio do you have positions based on different time frames like more longer term versus more like monthly or weekly like do you have time frames of your portfolio? My hedges will

be on a week toeek basis. Uh every week, next three weeks, I'll have short calls on some of these. Some of the tickers which are liquid are the weekly basis

now because I can afford to do weeklies.

When I was working, I could never could afford to do weeklyies because they need lot more monitoring. [snorts] I have IIT which I'll do on a weekly basis. There

are few tickers I'll do weekly basis otherwise most of my option trades will be on a monthly expiration cycle. So

right now it's all uh January monthly expiration. I was I thought I'll start

expiration. I was I thought I'll start with the February trades but not started this week. Maybe next week I'll start

this week. Maybe next week I'll start with February trades.

>> Got it. Thank you.

>> All right. Cool. All right. Last one.

Let's talk about the learning from the mistakes of a great investor. So I read through the book then I had my summary

and then I fed the summary to this LLM mark my I was blown up blurred away by the what these LLMs can do right from a textual summary I think I uh use

notebook LM asked it to create a slide deck for me and uh this is where the real uh what called productivity

uh of these models shows up. Let's go through this. Thank

shows up. Let's go through this. Thank

you to Google and notebook LM for this uh for the slide deck um that it created.

Basically learning from the mistakes of greatest investors. All investors say

greatest investors. All investors say the same stuff. The enemy is within.

Investing is difficult not because of intellectual but because of psychological treachery. I actually have

psychological treachery. I actually have not read each words. Hopefully, they are all right. Right. We talked about many

all right. Right. We talked about many times. It's uh it's more EQ game than

times. It's uh it's more EQ game than the IQ game. Then they talked about some of the biases that we have. Right.

Attribution bias. Uh earlier we were talking about it. We credit our success to our own skill but blame failure on bad luck. Endowment effect. And there

bad luck. Endowment effect. And there

have been studies done on it. The moment

I own a share, it becomes a lot more valuable to me.

just more than a minute ago before I own that share. Third is a behavior gap

that share. Third is a behavior gap which is way more important. Even if you invest in S&P 500, S&P will do 10%.

And investors in an S&P still getting only 7%.

Why this gap is called behavior gap?

Because we we just can't we just move in and out of it. Even if the underlying instrument has delivered X% we always earn less than X percent. All these are

because of our own behavior.

It's nothing to do with IQ.

Swan can give you the best stock Apple in 19 whatever 2000 we still wouldn't have been able to stay

with it because of our own psychological buildup.

Now let's talk about the big mistakes and this has done a good job of categorizing it. So let's first u

categorizing it. So let's first u mistakes of investor which are like mostly driven by ubris or illusion of control.

This is where the skill versus luck comes in. Don't confuse brains with the

comes in. Don't confuse brains with the bull market. 2021 everyone was warren

bull market. 2021 everyone was warren buffet because market was going up. I

thought I got lucky. I could identify all those such growth companies and I did you know until I realized how stupid I was. uh because market is going up

I was. uh because market is going up then we think oh it's all because I'm smart definitely not the case and we are

not the only one right long-term capital management who heard about long-term capital management LTCM

those who have been in the market for way longer than I have probably know about LTCM >> I've heard of it

>> yeah it caused a big 20% almost 19% draw down in the S&P in August 1998. It was

because of these people cornering so much of the investable capital that when they crashed the Fed had to come in and bail out.

>> Yep. So

John Merryweather came from Salomon brothers very successful traders and of course you know after the salmon got implicated in

rigging the treasury uh purchase etc moved out formed a new team got the best academic minds best IQ

people right they had a team of noble laates and the PhDs with more IQ points per square foot than any other institute institution in the world.

So uh those who trade options I've heard of black shores right both of them were part of his team Robert Burton and I

think blacksholes there were three people who were involved in this forming this equation uh no not the equation this option value calculation right they

got Nobel prize for it two of them were in um in his team in in LTCM he

uh PhDs from Harvards and MITs to be part of his team. They built fantastic models which could predict to the seventh

decimal of how the the the risk etc and how the markets would behave and you know they could control their risk. They

believed their model could predict what could happen in the market because these guys knew their stuff.

But no one can predict the market. They

did a big bet on the uh they had a big trade on the Russian uh rubal uh bounds and Russian

government chose to default.

No, that trade was actually uh what's called um basis trade between the long rate and short rate. And essentially the lesson is that they were too leveraged.

Look at the >> So basically it's the same lesson in futures market. 90% of the people who

futures market. 90% of the people who play in the futures market will end up broke or in other they'll have to end with nothing in hand. So that's the same lesson. Don't lever up too much. That's

lesson. Don't lever up too much. That's

it. and and the the the Russian bond default caused the shock that to earlier which rippled through to the US Treasury market co upsetting the damn basis trade

because the basis trade was reliant on the fact that 99% of the time it will not be upset.

>> Yep. I think you you got exactly right.

So Russian rubal uh when the government defaulted it uh decide to default on their on their bonds it upset their trade and they were at some point of

time they were lever like 100 is to1 with 1.2 I need this. That's right. Yep.

>> Anyway, so they lost 550 million single day and then you know the fund was down 52% as Kevin mentioned. Fed has to step in and they have to bail this out.

Again, hubris we are noble laets. We

know exactly how the models work and then they leveled up. The other one is a study of uh Jerry Sai and the Manhattan

fund. I never heard about this uh and

fund. I never heard about this uh and you know I read this book uh and JSI was a market star who's who was with Fidelity and the fund returned almost

300% from 58 to 65 but they used to do a lot of a turnover they had a huge turnover for almost 100% turnover uh on

their um on their fund. So he bought uh basically moved out started uh his own fund called Manhattan fund.

But this is where you confuse the bull market with brains is he didn't realize that all like the huge

gains that he had was because the market also had a bullish tilt during those years. Right? So he was basically

years. Right? So he was basically playing in the bowling alley, you know, uh with the bumpers on.

>> That's very funny. Yeah, that's exactly how I get high score when I bowl with bumpers.

>> Yeah. And doesn't really matter how hard you hit, right? It's going you're going to come back in the market going to probably, you know, throw some of the

pins around. But if you take those

pins around. But if you take those bumpers out, then you really know what your skill is. And when you know they

started Manhattan fund and uh when the markets turned around the it lost 90% of its asset and it had the worst 8-year performance in the mutual fund history.

Again don't confuse brains with a bull market right now or or let's given what has happened in last three years 2023

2024 now 2025 bumpers are on.

Well, I think the the uh comment there is that you have to always benchmark against what the your active fund stuff against the

benchmark. So if the benchmark has gone

benchmark. So if the benchmark has gone up 25% since June and you are close to that, it's okay. So I don't think unless you your focus is that the S&P 500 is

going to retreat, you don't say that, hey, I'm going to be looking more at risk now versus 6 months ago.

story easier said than that looks like these star fund managers probably don't do the same stuff.

>> No, they they had no risk management.

There's an official discipline called risk management at all banks and financial firms which wasn't there in the 60s7s even 80s. [laughter]

>> All right. So two lessons Jerry John Mather LTCM I think there's a whole book on LTM I need to read that book to get in the detail second is around conviction and AO

chamber right so listen Benjamin Graham le learned from the guru of investing teacher of Warren Buffet even he had to

learn his lessons so so [clears throat] as we know Benjamin Graham the father of value investing for complete completely focused on buying

the companies at cheap prices or so-called value investing right uh and uh

believing when the market start to crash corrected in 1929 it was wasn't until I think 1932 until the market actually bottomed out and then when Graham looked

at oh the prices has fallen it looks cheap based on relatively you know PE basis etc and uh he started loading up on his fund

but market wasn't done yet his fund itself lost 70%.

Right? So the lesson was a falling price might not equate a better value >> that was that's what happened to Steve Miller in the Miller funds in 2008 and

>> okay that has not been covered in the book. So very interesting story on Steve

book. So very interesting story on Steve Miller. [snorts] So,

Miller. [snorts] So, and Graham actually I I was looking I'm like bigger notes the summary which I gave and I mean obviously didn't put all

the content I'm looking at that Graham began his $450,000 portfolio which became 2.5 million in 3 years in investing mistake was 1930 he thought

worst was over he went all in and use margin to leverage the expected returns the worst was not over and he lost like

70% % by 1932. First he went all in then he also leveraged and even >> they allowed 10% 90% margin.

>> Yes, that that's that I saw in 1929 book that you can only put 10 10% and get 90% margin. Those are like wild west days of

margin. Those are like wild west days of investing.

>> That's where after that SEC stepped in and said no more than 50% margin available.

Okay, the next one, Jesse Livermore. If

you're a day trader or speculator, there is you would have definitely known this guy. This has been like his 1929

this guy. This has been like his 1929 fame uh big speculator and also a short seller and he made of all the stories

around 1929, he was the one successful story. He made $100 million

story. He made $100 million when the market crashed in 1929. And

when I was reading the book of 1929, interesting story when he went to his house, he saw his wife was not there at his house. And he went around looked

his house. And he went around looked into all bedrooms, couldn't find where his wife is and kids are not there. Then

he went to I don't know what the real name is like like a side house or barn or etc. He went there. There he saw his wife was like huddled and you know

hiding on a corner in a space and like what happened and his wife says that I heard that the market has crashed. So

she picked up her jewelry and whatever cash she had put in a box and she went and hid herself in thinking that we are done. and he told honey I made $100

done. and he told honey I made $100 million [laughter] because he was short in the market right [snorts]

and he he made uh $100 million in 19 uh during the 1929 but afterwards

uh bottom he made $100 million afterward he still stayed short because that's what once he made money by being short he still stayed short and when the

market start to rally up from 1932 towards 1933 and all that stuff.

He didn't uh he was still on the Oh, let me go through it.

>> He's short and the and the after you know the initial shot market bounced back 93% in 42 days and it was still

short.

So he got crashed because then he had to cover his shorts and then when he covered his shorts he thought the worst is over. He went long

at the top but the market did not finish correction until 199 1933 and then market fell down another 40%

from 32 to 33. So he got cut on both sides. after he made initial $100

sides. after he made initial $100 million in the crash stayed short market bounced 93% up called it bare market bounce or dead cat bounce he stayed

short lost money there covered it went long leveraged and then the market corrected >> there's a song >> it's a the gambler song here you need to

know when to fold and when to walk away the walk away part he forgot >> he says my position was right but my play was wrong he is the most coded

trader of all time which exhibited the poor risk management and eventually I think a two or three years later who took his own life because he lost everything.

>> Yeah.

>> Yeah. This this is why the all this day trading stuff it's very heavy not not everyone's cup of tea.

Third one is Bill Aman. This is hey I've seen this. I've lived through this.

seen this. I've lived through this.

Right. Uh there's a documentary on Netflix uh betting on zero I guess which is basically the whole um

story around how Bill Aman went around the investing world talking about how urbal life is a pyramid scheme company and basically was shot on urbal life.

Nothing wrong in going short, right? But the problem that he did was

right? But the problem that he did was he was became a crusader. Not gone

short, but went public with that information. Went on all the media

information. Went on all the media channels with that information.

Basically, he put a bull's eye target on his back. Now, Wall Street doggy dog

his back. Now, Wall Street doggy dog word, right? [clears throat] And if now

word, right? [clears throat] And if now you can go and listen to the interviews, etc. what happened right so when he declared that he's got a billion dollar

short position on urbal life Khal Ian came in talked about he has got a long position I think David Einhorn came in David Einhon and some other fund manager

came in with a long position he fought tooth and nail against that stock didn't go higher did some investigations and all that

stuff but eventually I think he lost 4 billion on that uh trade before he closed Persian Square man Bill Aman very

well respected mistake that he did was he forgot why in why was in that trade he was in that trade to make money

but he forgot that and basically his ego got better off him because now he's publically declared that I'm short on it he's stuck to it

couldn't admit his mistake or couldn't close his position once they are to lose it because he's gone

um you know he's declared his position so wide and open to the rest of the world.

He just couldn't let you know >> probably couldn't close and admit defeat because that would have been a blow to his ego.

So this is the same stuff which is called uh the Reddit apes causing short squeezes like it happened to GME two years ago. GameStop stock.

years ago. GameStop stock.

>> Yeah. The Melvin Capital.

>> Yeah. One one company was completely driven out of business.

>> Yeah. That's why I don't do that's why I don't do short uh stock because never know stupid company but anything

nowadays anything can uh go go high.

Didn't Robin Hood and uh Ken Griffin like they they kind of rigged the market so that people couldn't buy it?

>> Yeah, that's that's a conspiracy theorist say that they rigged the market people couldn't buy it. Uh Robin Hood Rob the stories I don't know who you

should believe it. So I was doing that GME thing uh on some days uh uh you know this uh TDM heritage would basically say you cannot borrow this stock anymore. So

those kind of things were happening.

>> Yeah. Yeah. And and you could >> you couldn't even buy the stock because they they taken off the you could only sell the stock. It is because uh the

regulators wanted Robinu to put more capital so that if the Robin traders cannot honor their commitment

then the you know they still need worry to you know OC is basically make sure that whatever trades you're putting in

you know uh will get will reach its uh the desired conclusion right so they Robin to put in capital. I

think Robin got a demand for some $3 billion of a capital overnight.

>> See, unless you can put in capital, you cannot have more open positions, new positions open on these stickers.

>> So, they had to arrange for uh liquidity injection into the market to satisfy the regulators needs otherwise regulators would have shut Robin down. That's a

that's a raw bun side of the story saying that we got a call saying we need to put in more capital because more and more risk was involved in that trade and if you were active during that time we would have seen the higher the GMA stock

goes >> Mhm. the higher the implied volatility

>> Mhm. the higher the implied volatility was going because the risk was on the upside which is very different than the normal stocks where the risk is on the downside right that's the gamma squeeze

concept right basically you're squeezing the stock and driving it gamma higher such that delta hedgers are forced to buy more and the meaning of higher gamma basically higher delta which means

higher volatility >> yeah uh not there was a gamma squeeze that was done but let's talk about that later But even

on commodities the risk is on the upside. So even if you see gold or

upside. So even if you see gold or silver probably if they even if there is no gamma squeeze but the IV goes higher generally when the price goes higher.

>> Oh that's the expectation of the future is that it'll be more volatile.

>> Exactly. Yeah. So anyway so coming back to this uh yeah so Bill Aman big mistake that Bill Aman did was it became a personal battle rather than he forgot

that I'm in this market to make money.

Uh so never take it too personally.

So or don't advertise your positions if you are >> they have to in order to drive it down.

That's what all these short people's thesis is, right?

>> Or Yeah. Or just don't advertise your positions too much if you cannot uh you know stomach if your position goes down. Anyway, so that's what

goes down. Anyway, so that's what happened with with Bill Aman. Let's talk

about other one, right? someone who made big >> I don't know >> they were basking in the victory shadow John Paulson uh made good amount of a

money uh during the 2007 2008 crash right his fund gained almost 600% immediately he went for his next

multi,000 return put $5 billion in gold in 2010 right and then we know from 2011 till 2022 gold did nothing

and gold actually start go down after 2010 and it only recovered back to its peak in 2022. I hope John Paulson kept

his position because now after 2022 last 2 three years gold has done wonderfully right.

So sometimes the money earned by luck is in distinguish by money earned by skill.

So you you were great on one trade doesn't really mean that you can just

apply the same skills as somewhere else.

There was one more case study of another person. I don't know if that is covered

person. I don't know if that is covered in this or not. Probably yes. Okay.

The next one is Stan Durken Miller, right? He is I think the only fund

right? He is I think the only fund manager that we talk about had never had a losing year in his 30-y year long career. I mean his career is longer than

career. I mean his career is longer than it but the fund that he runs he never have had a losing year but [clears throat] he talks and is very

open. I love when he talks about this

open. I love when he talks about this his own biggest mistake.

uh Stan Dragon Miller became very famous when he and George Soros basically broke the British banks right the British pound that's in the those who trade

currencies etc. probably it's a case study of how they did it and how big the position that he uh you know George Soros wanted him to take and basically

that was a trade of a lifetime uh but in 1999

right uh he was when he looked at uh in during the com bubble and let me go back to the little more detail around

whatever So in 1999 during the com bubble uh he made he bet against some of the stocks that

he thought was overvalued internet stocks and some of them corrected. So he

made you know couple of hundred million dollars but then afterwards the stock continued to go high and he saw some of these young traders like making money

hand over face right so he was like how come all of them are making money right [clears throat] and some of the short bets that he had

that were going against him and he was down like almost $600 million on that and then he's saying, "Gosh, everyone else is making money." Even though his

thesis was that these companies are way overvalued, just that his emotional um

call it makeup or call it ego got better off him cuz he just couldn't fathom that these new young traders that they

recently hired are made millions and millions of dollars and he is such an accomplished trader and and he's losing money. So, he put in uh I'm just looking

money. So, he put in uh I'm just looking at the number. He bought 6 billion worth of tech stocks.

And if you listen to his interview, he says that maybe I missed the top just by an hour or two. And in 3 weeks

or six weeks, he lost three billions of it.

And People ask me what's the lesson that you learned from me from this. He said I didn't learn any lesson because I knew what I was doing was stupid. But I just

couldn't see the other, you know, uh, traders make money. I just couldn't help myself.

money. I just couldn't help myself.

There's nothing new that I learned about the internet or the economy or the company. I knew those were shitty

company. I knew those were shitty companies. I knew that these were highly

companies. I knew that these were highly overvalued. I knew that we shouldn't be

overvalued. I knew that we shouldn't be doing it and I still I did it and he lost $3 billion.

After that it took a little bit of sabbatical. He says it was very

sabbatical. He says it was very difficult for him to cope with that big loss knowing that he was right and then he still lost it because emotionally he

couldn't control himself.

So again even even the great like Stan Draen Miller are you know can become victim of

uh these emotional mistakes and you and I are are [laughter] nothing

right it's all [clears throat] other one uh Michael Steinhart again uh he was a master of small and

medium cap stocks. Had a great career, unblenmished career for returning 24 and a half% for 26 years.

But what happens if you have a such a great uh returns? Your fund starts to grow bigger and bigger and bigger and

bigger. Now your expertise is in small

bigger. Now your expertise is in small and medium stocks. There are not many small and medium companies where you can deploy such big

amount of capital.

So he started looking for other opportunities international currencies areas which were outside of his core

competency.

And then 1994 he had a huge draw down uh of almost $800 million huge draw down which was like the big black spot

on his 20 year 26 year career.

The whole idea was don't move out from your core competencies. So I'm big fan of where Warren Buffet said this is too

hard pile for me and don't want to invest in it.

He had no business in moving into bonds and currencies. That wasn't his area of

and currencies. That wasn't his area of expertise but he did ended up losing $800 million.

The another one is Sequoa Fund. uh bill

ruined.

Um who was the guy when Warren Buffet closed his partnership, he told all of his customers that

if you want my advice on who should be managing your money, you should go to Bill Ruin.

Great investor, mana fund, great returns, right? but then

right? but then moved straight away from how he built up uh his portfolio and went too

concentrated in valin farmer and then one big bet

caused you know huge draw down on his fund. It was like fund was down from 9

fund. It was like fund was down from 9 billion to just $5 billion.

Again, very successful um uh investor straight too far out and became too concentrated.

That's why I'm big fan of maybe let's keep 25 stocks. I don't know tomorrow today Google looks great.

We don't know what the future will hold 10 years down the line, 20 years down the line.

One person that we all know, someone who stuck with his core competency is Warren Buffet, right? Uh even if Bshire

Buffet, right? Uh even if Bshire Healthway fell 51% in during 2000, he's still stuck to his lane, which is

right. I mean, I don't understand tech.

right. I mean, I don't understand tech.

I'm not going to invest in tech. That's

why I don't do individual biotech companies. I don't care how attractive

companies. I don't care how attractive that is. That's area where I have

that is. That's area where I have zeroities on. Not that I have expertise

zeroities on. Not that I have expertise in any area. I'm more of a dabler, but that's completely out of my circle of competency.

The reason I didn't invest in Arista networks for so many I mean I've heard Arista network in 2020 because networking is one area where while I was working in the tech sector, I always

stayed away from it. I can't wrap my head around it head around it. So it

took me a lot of time to understand little bit of the networking side before I could take a position in a resist.

Yeah, I missed a lot of gains. That's

okay. Stay within your circle of competence.

Uh I think that's it I guess. Yeah. And finally the mistakes are the tuition. We will all

pay the tuition fee and I have paid tuition fee. Each of these great

tuition fee. Each of these great investors have paid tuition fee. There

are more investors than mentioned in this deck. I don't think it talked about

this deck. I don't think it talked about um Mark Twain.

We have not talked about John Manet Kes, Chris Saka, even Charlie Munger,

right?

>> So, so even they lost money. So, we all all of us will pay tuition fee to the market. But if you can learn from

market. But if you can learn from mistakes of other and uh try to be cognizant of hey is it am I like Kevin

said right am I bowling with bumpers on or is it my skill or is market just going high or am I just changing some of

the growth stocks are it helps it will help in the long term that's all uh I want to say I think someone asked what's the name of the

book Um Bobby the book name of the book is big mistakes by Michael Batnik.

He is the author.

Michael Batnik. Uh name of the book is Big Mistake. It's a very easy read. Um

Big Mistake. It's a very easy read. Um

so yeah could be on your holiday reading bookshelf.

[clears throat and snorts] But I enjoyed reading this book and notebook LMS has made it lot more better than I could have ever done in terms of the of the deck.

All right, that brings us to the end of today discussion guys.