Online Retail Startups – another update

Sometime ago, I wrote a post on how all of them Online Retail Startups die. At that time Gilt Groupe was still alive. Recently I heard it too was sold for a fraction of the money it raised.

Here is the story from Techcrunch – Gilt’s Unicorn Tale Comes to an End

Gilt Logo

So another big one bites the dust.

Apparently One Kings Lane is the next one waiting to die according to this article.

I sincerely doubt if it has anything to do with women in the VC industry. But there is something to do with buying fashion online.

This could be a breath of life for almost dying retailers like JC Penney. But apparently even Walmart is closing 260 stores, not a sign of healthy B&M times.

There is something going on there, every retailer (both Online and B&M) is dying and Amazon is growing.

People are not spending less online but someone is grabbing all the fashion money and I have no clue who that is!

Your thoughts are always welcome.

 

Action Packed Investing

Investing is a boring job. Let me correct myself – “Profitable Investing” is a boring job. One can have a lot of fun in buying and selling shares on a daily, hourly basis. It will be so much fun to buy and sell multiples times during the day by looking at charts, graphs and what not. The flashing ticker is very, very exciting. Put in a TV showing the loudest business news channel, you got yourself a PARTEEY. 

But you are not in investing to have fun, or even have a party. You are investing to create wealth for long-term. If you really want to have a party, go to a party!

I know very, very few people who have made money trading. And many of them have lost money that they made the very next day. It feels like visiting a Casino. You can go and have so much fun but the end of the day, you will be poorer. 

I want to showcase an example of “Profitable Investing” where action is limited only a few times in an decade. Yes, I said it – “Decade”

Charlie Munger, the famous #2 at the company Berkshire Hathaway, is also a chairman at a Los Angeles based company called Daily Journal Corporation. They sell journals aimed at Lawyers and their business has been declining in the past decade. So they started to invest in other companies. Actually they held all their money in US Treasuries till the 2008 financial crisis. During the crisis they went in and bought shares in amazing companies at single digit prices. And  after that they have probably done one or two investments and that is it. All the other time, they were just sitting idle waiting for some really bad news.

It takes a lot of conviction to do that. But the results speak of themselves. I started investing in India just after July 2014. July 2014 was when the Indian Markets were at their peak. There was no rational investments to do and I pretty much sat with 99% cash. Come June 2015, there was a small correction in the market and I was able to buy a few Shares in good companies. Still, I am today sitting with more than 50% cash, reading annual report after annual report and doing little investing here and there. This is the best one can do at this time, getting prepared. This can be extremely boring but it is fruitful in long run. If one wants to enjoy the thrills of action go to a theme park and enjoy every crazy roller coaster. Don’t waste your time and money in the market. 

Percentage of Successful Investments

There is a myth in the investing world. The top investors get almost all of their investments right.

The reality is a lot different. Sir John Templeton, one of the legendary Value Investors said that if one gets 66 percent i.e two-thirds of their investments correct, it should be be enough to generate very good returns.

Even in my own personal investments, I usually get little more than 2/3rd of my investments correct. So if you intend to just copy my ideas, there is a chance you will have 3 out of 10 investments fail. The biggest difference in returns comes in how I allocate my capital. Some ideas get much higher percentage of capital compared to others.

Personally, I work to develop my Circle of Competence and build it strongly so that I reduce errors in my investment thesis.

If you are a regular on my blog, some of my failures include JC Penney and Paragon Ships. I do have a few energy investments that will take many years to turnaround.

This brings out an interesting question. Many of my friends believe and think that doing an investment is an easy job. As you can see, investment ideas are riddled with failures. A good investor is one, who takes a very non-emotional, purely focussed on the math, believing in his contrarian-ism to be successful.

“It’s not supposed to be easy,” Berkshire Hathaway’s Charlie Munger says about investing. “Anyone who finds it easy is stupid.”

 

The Goal of Investing – Part 2

 

I had to continue this in a separate post because I wanted you to think about your Goal of Investing.

If it involves anything to do with ego, envy or urgency, chances are that you will probably lose all of your money because you will end up gambling rather than investing.

The Ultimate Goal of Investing is to create Long-Term Wealth. Now why would anyone need Long-Term Wealth.

Long-Term Wealth “interestingly” provides one with the freedom to pursue one’s interest. One is not tied to a boring job for livelihood, but rather he or she can pursue interests that they are passionate about. I know of a wealthy entrepreneur who chose to pursue photography and is now one of the top photographers of the world. Isn’t that something?

I can provide numerous examples where people were able to pursue their passions and that was possible only because of the accumulation of wealth.

Disclaimer: Chasing Women and Alcohol could be a passion and I sincerely warn you that passion ensures the other person (the woma/en or the Alcohol Company) gets the Long-Term Wealth :)

Long-Term Wealth also helps your next generation to pursue their interests. Instead of studying to become another factory person ( factory denotes both offices and industries), your child can become a naturalist or a writer.

As the name signifies, Long-Term wealth cannot be created fast. It needs time and discipline.

To be continued…

 

The Goal of Investing

The main goal of Investing is to not to lose money.

The statement looks absurd but it is true. Most people invest to make more money.

Actually their goal is to make money in a very short period of time.

Let me correct myself again. Most people want more money than the people with whom they are compared with.

That may sound ridiculous but it is true. They want show off that they have more than the other person. It is not a rational thinking but it is true.

Very few people need more money just for themselves. If that ever happened then the world would be a much different place.

To be continued…