Most people dont know what they want in their life, want to own, to achieve, to do, to become before they die, kick the bucket. In short they dont have a Bucket List. I just love the movie with this title and  how my two favourite actors Jack Nicholson and Morgan Freeman bring out the insights about what one values in life. But both were old men in the movie and meet in a hospital before they decide to have a Bucket List for the rest of their life. My question is why do we wait for so long and for a harsh reminder to focus on what’s important in our lives.

Markets have once again started correcting. This time it appears that correction is happening at much faster rate. This could be because there are real concerns on marco-economics side.Rising Crude Oil prices have always been a pain point for India as we are net importers (oil and Gold). This leads to pressure on dollar reserves and hence currency weakness. This increases cost of capital in the country and leads to fall in asset prices, in stocks and bonds.

Stock investing is all about the future, you invest today with the expectation of a return tomorrow. And when it comes to anything about the future, we are prone to believe in predictions and predictors. Our belief may range from mild interest to staunch conviction; so much so that we may not do anything significant without consulting the stars and the astrologer/forecaster. So, how do we differentiate anything said in stock investing as an act of prediction (a forecaster approach) or sound analysis (an Analyst approach)?

Fishermen depend on luck, and the Vegetable Farmer depends on tending to the investment continuously to bear some result. Both have short-term perspectives and require continuous engagement. But here’s the catch – It has been proved that the probability of earning returns in the short-term is more like tossing a coin with 50-50 chance of getting the positive result. This is more like a computer picking up a stock for you.

The efficient market hypothesis (EMH) was developed by Eugene Fama who argued that stocks always trade at their fair value, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. So it is better to buy and hold broad index fund rather than picking individual stocks. Fama believed that returns earned above the index are an outcome of pure luck. However, research indicated that there are sources of Alpha (excess returns over benchmark) in plain sight because of behavioural biases of market participants, or structural/liquidity issues of the market. These factors are acknowledged by Eugene Fama who went on to publish 5 factor model.