Is This The most hated bull market of all time?

Many say the Global Financial Crisis erupted in earnest in 2008; however, I wouldn’t argue too much with those who claim that it all started with the problems faced by two subprime hedge funds managed by Bear Stearns in the summer of 2007, even if equities only felt the full impact more than a year later.  When the first signs of problems appeared, Bear Stearns officials went out of their way to downplay the incident. The hedge fund fallout represented a series of “isolated incidents”, it was “by no means a broader indication” of the bank’s performance, and concerns over the bank’s situations were “unwarranted”. These were only some of the many statements coming from Bear Stearns, designed to reassure a rather nervous investor community. (Source: Financial News (2013) – The collapse of Bear Stearns: Five years on.) Nine months later, it was all over. On the 15th March 2008, JP Morgan offered shareholders of Bear Stearns $2 per share for a company that had traded at $150 per share only a year earlier. The terms were accepted by the board of directors of Bears Stearns the following morning, and investors all over the world were mightily relieved. Now we could all return to what we thought we did so well, and that was to make money off the great bull market. Let’s not confuse genius with bull market, as my former boss always reminded me. Little did we know that it was going to get a lot worse in the months and years to come.

bull market

Today, a decade after Bear Stearns blew up, the ramifications of the Global Financial Crisis are still felt every single day. Extraordinarily low interest rates are only the tip of the iceberg. In so many ways, it is such a different world we wake up to every morning compared to the world we knew, and came to like, in pre-crisis times.

Some abnormalities in the New Normal

An example of something that has changed dramatically in recent years is the composure of the growth in earnings per share (EPS). No less than 72% of EPS growth in the S&P 500 between 2012 and 1H2017 was accounted for by stock buybacks, but Trump’s tax reform could change that – more about that in a moment. (Source: MacroStrategy Partnership LLP.)

Another thing that has changed in recent years is the investment community’s relationship with the Fed. To put it mildly, American investors have developed an obsessive love affair with the Fed. Anything the Federal Open Market Committee (FOMC) does is rewarded by investors, and I mean anything. In fact, they don’t need to do anything at all. As long as an FOMC meeting is held, investors get carried away.

Before 1982, the days on which the FOMC convened were just like any other day in the US equity market, but that changed with the arrival of the Great Bull Market. Since 1982, a full one quarter of the total cumulative return on US equities has been delivered on the eight days a year that the FOMC have met, regardless of whether interest rates have been lowered or not.

Even more noticeable, in the first few years following the Global Financial Crisis, the performance of the S&P 500 on the days that the FOMC convened was no less than 29 times higher than the average daily return (Exhibit 1).

In other words, the sheer presence of those meetings has had a much bigger say on equity returns than what the FOMC actually decided to do. By establishing QE, the Fed effectively created a considerable amount of moral hazard by force-feeding investors risk assets; hence the expression the foie gras market. (Note: I have borrowed the expression with gratitude from James Montier of GMO.)

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What to do when markets are volatile?

The point here is that there are a lot of ways to look at what is going on right now. If you look at extremes and absolutes and try to find the headlines — It’s the worst decline since [fill in the blank]! — the numbers will make you crazy. To stay sane in these situations where markets are volatile conditions, most experts are advising that you stay the course and don’t panic. That’s not bad advice — when is it ever a good time to panic? — but it’s not easy in the face of a numbers-induced mania.

So here are some things to consider as volatility comes back to the market and the current whipsaw plays out:

markets are volatile

• Do look at your portfolio. Plenty of experts advise against peeking at long-term investments when the market makes short-term swings, but a peek now makes some sense.

Consider both Peter and Jack; if the daily swings in the market are so large that they worry that they can’t ride out any downturn to reach their long-term goals, then it may be time to change their allocation, take some risk off the table and give themselves some peace of mind.

That may not be the best thing from a long-term perspective, but a reasoned move now is better than a panicked move later, so if making a change will increase your sleep factor, think about how you could ease your nervous mind.

• Do the math. Yes, a $12,000 loss in his retirement savings in a day looks ugly to Peter. But he amassed much of his $300,000 account while the market was rising and he never once felt like “the market is too volatile” while it was quickly pushing his balance up.

Likewise, Jack crossed the $10,000 mark in his young portfolio with significant help from a market that was returning more than he expected. The returns on his investments are still much higher than he would have expected for the few years he has been setting money aside; he would have been happy with returns closer to historic norms (10 percent in large-cap stocks), so the only problem he’s really having right now is that he hates to see returns “normalize” because that means the froth is being removed from his cup that had been running over.

• Don’t fight the machines. A huge chunk of Wall Street trading is triggered by machines that are trying to outmaneuver competing computers. There’s no denying that market swings can be caused by this kind of trading, and the fact that Monday’s decline saw so many Dow stocks falling large percentages in lock-step could signal that it was more computer-driven than money managers making conscious decisions to get out.

Your goal isn’t to beat the market for a day or a moment, it’s to capture the long-term trend of the market. Trying to win minute by minute is a pretty sure way to lose over time.

• This isn’t a test of the market, it’s a test of your nerve.

The market has no emotions. It does what it does. Steep drops, corrections, downturns and bear markets haven’t been repealed.

If you are honest with yourself, you always knew this was going to happen, again.

This is where you look at your plan and make sure it still makes sense. When it was delivering bigger-than-expected returns, you were sure it was working; it’s almost certainly still working now, but market conditions have changed and you have bigger account balances thanks to the long bull-market run.

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A Dozen Lessons in Investing – Edward Thorp

“Edward O Thorp is the author of Beat the Dealer, which was the first book to prove mathematically that blackjack could be beaten by card counting, and Beat the Market, which showed how warrant option markets could be priced and beaten. He also was the co-inventor of the first wearable computer along with Claude Shannon. Thorp also pioneered the use of quantitative investment techniques in the financial markets (Option Arbitrage, Warrant Modeling, Convertible Arbitrage, Index Arbitrage and Statistical Arbitrage).”

Thorp speaks clearly and from the heart. He reminds me of that other ultra rational decision maker Charlie Munger. Despite his prodigious intellectual gifts Thorp remains grounded and approachable. A few sentences reveals his gift for communication which reminds me of Michael Mauboussin:

My life has been an adventurous journey I thought readers would enjoy my stories of the people I met and the challenges I faced.” “Chance can be thought of as the cards you are dealt in life. Choice is how you play them.” “A lot of big choices that you make at some point or other, and then there are things that you can’t control like who your parents were, and what kind of economic circumstances you were brought up in, where you started. Did you start 20 yards behind the start line or 20 yards ahead of it, or right on it? People start in different places. Those are cards that are dealt.


Set out below are usual twelve lessons I have learned from Thorp:

Try to figure out what your skill set is and apply that to the markets. If you are really good at accounting, you might be good as a value investor. If you are strong in computers and math, you might do best with a quantitative approach.” “If you aren’t going to be a professional investor, just index.

Thorp likes to stay within his circle of competence. This is a hallmark of people who are rational. In that sense, Thorp reminds me of Warren Buffett. But unlike Buffett, Thorp did not make his fortune in the market by analyzing businesses and instead found his special competency in statistical arbitrage, which he more or less invented. Thorp was able to successfully take his considerable mathematical and intellectual gifts and apply them in an area where he has a significant advantage.

The way I sized up the Ben Graham approach was that it would be a total lifetime of effort. It was all I would be doing. Warren demonstrated that. He’s the champion of champions. But if I could go back and trade places with Warren, would I do it? No. I didn’t find visiting companies something I wanted to do. I never even thought about finance until I was 32.

Thorp also decided early in life to get in the side car of other people who have a different competitive advantage. He invested in Berkshire when the stock was trading at $982 and still hold those shares today. When Buffett was winding up his partnership he was asked to do some due diligence on Thorp as an investor by a mutual friend. That chain of events resulted in Thorp and his wife playing bridge with Buffett in 1968. Thorp described the meeting: “The Gerards invited my wife Vivian and I to dinner with Warren and his charming blonde wife Susie. Impressed by Warren’s mind and his methods, as well as how far he’d already come, I told Vivian that he would eventually become the richest man in America. A mutual friend talked recently with Warren, who spoke warmly of our meetings, of Beat the Dealer and Beat the Market, and of non-transitive dice.”

Speaking of impressive mental calculation, Barry Ritholz recently interviewed Thorp and watched him calculate his return on his Berkshire shares in his head. Thorp is the sort of person who taught himself FORTRAN so he would create his card counting techniques for Blackjack on an IBM 704 mainframe. The number of things Thorp taught himself is astounding.

It is a good thing to remember that you are not Ed Thorp, Warren Buffett or Charlie Munger and neither and I. If you have similar mathematical gifts as Ed Thorp or Buffett, good for you. I do not have them. Even if you have those mathematical gifts, are you are rational as Thorp? Do you have control of your ego sufficiently to stay within your circle of competence?

The first group of investors are those who do not want to do a lot of work who should invest in indexes. Index investors do better than maybe 90% of all other investors who are busy paying fees to advisers.” “The second group are those who would like to learn more about securities. They are entertained by following and analyzing securities. I think they can learn about special, unusual things although there is a price for that education. [They are] interested in the market, and it’s kind of fun for them. Those people if they want to learn more should go out and have their go at trying to make some money, but they shouldn’t use the bulk of their resources to do this. If they find something that really works then they can start putting more money into it. They’ll find that most of the time they haven’t really found anything that really works.” “The third group, which are the professional people some of whom actually get an edge. Most of whom don’t, but some of whom do. Those people get a start somehow in the market just like I got a start with an option’s formula, so I have an edge. I get in. I build an organization, which is small, and it gradually grows. It gets more and more skills. It gets into more and more kinds of investing. You, basically, get over the hurdle and get yourself established. If you can do that as a professional then you’re kind of on your way to collecting what people call Alpha, excess return. Then there’s the fourth group, which I don’t have much interest in, and those are the ones who are simply asset gatherers. They’re in there to collect fees and get rich, but there’s nothing really very interesting in what they do.

In which category do you fit? Do you enjoy learning a lot about businesses? Are you willing to devote many hours a day to researching businesses? Have you tried picking stocks with a small portion of your assets and carefully tracked results to see if you are any good at it?

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How to Add to Value Investing?

In its purest form, value investing involves solely buying cheap companies. Just cheap companies. Studies of valuation either use high minus low (buying the cheapest stocks and shorting the most expensive stocks) or separate stocks into deciles (10 evenly split groups) or quintiles (five evenly split groups) based on their relative valuation ratios. No consideration is given for any other characteristics.

The big challenge with a pure value strategy (or a pure momentum, a pure growth strategy, etc.) is the actual stocks designated for purchase. In the case of value, an investor will end up looking at a list of stocks so unattractive that they are unlikely to even be allowed to entry into the building where a beauty contest is being held. There will be more than enough stocks with big enough flaws and risks to cause an investor to openly question the rationality of following the strategy.

value investing

A way around this problem is to require stocks to have additional characteristics. In “Fact, Fiction and Value Investing,” Clifford Asness et al. explained how including momentum and profitability components in a value strategy increased risk-adjusted returns. Strong momentum occurs when a stock’s return is above average over a period of time (e.g., 26 weeks). Profitability, as the word implies, means a company is making money.

Taking a step back to look at the bigger picture reveals why this would be the case. Value occurs when perceptions about the company drive down the price investors are willing to pay relative to a fundamental metric (book value, earnings, cash flow, etc.) Momentum occurs when investors buy or hold onto to a stock because its price is rising. Profitability implies the company is making money, and investors mostly prefer companies that are expected to make money over those that aren’t. (There are always some speculative exceptions to this from time to time.) Combining momentum and profitability (or a broader measure of quality) results in both finding stocks recognized as bargains by other investors and reducing the odds of buying stocks that are cheap for a reason. The diversification benefits of momentum and profitability relative to value are the icing on top of the cake—and tasty icing at that.

Here at AAII, our value-oriented portfolios are not pure value. The Model Shadow Stock Portfolio uses profitability as a criterion for adding and selling a stock. The portfolio also requires stocks to have a relative price strength rank (the measure of momentum) within the top half of all stocks in order to be considered as buy candidates. The AAII Dividend Investing portfolio requires underlying financial strength and dividend growth in addition to an attractive valuation. Even the value strategies used within our Stock Superstars Report portfolio include quality components.

It’s not just us. The renowned value investor Warren Buffett evolved from Benjamin Graham’s “cigar-butt” strategy to considering quality as well. (The term “cigar butt” refers to picking up discarded cigars with one puff left, meaning companies with some semblance of intrinsic value left in them.) Joel Greenblatt’s Magic Formula requires companies to earn a minimum return on their capital. These men are far from being alone.

Investing in cheaply valued stocks works really well over the long term. (Over short periods of time, any style of investing can and will flop.) The challenge comes from purely investing in value with no consideration for any other factors. Though pure value works mathematically when a large enough number of stocks is purchased, the strategy requires a strong tolerance for owning very risky companies. Incorporating additional traits will make the stocks you identify more palatable with potentially even higher returns.

  • AAII


Boeing Plans to Buy Brazilian Embraer

Boeing Co.’s purported bid for Embraer SA looks low. Boeing has been aggressively pursuing a takeover of the Brazilian regional jet maker, a remarkable shift for a company that dubbed a similar combination struck by Airbus SE and Bombardier Inc. in October “a questionable deal” that wouldn’t force it to change its strategic path. Many details are still being sorted, the most important being whether the Brazilian government, which has veto power, will support an acquisition. But at least one thing has reportedly been worked out: the price. According to the Wall Street Journal, Boeing and Embraer have informally agreed to a deal at … $28 a share.

That’s hardly the “relatively large” premium that previous reports had indicated was coming. A bid of $28 would be 40 percent higher than where Embraer was trading before news emerged of Boeing’s interest. That’s not insignificant, but also not atypical in M&A, especially lately. It’s also worth noting that Embraer’s stock had taken a hit this fall as the company faced the prospect of heightened competition from the Bombardier-Airbus combination, a problem it could better handle as part of Boeing.


Investors were clearly expecting more. The American depositary receipts had climbed to about $27 heading into Friday, a level that’s untenable if the ultimate price is just $1 higher because the deal hasn’t even officially been inked yet and faces significant regulatory hurdles. Thus, news of the price sent Embraer’s ADRs plummeting as much as 7 percent.

Shareholders had every right to be more optimistic. Embraer is a crown jewel for Brazil. While Boeing is still negotiating with the government over what would happen with Embraer’s defense business and how much say politicians would have going forward, a hefty offer was assumed to be part of its argument. The regional-jet hole in Boeing’s lineup has been laid bare by its trade dispute with Bombardier over claims the Canadian company used low prices to unfairly compete for a Delta Air Lines Inc. order for which Boeing wasn’t even a contender. If Boeing is serious about catching up to the new Airbus-Bombardier union, it doesn’t have many other options that match the scale of Embraer.

And yet Boeing’s offer values Embraer’s ADRs at a discount to the median multiple paid in major aerospace and defense deals over the past decade, according to data compiled by Bloomberg. Takeovers targets of more than $1 billion have typically commanded about 13 times Ebitda.

Not all of the acquisitions in this industry are perfect comparisons; Embraer has no hope of fetching the kind of pricey valuation that higher-margin avionics supplier Rockwell Collins Inc. did from United Technologies Corp. last year, for example. But Lockheed Martin Corp. paid 13 times Ebitda to acquire helicopter maker Sikorsky from United Technologies in 2015, or a little over 10 times if you adjust for the benefits of tax maneuver. Something in that ranges seems more reasonable for Embraer.

Boeing still has work to do to secure an Embraer acquisition. Perhaps that should include re-evaluating the price. The Brazilian government isn’t the only stakeholder it has to please.

  • Bloomberg


$80 Billion Bullet Train Scandal in Japan

A scandal threatens to put the brakes on Japan’s plan to build the world’s fastest train. To surpass the nation’s famous bullet train, the project incorporates magnetic-levitation technology that promises to cut journey times from Tokyo to Osaka by more than half, to just over an hour. The $80 billion project carries the government’s added hopes of exporting the maglev technology.

1. What is the scandal?

It centers on possible collusion on contracts for the project by four of the giants of Japan’s construction industry — Kajima Corp., Shimizu Corp., Obayashi Corp. and Taisei Corp. The Tokyo District Public Prosecutors Office and the Japan Fair Trade Commission raided their headquarters earlier this month following reports that the four companies were under investigation for possible antitrust violations related to maglev contracts. All four firms acknowledged the raids and said they’re cooperating with authorities. On Dec. 19, the Yomiuri newspaper reported that Obayashi had admitted to the FTC that it colluded with the three others. An Obayashi spokesman declined to comment.

bullet train

2. How did the collusion allegedly play out?

The contractors are suspected of having conspired to decide in advance which of them would win orders and at what prices, meeting regularly to discuss bids, Japanese media including Sankei newspaper have reported. The companies prompted suspicions by each winning about the same number of orders, according to reports. A former Taisei executive is suspected of being the mediator in the collusion, passing on details of the project obtained from an acquaintance at Central Japan Railway Co., which is running the project, Asahi reported on Dec. 26. A Taisei spokesman declined to comment on the report.

3. What is magnetic levitation exactly?

Maglev trains use magnetic power to float carriages, eliminating the friction of tracks. The trains set off on wheels (the kind used on F-15 fighter jets) until there’s enough speed for the magnets to kick in and create lift. China already operates a maglev over a short route in Shanghai, but the Japanese work-in-progress is on a much larger scale. During a trial in 2015, Japan’s project set a world speed record for a train — 603 kilometers an hour (375 miles an hour).

4. When can I ride it?

Don’t line up for tickets just yet. Central Japan Railway, known as JR Central, is running the project and began construction in 2015, but the first leg — from Tokyo to Nagoya — isn’t scheduled to open until 2027. The second stage, to Osaka, is planned for 2045, though the government is providing a loan to try to bring that forward by eight years.

5. Why is the project so important for Japan?

The government has hailed the project as “Japanese technology that will revolutionize intercity transport.” It sees maglev as a highly exportable revenue generator, with foreign dignitaries frequently taken on rides at a test line near Mount Fuji. Prime Minister Shinzo Abe has said his government may provide financing to JR Central’s bid to provide trains for a proposed Washington-Baltimore line. Japan’s interest in maglev technology dates back to the 1960s, about the time when bullet trains first appeared.

6. Why has it taken so long to develop?

As well as the cost, there are technical challenges. Such as tunneling through the Japanese Alps. Or making the train line straight enough to accommodate maglev’s speed. To achieve that goal, JR Central has to dig some 246 kilometers of tunnels for the first leg — almost five times the length of the Channel Tunnel linking Britain and France.

7. What’s at stake in the collusion allegations?

Other than another black mark for Japan Inc. in a year when manufacturers admitted faking data, there’s a risk that the project will face delays. The contractors under suspicion constitute all but one of the so-called super zenecon, or super general contractors, that dominate Japan’s construction market. The super zenecon are said to be the only companies with the capacity to handle large-scale projects with the technical precision required. Tunnel-building would face a serious obstacle if the investigation were to jeopardize their involvement, industry experts say. Many see such far-reaching consequences as unlikely, however. Transport Minister Keiichi Ishii has declined to comment on the possibility of delays.

8. What’s at risk for the companies?

The worst-case scenario is a criminal conviction against the companies and their executives, according to Daiske Yoshida, a Tokyo-based partner at Latham & Watkins LLP. While Japanese authorities rarely prosecute cartels, criminal charges were filed against three of the nation’s ball-bearing makers in a price-fixing case earlier this decade. Shares in the four construction firms fell as much as 10 percent in the days following the first reports, but investors don’t seem overly concerned. “The market isn’t having a big reaction,” said Minoru Matsuno, president of Tokyo-based investment adviser Value Search Asset Management Co. “There is a feeling that the market accepts that for this type of large-scale project, bid-rigging is a necessary evil.”

– Bloomberg



PremjiInvest becomes the top investment company in India

When HDFC raised Rs 11,000 crore on Saturday, the list of marquee investors included one domestic fund: PremjiInvest, which invested Rs 1,000 crore in India’s largest mortgage lender. The other investors in HDFC were all established global heavyweight asset managers: Singapore’s GIC, which manages $359 billion globally, alternative asset firm KKR with a $153-billion corpus, Canadian pension fund OMERS with $85 billion, and
French AMC Carmignac which manages $74 billion of assets.

PremjiInvest, which according to three independent and conservative estimates, manages at least $3 billion of assets — predominantly in the public markets — is by far the largest family office in the country. The firm has a runway to increase assets under management to $6 billion, according to one of these sources. “There are only five mutual funds larger than PremjiInvest when you look at their public markets corpus,” said an investment banker, on the condition of anonymity.


HDFC has been among a slew of bets made by PremjiInvest, which has been active in financial services and consumer-facing companies. “The consumption thesis is important, and they look for leaders in the categories,” said a venture capital investor in Bengaluru. “They are very selective of who they invest in.”

Azim Premji began the fund in 2006, as an effort distinct from the family’s philanthropy (Azim Premji Foundation) and core business (Wipro). According to a source in knowledge of the inception, the intent was to participate in growing domestic companies.

“Mr Premji envisaged it as an investment office — not a family office,” he said, adding that Premji wanted PremjiInvest to attract professional talent from private equity and investment banking. It has been a quiet rise in the markets, with the firm abstaining from even having a website. Since then, it has grown to a 40-persons outfit beside the Wipro campus at Sarjapur Road in Bengaluru. Its investment analysts number less than 10 for private equity deals, and at least 15 for the public markets, with the remaining staff in administrative roles. On the public markets, the team actively tracks the top 200 stocks, according to one source familiar with their functioning.

“What Premji has done is the right way to do it,” said Ranjan Pai, chairman of Manipal Education and Medical Group. “He put together a really high-quality team, which has invested in both public markets and private equity,” Pai added. In January 2017, former Wipro vice-chairman TK Kurien was appointed chief investment officer of Premji Invest, succeeding Prakash Parthasarathy who is credited with building the structure and processes at PremjiInvest. In the past seven years, there has been a quiet shift in its public markets portfolio. The firm has exited from most of the companies in the broader infrastructure sector like cement (India Cement, Prism Cement), ports and logistics (Gujarat Pipavav, Gateway Distriparks) and engineering, procurement and construction (HCC, IVRCL).

Out of the 13 investments in infrastructure made by the firm, it holds only three right now: NCC, Schneider Electric Infrastructure and Ramco Cements. On the other hand, it has continued to hold most of its portfolio in the consumer space, with some positions like Parachute hair oil and Saffola cooking oil maker Marico, which have been held for nearly a decade. Of the current set of 28 known public market positions held by PremjiInvest, 12 are in consumption and retail sectors. The major ones include Domino’s franchise owner Jubilant Foodworks; FMCG players like Jyothy Labs, Marico, Zydus Wellness and retailers like Future Lifestyle Fashion, Shoppers Stop and Trent. Financial services is the next big theme in the public market portfolio, with eight of the 28 investment in banks, NBFCs and insurance companies, according to data from Prime Database analysed by ET.

This focus on financial services and domestic consumption is also reflected in the private equity investments made by the firm. Since 2015, it has invested in companies like Hygienic Research Institute, the country’s third-largest hair colour maker known for Vasmol and Streax products; ready-to-eat packaged foods maker ID Fresh Foods and ethnic apparel maker FabIndia. In financial services it has backed insurance companies like ICICI Prudential Life and HDFC Standard Life in pre-IPO rounds besides home finance company Shubham and online financial products seller Policybazaar.

After backing companies like Snapdeal and Myntra in the online retail space in 2014, it has mostly stayed away from investing in startups in India. Most of the investments in startups is now focused in the US market where it has backed artificial intelligence venture Apttus, enterprise planning cloud firm Anaplan and ServiceMax, provider of cloud-based field service management solutions. In its private investments, PremjiInvest has a 10-15 year horizon, said the source close to PremjiInvest. According to two sources, Premji Invest has left most of the tech investments to Wipro, whose core business is IT services. Under Wipro’s chief strategy officer Rishad Premji, the company has built a mechanism to invest in next-generation companies. “Premji Invest has mostly stayed away from tech, and focussed on larger ticket size investments being sector-agnostic,” said one of the sources cited above.

“They don’t go by the hype, but fundamentals of a business,” said the VC investor. “They know the metrics that need to be driven, and the governance levels that need to be driven,” he added. Premji Invest has had sour experiences with investments like retail chain Subhiksha in 2008, when it had infused Rs 230 crore. Some other investments like car services player Carnation Auto and online marketplace Snapdeal have also not worked out. Crucially, according to the sources, having started out early has helped Premji Invest stay the course and lead a fast-growing tribe of family offices. “They are the most organised of family offices in terms of strategy,” the VC investor said. “Family offices tend to be opportunistic because they are driven by a successful promoter. Premji Invest is the most organised–opportunities by sector and intrasector categories. They bring a lot of conviction into the thesis.”

  • ET


Simple Strategies to Help Focus

In today’s always-on, information-overloaded world, it can be hard to stay focused throughout the day. How often do you find yourself distracted by inner chatter during meetings? Or how often do you find that emails are pulling you away from more important work? We’ve surveyed and assessed more than 35,000 leaders from thousands of companies across more than 100 countries, and found that 73% of leaders feel distracted from their current task either “some” or “most” of the time.

simple strategies

We also found that 67% of leaders describe their minds as cluttered, which means they have a lot of thoughts and a lack of clear priorities. As a result, 65% of respondents fail to complete their tasks. The biggest sources of distraction are: demands of other people (26%); competing priorities (25%); general distractions (13%); and too big of a workload (12%). Not surprisingly, 96% of leaders we surveyed said that “enhanced focus” would be valuable or extremely valuable.

While those numbers are alarming, they also represent a massive potential for improved performance and effectiveness. If there is one secret to effectiveness, said leadership pioneer Peter Drucker, it’s concentration. In our age of information overload, this is truer now than ever before.

The ability to apply a calm, clear focus to the right tasks — at the right time, in the right way — is the key to exceptional results. Even one second of misplaced focus can mean wasted time or worse missing a key opportunity like a facial cue from a client during a tough negotiation.

One of the CEOs we interviewed, Jean-Francois van Boxmeer of Heineken, put it this way: “My role does not allow for a lack of focus. I can’t afford to be distracted. I must be on point. I have trained my focus while at work for 15 years, moment-to-moment. I feel the brain is like a muscle, and I exercise it all the time.”

In fact, in our ten years of experience, we have observed a direct correlation between a person’s focus level and their career advancement. Of the thousands of leaders with whom we’ve worked, the vast majority possess an above average ability to focus. This is not to say that exceptional focus is a sure way to the top. But certainly, without focus, career success will be much more difficult to attain. For aspiring leaders, focus should be a daily mantra.

Much has been written about how you can better maintain your focus, and mindfulness practice is obviously the foundation of enhancing focus. But in our research, we looked at some new areas that enable you to manage your focus. Here’s how to do it.

Understand Your Daily Focus Pattern

We looked at how well leaders are able to focus during the day, and found a very clear pattern.

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How Frustration Causes More Harm Than Losing Money While Trading

Frustration is the antithesis of confidence and euphoria. It can cripple you and distract you from your sense of persistence and determination. Unlike other teachers, I don’t put a negative connotation on euphoria – as long as you don’t abandon your trading rules, have at it. You can avoid frustration in the first place by “not” having expectations of the outcomes of anything (or any trades). This is not the same thing as Expected Value, but an emotional expectation about the result of something you’re endeavoring – such as trading.


One sure-fire way to decrease frustration in your trading is to make sure that you’re protective stop is not placed inside the 20-day ATR of the instrument that you’re trading. For example, say you’re trading an instrument that has a 20-day ATR of 15 points. If you’re long and the current market value is 535 and you’ve placed your stop at 530 because you have set 5 points as your max loss point, you are more than likely to get stopped given that you’re stop is well within the ATR. Many times, traders with smaller accounts do just this because they don’t want bigger losses. This is respectable and totally understandable.

In the above example, you can trade a smaller position and give your smaller position a greater latitude by placing your protective stop at 520 (535-15). You can test this strategy. You might find that you are not getting knocked out of as many such trades and, if you are trading in strong trends, take the risk home overnight and let the market forces, time, and leverage work for you.

In our coaching and teaching, we’ve found that traders disregard the daily vol of the instrument their trading as if it was going to change because the trader put a trade on. This leads us to believe that the feeling of frustration is going to be an integral part of a particular trader’s emotional system until they change their trading behavior.

We can’t change the nature of things. The instrument that you’re trading isn’t going to change how it behaves just because you’re in the trade. Chart readers put faith in patterns without knowing the expected values of the trades, but put the trades on anyway. In order to avoid the frustration that you get from having blind faith, you can always backtest your rules or stop trading pattern altogether.

Let the feeling of frustration become an “early warning system” for you to put a halt to whatever you’re doing, especially if it arises from your trading. Frustration can lead to “revenge trading” and most people who did so, didn’t want to burn through their trading capital because they were angry in retrospect. Most find this out too late.

Frustration stems from your behavior, not the instrument that you’re trading. If you’ve put faith or belief system in a chart pattern but you don’t know the expected value of the trade, you can eliminate the frustration by putting an “emotional stop” in place and not do the behavior in the first place. You can’t experience frustration from paper trading, but you can get a bumper crop of it from trying to day trade.



Croatia: Small Country With So Much To Offer

Croatia is no doubt a beautiful country with excellent attraction sites second to none. It is among the top Europe tourist destinations that tourists from various parts of the world flock to enjoy their holiday. Croatia has outstanding natural attraction sites as well as old cities and other spectacular historical ruins. A Croatia sailing trip cannot be compared to any other. Below are five of the top attractive places, you ought to visit.

krka national park

Krka National Park

It derives its name from the Krka River situated along it. Krka National Park is an exact definition of nature. Its beautiful and numerous gushing waterfalls are what every tourist looks forward to seeing once they arrive. The waterfalls form beautiful pools of clear water which you can never get tired of staring at. If you love swimming, then these pools are a perfect place too. With the freshness and calmness of the water, you can be sure to enjoy the experience. There are also walkways and boat excursions just for you to have a perfect view around the park.


This a very old city on the coastline of Croatia which has been in existence for over three thousand years. A visit to this place gives you a chance to swim, sunbathe or just relax. Zadar is a tourist destination for the people who want to have a glimpse of the history of Croatia. Tourists do not overcrowd it like most of the other places, and this gives you an excellent chance to see many things at your own pace as well as engage yourself in numerous activities. While in Zadar, you can also tour its Old town which is filled with fantastic attractions like beautiful old churches and medieval architecture.

Dubrovnik Croatia


It defines the height of touring Croatia. It has numerous eye-catching sites like old defensive walls, splendid palaces among other breathtaking sceneries. Dubrovnik is an ancient city that was started in the 7th century. Dubrovnik is located towards the south of Croatia. Its closeness to the well known Banje and Lapad beaches gives you an extra opportunity to visit more beaches. Dubrovnik is also near Lokrum island. Korcula


This is an island off the Adriatic coast of Croatia. Its amazing green forests, sandy beaches, historic sites, charming villages are just but a few of the wonderful attractions in the area. Korcula is alleged to be the place of birth for Marco Polo, the famous merchant traveler. Visiting this site gives you an opportunity to experience and enjoy different views within the same area. Its beauty creates a memory that will linger around for many years to come.

plitvice national park

Plitvice National Park.

The most outstanding features of the Plitvice National Park are its numerous lakes, waterfalls in addition to the vast forest. The view of the park is impressive and spectacular. These features make the park unique and marvelous especially with the 16 lakes that interconnect. It’s a site to behold. It has wooden walkways which you can use to walk around. You can as well opt for a boat and enjoy the view.

Alex Dragas (Guest Writer)