9. Avenues of Investments
• Saving Account
• Fixed Deposits
• Commodities-Precious Metals, agricultural
commodities etc.
• Real Estate
• Bond
• Direct Equity and Equity Mutual funds
11. The Only Saviour
Equity- The portion of the business that belongs
to the shareholder.
• You could choose to start your own company
and be the majority shareholder.
or
• You could invest in public listed companies as
a minority shareholder.
12. Majority Shareholder Mindset
• To invest money and time today for future
comfort.
• Loves making decisions on his own.
• Basically, an entrepreneur's mindset.
13. Minority Shareholder’s Mindset
• To invest money today for future comfort.
• Is happy playing the sleeping partner.
• Basically, a lazy bugger’s mindset!
17. Unique Product makes a Franchise
Business
Has pricing power and produces high return on Invested
money
18. Me too Product makes a
Commodity Business
Competition curtails pricing power and hence generally low
return on invested money.
19. Antidotes to a commodity Business
Low-cost Producer And/or An Exceptional Manager
What the Image for low cost producer is depicting ?
Largest player has the advantage of scale.
39. Availability Bias
Facts –
As per a study done in the US, the chances of
a plane crash are roughly 6,000,000 to one, or
0.00002%
More people are killed every year by
drowning in swimming pools than those who
died in Flood.
41. Ad on Website for Subscription
Check the following ad in the website of a magazine
about various subscription options -
• 1 year online subscription – Rs. 600
• 1 year print subscription – Rs1250
• 1 year online and print subscription – Rs1250
Which option you would select ?
42. Another Ad
Now which option would you choose?
• 1 year online subscription – Rs 600
• 1 year online and print subscription – Rs 1250
43. Results
Both options given to 100 Students and results
were :
In the First Case –
• Option A – 16 students
• Option B – 0 students
• Option C – 84 students
In Second Case –
• Option A – 68 students
• Option B – 32 students
Why is the behaviour so different?
48. Antidote of Mere Association Bias
• Measure people, things and situations on
their own merits and not because they belong
to a certain category or group.
• Experiences are context dependent. The same
experience with another context can produce
a different result.
54. “To the man with only a hammer,
every problem looks like a nail.”
55. What is Mental Model ?
Model is a general rule developed through
experience, supported by proper theory.
You need multiple such models – because the
nature of human psychology is such that you’ll
torture reality to fit selective models.
57. Mental Models
Mathematics - Probability, Compounding etc.
Psychology – Association, Process Vs Outcome etc.
Accounting – Earning, Depreciation etc.
Economics – Opportunity Cost, Supply &
Demand etc.
Engineering – Feedback loops, Breakpoint etc.
Physics – Momentum, Critical Mass etc.
Biology – Evolution, Neuro Network etc.
58. How to earn Mental Models ?
Be a Shameless Learning Machine !!!