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11 Ways to Beat the Monday Blues!

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April 17, 2023

Does the start of your workweek trigger overwhelming feelings of anxiety, sadness, or stress? Do you lack passion and motivation on Monday morning? Are you sluggish or tense?

If you’re nodding affirmatively, you might have a case of the Monday Blues.

“The ‘Monday Blues’ describe a set of negative emotions that many people get at the beginning of the workweek if they’re not happy at work. “It contains elements of depression, tiredness, hopelessness and a sense that work is unpleasant but unavoidable.”

The Monday Blues are so prevalent that they have become a cultural phenomenon, “and this makes it easy to laugh them off as ‘just the way things are,’” he says. “But they can be much more than just a passing tiredness; they are often a serious warning sign that something is not right at work. If you were happy, you’d be excited and energized on Mondays, not tired and depressed.”

Rita Friedman, a Philadelphia-based Career Coach, agrees. “If you love your job and are passionate about what you’re doing, going in to work Monday morning is another opportunity to do what you love,” she says. “But if you’re feeling under-appreciated or unsatisfied with your job, it can be especially difficult to start another seemingly endless workweek.”

As it turns out, your case of the Mondays can have a negative impact on your performance and productivity—as well as the people around you.

“We know from countless studies in psychology and neurology that your current emotional state has a huge effect on the quality of your work and when you’re feeling blue you are less productive, less motivated, more pessimistic, less creative, less engaged and learn more slowly–just to mention a few effects,” Kjerulf says.

The Monday Blues are contagious. “Your stress or bad mood can drastically change the overall work environment”.

Everyone’s productivity is affected by your Monday Blues. “When you’re unhappy at work, it makes it very difficult for those around you to be happy, and oftentimes just one worker with a case of the Mondays can spread the doldrums to the whole team.”

Here are 11 ways to beat (or avoid) the dreaded Monday Blues:

  1.  Identify the problem. “The first thing to do is to ask yourself what’s wrong,”. If you have the Monday Blues most weeks, then this is not something you should laugh off or just live with. It’s a significant sign that you are unhappy at work, and you need to fix it or move on and find another job.

We suggest making a list of the things that are bringing you down in your job. “Maybe it’s a negative co-worker or a meeting with your boss first thing on Monday morning, or maybe it’s that you don’t feel challenged–or maybe it’s all of the above,” she says. “In either case, clarifying what is bothering you can help you try to be active in finding solutions. It’s a way of empowering you to take charge and try to improve the situation.”

If you only suffer the occasional bout of mild Monday Blues, then you can do some things to successfully cheer yourself and others up on an otherwise dreary Monday.

  1. Prepare for Monday on Friday. “Mondays can be extra stressful from work that has potentially piled up from the previous week and, for many, can be challenging to jump right back in,”

To help combat that Monday morning anxiety, be sure to leave yourself as few dreadful tasks as possible on Friday afternoon, Friedman says. “By taking care of the things you least want to handle at the end of one work week, you’re making the start of the next that much better.”

If you do have any unpleasant tasks awaiting your attention Monday morning, get them done as early as possible so that you don’t spend the rest of the day procrastinating or “feeling as if there’s a black cloud hanging over your head,” she says. “Make that uncomfortable phone call, resolve that outstanding issue, or clean up that mess that’s waiting for you. You’ll feel a lot better once it’s over.”

You’ll also want to make sure your calendar is up to date and synched, and you have a good view of and handle on your upcoming work week–especially Monday. “What do you need to prepare for and get organized with? Get it done Friday, or by Sunday, if possible.”

  1. Make a list of the things you’re excited about. “We often look at the week ahead of us and think of all the tough stuff we have to do and the difficult tasks ahead of us. “Turn that around. Sunday evening, make a list of three things you look forward to at work that week. This might put you in a more positive mood. If you can’t think of three things you look forward to, that might be an indication that you need to make some changes.”

  1.  Unplug for the weekend. If possible, try to avoid checking work e-mail or voicemail over the weekend, especially if you’re not going to respond until Monday anyway. “It can be tempting to know what’s waiting for you, but drawing clearly defined boundaries between work and personal time can help keep things in check. When you leave the office on Friday, leave your office problems there and focus on enjoying your time off. Sometimes going back to work on Monday feels especially frustrating because you let it creep into your off-time, and so it never even feels like you had a weekend at all.”
  2. Get enough sleep and wake up early. Go to bed a little early on Sunday night and be sure to get enough sleep so that you wake up feeling well-rested. “If you’re only running on a couple of hours of sleep, it’s unlikely that you’re going to feel good about going anywhere when the alarm goes off Monday morning.”

Although it might seem counter-intuitive, waking up an extra 15 to 30 minutes early on Monday morning can actually make going back to the office easier. “Having a little more ‘me time’ instead of feeling like you’re trapped in a time crunch can make that transition a little easier,” she says. “Taking the time to enjoy a healthy breakfast, do some exercises, or take the dog for a walk can help you feel more cantered for the rest of the day, and can help you remember that you’re not a robot who just sleeps and works.”

  1. Dress for success. “Dress up, perk up and show up ready to be positive and help others be positive,”. “Be the light and energy that makes others have a better day. Show and share your spirit, charisma and vibe and make yourself magnetic.”

We suggest you use Monday as the day to wear your favourite new outfit. This can help build your confidence around the office and might get you a few compliments from co-workers.

when you look good, you feel good. “Feeling good about yourself is half of the battle on Monday mornings, because rather than being deflated by work you want to face it with confidence.”

  1. Be positive. Start the week out with an “attitude of gratitude,”. “Take time to recognize and appreciate the things that you enjoy about work.”

This starts before you even get to work. To pump yourself up on your way in to work, try listening to your favourite songs, “Think about the type of playlist you would create for a workout, and incorporate that same upbeat, high-energy music into your morning preparation or commute.”

When you get to the office, do your best not to be a complainer–and keep your Monday morning grumpiness to yourself, “In the same vein, don’t listen to other people’s Monday gripes. Creating or contributing to a culture of complaining is no way to improve your attitude.”

you must make a decision to turn negative reluctance and dread into a “positive, productive and excited welcome to Monday energy.” Start with Friday and make sure your desk is organized, and your work to-do list is ready to go for the following week. “Take Sunday to rest, review and reward, but plan for and get ready to leap into Monday.”

If you’re able to be a source of positivity in the workplace, not only will you make your day more enjoyable, but you’ll also make the work environment better for those around you.

  1.  Make someone else happy. Make a vow to do something nice for someone else as soon as you get to work on Monday. “Doing nice things for other people definitely can lift the spirits, and in this case, it could actually help shift the overall mood in your office. “Paying it forward can yield great results all around.”

He says we know from research in positive psychology that one of the best ways to cheer yourself up is to make someone else happy. “You might compliment a co-worker, do something nice for a customer, help out a stranger on the street or find some other way to make someone else’s day a little better.”

  1. Keep your Monday schedule light. Knowing that Mondays are traditionally busy days at the office, a good strategy is kept you Monday schedule as clear as possible, “When you’re planning meetings ahead, try to schedule them for Tuesdays and Wednesdays. This will help you to come into Monday with more ease from the weekend.”

Instead of tackling the biggest and most complicated tasks early on Monday, take some time for easier, more routine stuff, “This might get you up and running and give you the energy for the hairier tasks.”

But beware: If you have too much free time—you’ll sit around “feeling blue,”

  1. Have fun at work. Take it upon yourself to do things that you enjoy in the office on Monday, “Maybe bring donuts for your colleagues or take a quick break to catch up with friend in the office. Sharing stories about the weekend with co-workers can be fun and also is a great way to strengthen your interoffice network.”

To schedule a weekly Monday coffee break or lunch with a friend. “Create an event that you will look forward to on Mondays as a way to break up the day with some known positivity.  At the very least, it gives you a chance to take a deep breath, talk with a friend, and regroup for the rest of the day.”

  1. Have a post-work plan. Your day shouldn’t just be about trudging through Monday to get it over with, but about looking forward to something. “By making Monday a special day where you get to go out with friends, make your favourite dinner, or eat a bowl of popcorn and catch up on a TV show you recorded, the day doesn’t have to be all about getting up to go into the office,”.

 

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Re-Emergence of Hybrid Funds: A Tax-Efficient Route to a Combination of Equity, Debt and Gold

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April 17, 2023

As per the proposed amendments in the Finance Bill, 2023, income from any mutual fund investing not more than 35% of its total proceeds in the equity shares of domestic companies, shall be treated as short term capital gains on after April 01, 2023.

Against this backdrop, investors can consider hybrid funds as feasible addition to the portfolio.

Why does investing in Hybrid Funds makes more sense in the Current Scenario?

An investor, who is willing to take additional risk, can consider adding hybrid funds (with a gross exposure of over 65% to equities) to his or her portfolio to get incremental exposure to debt on or after April 01, 2023. By investing in these funds, investors can benefit from tax-efficiency, as they will be taxed as equity-oriented funds.

As per The Income Tax Act, 1961, the taxation of capital gains for an equity-oriented fund, for an individual investor, in the short term (holding period less than equal to 12 months), the capital gains are taxed at 15% (plus applicable surcharge and cess). In the long term (holding period greater than 12 months), the capital gains are taxed at 10% (plus applicable surcharge and cess) for gains exceeding INR 1 lakh.

Since the tax levied on the capital gains will be at the investor’s personal income tax rate for investments in debt funds on or after April 01, 2023, getting incremental exposure in debt through hybrid funds can be a more tax-efficient route for an individual investor.

Why should an investor consider Asset Allocation?

In Hindustani Classical Music, an octave, also known as Saptak, comprises of the following 7 notes – Sa Re Ga Ma Pa Dha Ni. Interestingly, every song is created using a combination of all the 7 notes. By judiciously combining these notes, a composer makes listening to music, a stress-free experience.

Just like this combination equates to a stress-free experience, allocating to different asset classes helps in making an investor’s investment journey less stressful!

Why should an investor consider investing in Hybrid Funds?

When investing in hybrid funds, investors can allocate their assets to different asset classes. What does this mean? Primarily, an investor can consider allocating towards 3 asset classes, namely:

  • Equity: Providing growth of capital
  • Debt: Providing stability to capital
  • Commodity: Hedge against inflation and uncertainties

 

While each asset class has a specific role to play, different asset classes perform differently under each market cycle. For example, while equity markets fell sharply during onset of COVID-19 pandemic, both debt and gold saw a modest rise during the same period.

As these asset classes have low or negative correlation amongst themselves, investment in multiple asset classes can help in reducing the volatility (measure of risk) of the overall portfolio during period of sharp movements in a single asset class. This non-linear relationship between the asset classes is the key reason for hybrid funds being a great addition to an investor’s portfolio.

For further clarity, let us have a look at the graphs below. Taking one scenario from Chart 2 – An investor’s portfolio has an allocation of 60% towards domestic equity, 30% towards debt and 10% towards gold. For this portfolio, in comparison to pure equity, while the gross compounded annualized returns over 20 years fell by a mere 1.7%, the volatility has reduced significantly – by 7.4%!

1

Source: www.niftyindices.com, World Gold Council. Data for last 25 fiscal years from April 2002 to February 2023. Returns are compounded annualized in nature. Data used for asset classes: Equity – NIFTY 50, Debt – NIFTY 10-year Benchmark GSec, Gold – Spot Rate INR/10 Grams. Monthly portfolio rebalancing assumed. Standard Deviation calculated using daily returns. HDFC Mutual Fund/AMC is not guaranteeing future returns of these asset classes. The above combinations are for illustrative purpose. Investors are requested to take professional advice while making investment decisions. *E: Equity, D: Debt, G: Gold

The selling of securities within a mutual fund portfolio is exempt from tax under Section 10(23D) of the Income Tax Act, 1961. As a result, the re-balancing of portfolio between asset classes within a hybrid fund also does not attract any tax. Hence, asset allocation through a hybrid fund is highly tax efficient as compared to investors doing the same on their own.

Consider investing from our Suite of Hybrid Funds

While there are multiple choices to opt from the suite of Hybrid Funds offered by HDFC Mutual Fund, it is important to assess risk tolerance level before choosing a hybrid fund. Based on the asset allocation, especially the exposure to equities, each hybrid fund differs from another. The net equity allocation ranges from minimum 15% to maximum 100%, and there are four different categories under hybrid funds to suit different investor segments from conservative to aggressive:

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Year 2023 : Secrets of Keeping & Failing your New Year Resolutions.

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January 12, 2023

A habit takes 66 days to form on average, but we give up our resolutions way before that. Here’s how to ace your 2023 ‘promises to the self’

January 16th is important date coz Most New year resolution will start falling flat from this Day onwards or some way before that .

Here’s Why ?

Enjoyment is an Important Factor :-

Both enjoyment and importance were important in terms of how successful one would be in sticking to their resolution in the future.

Contrary to popular belief, enjoyment predicted long-term persistence. In other words, we make a fundamental psychological error when we assume that we will stick to the plan to achieve the goal simply because it is clearly important to do so.

What really matters is how much we enjoy our initial efforts to begin a new habit, such as a fitness regimen or a diet change. That’s why Quick wins & accountability Partner or mentor is so important . They keep you going in those odd days & make sure you have those rewards / or quick wins in between.

Read on..

Why New Year Resolutions are necessary in the first place or why we are so bad at sticking to fitness resolutions and health goals :-

According to Professor Seppo Iso-Ahola, changing our lifestyle to improve our chances of living a long and healthy life is surprisingly simple at one level. He emphasizes that a healthy lifestyle consists of only four key health behaviors: regular exercise, no smoking, a healthy diet, and moderate alcohol consumption. According to this study, if people followed only these simple strategies for the rest of their lives, they would live seven years longer.

His study, ‘Conscious-Nonconscious Processing” Explains Why Some People Exercise But Most Don’t,’ delves into understanding why we don’t exercise when we should boils down to understanding what happens when we have to think about the decision to exercise.

How much of this decision is conscious wrestling with yourself over what you should do versus what you really want to do will predict how likely you are to stick to your fitness resolution.

Once you get started and establish a set of health routines, they begin to operate below conscious awareness, so you don’t have to think about them too much. The benefits of exercise then become a positive feedback loop; physical activity improves our self-esteem and directly improves our mental health, well-being, and brain function.

Learning or taking up a new sport, increases brain grey matter. Physical activity increases the size of the hippocampus, the part of the brain dedicated to memory, which improves recall and may even delay or prevent dementia, the report says.

when people get home from work, it is the first time during the day when they feel “it is my time to do whatever I want,” and thus they do not want to be told what to do (i.e., you have to go for a run). This is the last time they want to have to make difficult decisions.

Choosing to exercise at this precise moment is mentally taxing and undermines their sense of freedom for occasional exercisers and non-exercisers, whereas other common leisure activities (e.g., TV watching) do not. As a result, the “law of least effort” is followed while satisfying the fundamental need for autonomy, making couch-potato a formidable psychological barrier for would-be exercisers.

The psychological trick here is for exercise to become a forced “choice”.

Professor Seppo Iso-Ahola refers to this as the systematic construction of a ‘exercise infrastructure’.

This could include, for example, changing your environment to encourage you to exercise. It could mean leaving your gym clothes out on your couch as a nasty reminder of what you should be doing instead of watching TV, or choosing a time of day when there is less competition from other activities you enjoy doing – perhaps first thing in the morning or at lunchtime. Or enlist the help of others to go running with you, so that the knock on the door makes it more difficult to stay in and watch TV.

After a sufficient number of repetitions, exercisers can progress to the point where they make a permanent decision to exercise regardless of daily circumstances.

According to Professor Seppo Iso-Ahola, once a high level of habituality has been attained, it is difficult to break the habit.

Five ways to have Successful Resolutions :-

A habit takes 66 days to form on average, and education is ineffective at changing behaviour. A review of 47 studies discovered that changing a person’s goals and intentions is relatively easy, but changing their behaviour is much more difficult . Strong habits are frequently activated unconsciously in response to social or environmental cues.

Here are the five tips to help one stick to their New Year’s resolutions:

  1. Determine your priorities: Willpower is a limited supply. Resisting temptation depletes our willpower, leaving us open to influences that reinforce our impulsive behaviour. We often make the mistake of being overly ambitious with our new year’s resolutions. It is best to prioritise goals and concentrate on one behaviour. Small, incremental changes that replace the habit with a behaviour that provides a similar reward are the best approach. Diets that are too strict, for example, demand a lot of willpower to stick to, the report explains.
  2. Modify your routines: Routines are where habits are formed. Routine disruption can thus prompt us to adopt new habits. Major life events, such as changing jobs, moving, or having a baby, all promote new habits because we are forced to adapt to new circumstances. Routines can increase productivity and add stability to our social lives, but they should be chosen with caution. People who live alone have stronger routines, so if you do, using a dice to randomise your decision making could help you break your habits.
  3. Keep track of your actions: “Vigilant monitoring” appears to be the most effective approach to breaking bad habits. This is the stage at which people actively monitor their goals and regulate their behaviour in response to various situations. A meta-analysis of 100 studies found that self-monitoring was the most effective of 26 different strategies for promoting healthy eating and physical activity, the report said.
  4. Visualize yourself in the future: To make better decisions, we must overcome our tendency to prefer rewards now rather than later – a phenomenon known as “present bias” by psychologists. One way to combat this bias is to plan for the future. Our future self is virtuous and pursues long-term goals. Our current self, on the other hand, frequently pursues short-term, situational goals.
  5. Establish objectives and deadlines: Setting self-imposed deadlines or goals assists us in changing our behaviour and developing new habits. Assume you intend to save a certain amount of money each month. Deadlines are especially effective when they are linked to self-imposed rewards and penalties for good behaviour.

To know more & be part of  for Life changing community that works on “Kaizen” , Register atEWN Growth Multiplier program conducted online every Friday at 8 PM that Covers four pillars of Human aspects (Healthset / Wealthset / Mindset / Careerset ) for your professional &personal growth & success.

Register here at https://zfrmz.in/fv47zYixWmbenKBmBVyV to get a call back from our Team.

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“Cryptocurrencies have risks, but don’t overlook the opportunities they present”

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October 9, 2021

Cryptocurrencies are products of free markets.

Last month, the Government of El Salvador announced that it would start accepting Bitcoin as legal tender. This is the latest major development in the on-going debate around cryptocurrencies, and the road ahead.

Important facts :-

  • El-Salvador Govt accepted Bitcoin as digital currency .in June,2021.

  • Before June only 30% of El-salvador population had an account at a bank .

To promote the currency’s use, the El-Salvador government has created a cellphone application — Chivo Wallet — which allows citizens, including many who do not have bank accounts, to send and receive bitcoin-denominated claims, convert them to dollars and withdraw them from special ATMs. It also gave $30 in bitcoin to every Salvadoran who adopts the wallet.

Within a span of 3 Months , El-Salvador has more population holding Bitcoin wallet than bank account ever opened in last 100 years.

Blockchain truly have potential to bank the banked & its uses are far more impactful than otherwise.

The debate has gained volume in India too. While the Government of India and the Reserve Bank of India (RBI) measure the pros and cons of allowing a free play of cryptocurrencies, the emergence of cryptocurrency exchange apps indicates that the markets are running ahead of the regulation.

As we debate the scope and desirability of cryptocurrencies, here are some of the factors that should be weighed in.

Acceptance of innovation: The power to issue currency is one of the foundational pillars of a modern nation state. Any innovation that competes with this power is bound to be resisted. The GOI and the RBI should resist the temptation of viewing cryptocurrencies as an alternate to fiat currency. In the spirit of regulatory sandbox, it should allow private parties to use cryptocurrencies for mutual contracts. As its usage expands, we stand to learn at the cost of private capital.

Eradicate anonymity: Blockchains — the underlying technology on which cryptocurrencies are based — ride on the power of anonymous participants. If the asset class wants to be included in the formal financial system, the owners and holders of it cannot remain anonymous.

Our financial system is based on and strives to identify all participants under the KYC (know your customer) doctrine. Therefore, all cryptocurrency holders should disclose their identity, source of the funds they’ve deployed in it, and the end use of the currencies needs to be monitored.

The KYC disclosures will also bring usage of cryptocurrencies under the ambit of the existing anti-money laundering rules. Questions have also been raised on where do cryptocurrencies, a US dollar denominated asset, fall in the scope of the Foreign Exchange Management Act. The government should consider including cryptocurrency investments within the ambit of the Liberalised Remittance Scheme (LRS). These holdings can be clubbed investors global assets and attract current taxation regime applicable to global assets.

No backstop: The importance of stating that there is no backstop if cryptocurrencies fail cannot be understated. The government should clearly communicate that cryptocurrencies are not back stopped by the sovereign, they are not a part of any deposit guarantee programmes, there are no guarantees on investments made, and they will not be considered collateral for loans issued by any financial intermediary. Participants of the cryptocurrency exchange should be made aware that they are investing in an asset that has its unique risks vis-à-vis pricing and liquidity. Caveat Emptor.

Regulatory oversight: Treating cryptocurrencies as financial assets that operate under the paradigm of private party contracts, implies that they be regulated by capital markets regulator: Sebi. Sebi has extensive experience of regulating a gamut of financial products, and overseeing exchanges where these instruments trade. Sebi also has experience of developing and managing independent bodies-depository participants that provide transparency, and risk management frameworks for capital market products.

Educate and inform: As it does for financial products such as insurance and mutual funds, the government and the regulator should focus on informing and educating investors on the risks associated with cryptocurrencies.

Wider use of blockchain: Cryptocurrencies are based on the blockchain technology, which is a publicly recorded, verified, accessible, and immutable stack of information. For a country our size and one where the design and structure of the State make accessing information a humongous task, any innovation that helps accessing information more easily should be encouraged.

Blockchain could come handy for digitising and updating land records. The government can create a blockchain, and make information on land records more accessible. Thus, a blanket ban on the most popular product (cryptocurrency) in blockchain technology could deprive us of its other, possibly more impactful, uses.

Let the markets play: Cryptocurrencies are products of free markets. They are an example of voluntary participation by market players, and private capital testing the limits of a new technology. As long as we have ringfenced the stability of the financial system, and clearly communicated that all risk of innovation failing is on the participants, we should let the markets play.

The government and the RBI should focus on ensuring there are no spill overs from private contracts going bust on public markets, and restrict any regulation at this stage only on achieving that.

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What history tells you about post-pandemic booms

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June 10, 2021

People spend more, take more risks—and demand more of politicians !

The cholera pandemic of the early 1830s hit France hard. It wiped out nearly 3% of Parisians in a month, and hospitals were overwhelmed by patients whose ailments doctors could not explain. The end of the plague prompted an economic revival, with France following Britain into an industrial revolution. But as anyone who has read “Les Misérables” knows, the pandemic also contributed to another sort of revolution. The city’s poor, hit hardest by the disease, fulminated against the rich, who had fled to their country homes to avoid contagion. France saw political instability for years afterwards.

Today, even as covid-19 rages across poorer countries, the rich world is on the verge of a post-pandemic boom. Governments are lifting stay-at-home orders as vaccinations reduce hospitalizations and deaths from the virus. Many forecasters reckon that America’s economy will grow by more than 6% this year, at least four percentage points faster than its pre-pandemic trend. Other countries are also in for unusually fast growth (see chart ).

 The data analysis of GDP data for the G7 economies going back to 1820 suggests that such a synchronized acceleration relative to trend is rare. It has not happened since the post-war boom of the 1950s.

The record suggests that, after periods of massive non-financial disruption such as wars and pandemics, GDP does bounce back. It offers three further lessons. First, while people are keen to go out and spend, uncertainty lingers. Second, crises encourage people and businesses to try new ways of doing things, upending the structure of the economy. Third, as “Les Misérables” shows, political upheaval often follows, with unpredictable economic consequences.

Take consumer spending first. Evidence from earlier pandemics suggests that during the acute phase people behave as they have during the past year of covid-19, accumulating savings as spending opportunities vanish. In the first half of the 1870s, during an outbreak of smallpox, Britain’s household-saving rate doubled. Japan’s saving rate more than doubled during the first world war. In 1919-20, as the Spanish flu raged, Americans stashed away more cash than in any subsequent year until the second world war. When that war hit, savings rose again, with households accumulating additional balances in 1941-45 worth some 40% of GDP.

History also offers a guide to what people do once life gets back to normal. Spending rises, prompting employment to recover, but there is not much evidence of excess.

The 1920s were far from roaring, at least at first. On New Year’s Eve 1920, after the threat of Spanish flu had decisively passed, “Broadway and Times Square looked more like the old days”, according to one study, but America nonetheless felt like “a sick and tired nation”. A recent paper by Goldman Sachs, a bank, estimates that in 1946-49 American consumers spent only about 20% of their excess savings. That extra spending certainly aided the post-war boom , though the government’s monthly “business situation” reports in the late 1940s were nonetheless filled with worry of an impending slowdown (and indeed the economy went into recession in 1948-49). Beer consumption actually fell. Consumers’ caution may be one reason why there is little evidence of pandemic-induced surges in inflation (see chart ).

The second big lesson from post-pandemic booms relates to the “supply side” of the economy—how and where goods and services are produced. Though, in aggregate, people appear to be less keen on frivolity following a pandemic, some may be more willing to try new ways of making money. Historians believe the Black Death made Europeans more adventurous. Piling on to a ship and setting sail for new lands seemed less risky when so many people were dying at home. “Apollo’s Arrow”, a recent book by Nicholas Christakis of Yale University, shows that the Spanish flu pandemic gave way to “increased expressions of risk-taking”. Indeed a study for America’s National Bureau of Economic Research, published in 1948, found that the number of startups boomed from 1919. Today new business formation is once again surging across the rich world, as entrepreneurs seek to fill gaps in the market.

Other economists have drawn a link between pandemics and another change to the supply side of the economy: the use of labour-saving technology. Bosses may want to limit the spread of disease, and robots do not fall ill. A paper by researchers at the IMF looks at a number of recent outbreaks of diseases, including Ebola and Sars, and finds that “pandemic events accelerate robot adoption, especially when the health impact is severe and is associated with a significant economic downturn.” The 1920s were also an era of rapid automation in America, especially in telephone operation, one of the most common jobs for young American women in the early 1900s. There is as yet little hard evidence of a surge in automation because of covid-19, though anecdotes abound.

Whether automation deprives people of jobs, however, is another matter. Some research suggests that workers in fact do better in the aftermath of pandemics. A paper published last year by the Federal Reserve Bank of San Francisco finds that real wages tend to rise. In some cases this is through a macabre mechanism: the disease culls workers, leaving survivors in a stronger bargaining position.

In other cases, however, rising wages are the product of political changes—the third big lesson of historical booms. When people have suffered in large numbers, attitudes may shift towards workers.

Pandemics expose and accentuate pre-existing inequalities, leading those on the wrong side of the bargain to look for redress. Ebola, in 2013-16, increased civil violence in West Africa by 40%, according to one study. Recent research from the IMF considers the effect of five pandemics, including Ebola, Sars and Zika, in 133 countries since 2001. It finds that they led to a significant increase in social unrest. “It is reasonable to expect that, as the pandemic fades, unrest may re-emerge in locations where it previously existed,” researchers write in another IMF paper. Social unrest seems to peak two years after the pandemic ends.

That seems to be happening this time: policymakers across the world are less interested in reducing public debt or warding off inflation than they are in getting unemployment down to reduce social unrest down.

Having said above Enjoy the coming boom which Pandemic brings, but boom may be not be linear.

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Should an investor buy a stock at a PE ratio of 50 ?

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April 7, 2021

Value investing principles say that buy low and sell high. One should buy stocks cheap with a wide margin of safety when no one else wants to buy stocks and sell during the next bull run when valuations may become overstretched.

There are a lot of things that have to be taken into consideration during stock-picking. One such key performance indicator is the PE ratio. The Price to Earnings ratio is the ratio of a company’s share price to the company’s earnings per share.

The ratio is used for valuing companies and to find out whether they are overvalued or undervalued. And so here comes the question, should a value investor buy a stock at PE ratio 50?

Let us challenge our understanding of  investing using the case study of Company – M/S Deepak Nitrite.

What happened if you bought Deepak Nitrite in Jan-18 – a Rs 4,000 Cr market-cap company was trading at a PE ratio of 50.

Stock Price of Deepak Nitrate at 50 PE in Jan,2018 was 282.45/- . Its valued 1646.30 /- In April,2021.

The Finance Minister imposed the long-term capital gains tax (LTCG) when she announced the budget on 1st Feb-18. The markets reacted violently to this announcement and Jan-18 turned out to be the top of the Sep-13 to Jan-18 bull-run.

Small and midcap stocks were especially battered and midcap investors lost a lot of money over the next 2 years. In fact, anyone who bought mid/small caps then was considered foolish.

But, Deepak Nitrite, a midcap company, was running a different race. Was it foolish to buy Deepak Nitrite in Jan-18 at a PE ratio of 50 at the top of the Sep-13 to Jan-18 bull market?

Let’s look at the numbers.

Let us try and reverse engineer why Deepak Nitrite was a compelling buy in the month of Jan-18. Yes, even at a PE of 50!

This is the financial summary of Deepak Nitrite in the month of Jan-18.

Sales = Rs 1651 Cr
PAT = Rs 79 Cr
Market-Cap = Rs 4000 Cr                                                                                                                                                        Total Debt = Rs 724 Cr

When analyzing a company, one of the first things that an investor must do is read the annual report. Start with the shareholder letter that the Chairman/CEO writes to the shareholders.

What did the 2017 annual report of Deepak Nitrite say?

The company is expanding by investing Rs 1400 Cr. What were the total fixed assets of the company on Jan-18? It was Rs 590 cr.

Deepak Nitrite is taking a massive bet by investing almost 2.5 times of what it have invested in the last 46 years since they started operations in 1972.

This can be a game-changer. Why is the company so confident about such a massive expansion?

The company is basically expanding into 2 new chemical products – acetone and phenol.

 

–

Back in Jan-18, the demand-supply dynamics for phenol looked like this –

 

And the demand-supply dynamics for acetone looked like this –

 

Reading a little more of the annual report, one would come across the following –

The company raised equity capital from institutional investors. This meant that not only is the company confident about its massive expansion project, other institutional investors are willing to commit to the capital too.

Sitting in Jan-18, let us try to imagine what the future will look like for Deepak Nitrite.

The Rs 1400 cr expansion plant will be commissioned sometime in calendar 2018.

 

Given the high imports of phenol and acetone, capacity utilization might not be a big issue for Deepak Nitrite.

In 2017, Deepak did a sales turnover of Rs 1650 Cr on fixed assets of approx. Rs 590 Cr.

When fixed assets increase to Rs 2000 Cr, what could the sales and PAT increase to?

Here’s my assumption:

Given the massive capacity expansion, one expects the revenue and profits of Deepak Nitrite to increase by 3/4 times in the next 2 years. In this context, this was an obvious buy-in Jan-18, even at a PE of 50.

As an investor, here are some of the key takeaways from the case study:

  1. Most retail investors worry about Sensex/Nifty PEs and whether the indices will go up or down and do not pay attention to the specific business dynamics. You see how this can be a very costly mistake for your portfolio.
  2. If profits of the company increase, the stock price will increase. GDP, interest rates, Coronavirus, pandemic, bull market/bear market does not matter.
  3. Microeconomics of the business always trumps macro-economics.
  4. Value investor or not, one need not necessarily stay away from high PE stocks

Similarly, all low PE stocks are not worth investing

  1. Finally, business analysis is underrated and trend analysis is overrated. You need business analysis to create wealth with equities.

Note: Please do not consider this article as a stock recommendation. The article is an illustration of the kind of analysis that goes into fundamental research and equity investing.

Feel free to drop us your query at https://bit.ly/36dvUmh & we will get back to you.

 

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13 Must-Watch Movies for Aspiring Entrepreneurs

By
August 14, 2020

Entrepreneurship will make you cry and hope for a happy ending. Just like a good movie.

Many excellent movies have been made about entrepreneurs and the pioneering spirit they embody. These movies can encourage, exhilarate and, of course, entertain us.

For all the aspiring entrepreneurs out there who are looking for some movie inspiration while cozying up with some popcorn, here are the top 13 flicks about the entrepreneurial experience.

Wall Street

The iconic Wall Street centers on an ambitious young stockbroker, Bud Fox, and a charismatic and ruthless investor, Gordon Gekko. Fox, who is desperate to succeed, idolizes Gekko, who operates under the mantra “Greed is good.”

Fox becomes absorbed in the financier’s glamorous lifestyle, only to get entangled in a vicious web of insider trading. The film is a cautionary tale of how the pursuit of power can lead us down an unethical path. While it’s easy to be lured by greed, it’s never worth it to sell one’s integrity for the sake of money and ambition.

Office Space

This film speaks to the challenges, frustrations and absurdities of corporate office life. Office Space satirizes the soul-crushing monotony of the modern cubicle worker, but also reminds us that it’s up to us to find a way out.

Don’t let work, with its tedious corporate culture and petty bureaucracy, suck the life out of you. You have to balance your work and life and ensure you’re working for effective and positive managers. As the movie so hilariously depicts, unhappy workers aren’t the most productive, and toxic bosses and poor management can do untold damage to morale. The bottom line is that life is too short to spend huddled in a cubicle.

Erin Brockovich

Based on a true story, Erin Brockovich follows a struggling single mother who finagles her way into a job as a file clerk for a law firm. She begins investigating a case that eventually leads to a class-action lawsuit against a multibillion-dollar company. Through the course of the investigation, she learns some hard truths and faces plenty of hurdles.

Against the odds, she helps to win the largest settlement ever paid in a direct-action lawsuit. Erin Brockovich embodies female empowerment and underscores the importance of being independent-minded and unafraid to stand up for what you believe. It can also be a great inspiration to female entrepreneurs who face a male-dominated corporate world.

The Godfather

Widely accepted as one of the best films ever made, The Godfather, at its core, is a story about a small family business growing into a large and powerful organization in New York, while fighting off the opposition.

The movie offers insight into what it takes to become one of the most influential and dynamic family businesses in the country. In the movie, Vito Corleone grants favors and helps people with their problems, highlighting the importance of relationships and building networks in any business. The Godfather will make you think about competitive strategies, alliances, mergers and business diversification.

Joy

In business, you must always be ready to fight battles on multiple fronts, and the more successful you are, the more others will want to tear you down and get a piece for themselves. These are among the many lessons behind this biographical film about New York native Joy Mangano, who went from single mother to millionaire in the 1990s.

She got her start by inventing the Miracle Mop, a self-wringing mop that required less effort to use than traditional mops. Joy details the ups and downs Mangano faced with her fledgling business. The movie shows how belief in yourself, your product and your business are key if you’re going to survive and succeed.

Glengarry Glen Ross

In the cutthroat Chicago real estate market, lying, cheating and stealing often decide who comes out on top. Glengarry Glen Ross is about four real estate salespeople whose jobs are on the line when a competition is announced — all except the top two men will be fired.

The film takes a stark look at the underbelly of sales culture, including the lies, betrayals and manipulation people will resort to in order to survive in the business. It showcases how not to manage a sales team and how a high-pressure job with never-ending demands to perform will eventually lead one down a dark path. Extremely competitive high-pressure environments can bring out the worst in you and those around you.

The Pursuit of Happyness

This inspirational film is based on the true story of Chris Gardner, who faced homelessness as a single father while working a grueling unpaid internship as a stockbroker. Through sheer force of will, Gardner persists through impossible circumstances after his wife leaves him and the IRS garnishes his wages, leaving him in poverty. Gardner struggles to sell medical scanners and is living in homeless shelters while pursuing a full-time, six-month internship, hopeful that it will pay off with a permanent position.

The Pursuit of Happyness shows how a diehard work ethic coupled with an unflappable belief in yourself and a willingness to do whatever it takes to reach beyond your circumstances can pay off when you achieve your dreams.

Steve Jobs

This movie showcases pivotal moments in the rise of Steve Jobs, the co-founder of Apple Inc., and takes a hard look at the entrepreneur’s personal and professional struggles. There have been a handful of movies and documentaries detailing the life of Jobs, but this 2015 version is perhaps the best. It takes a behind-the-scenes look at Jobs during three key product launches.

Jobs could be coldly dismissive of the people closest to him and often micromanaged even the smallest details of his presentations. He experienced tremendous failure and made ugly mistakes before finding success. Yet entrepreneurs watching this film will undoubtedly be motivated to stay true to their vision when facing tough challenges and weighing competing opinions.

The Social Network

The Social Network offers a behind-the-scenes glimpse into how Mark Zuckerberg created Facebook and the cutthroat world of the startup. As the trailer for the movie says, “You don’t get to 500 million friends without making a few enemies,” and this point is underscored throughout the film as Zuckerberg navigates lawsuits and hurdles in funding.

Through it all, Zuckerberg must be flexible and evolve his product to suit the needs and desires of users. He also learns a painful lesson on the importance of having a binding contract in place. This movie offers several important insights for aspiring entrepreneurs, including that it’s not about who has an idea but who can execute it. But perhaps the big takeaway should be that you’re going to have to ruffle some feathers if you want to fly.

Catch Me If You Can

Based on a true story, Catch Me If You Can exemplifies the entrepreneurial journey. The main character, Frank Abagnale, is a con man who earned millions before he was 19 years old and successfully impersonated an airline pilot, doctor, lawyer and history professor. While Abagnale’s swindling tendencies shouldn’t be replicated, there are some wonderful insights here for the aspiring entrepreneur.

Abagnale knew how to create new opportunities out of bad situations. He achieved tremendous success in tough environments and under a great deal of stress. The movie also touches on entrepreneurial themes including creative problem solving, perseverance, personal sales techniques and finding funding sources.

Jerry Maguire

This is a story about Jerry Maguire, a man who, at the top of his game, has become disillusioned with the soulless corporate structure of his business. When he takes a step back and questions it all, it costs him everything he has achieved up until that point. In Jerry Maguire, he is fired from his job and everyone turns their back on him, except for one volatile client.

Maguire is forced to examine what is really important to his business and life as he works to bring the pieces back together. There’s a compelling and satisfying payoff, showing that striking out on your own and seeking to change something for the better has its own reward.

The Aviator

Howard Hughes was a man with lofty dreams and undeterred ambitions, until it all came crashing down. The Aviator, which depicts Hughes’s early years as a director and aviator in the late 1920s to mid-1940s, shows the obsessive attention to detail that both set him apart from the competition and, ultimately, led to his undoing.

As an undiagnosed sufferer of obsessive-compulsive disorder, his life began to unravel as he fell into a dark mental state, and yet he was able to pull himself together just in time to defend himself. Aspiring entrepreneurs can see flashes of Hughes’s spit-and-vinegar and also the fear and foreboding that embodied his personality.

The Big Short

The U.S. housing crash and global financial crisis play a starring role in The Big Short, which tells the story of a group of Wall Street fund managers and investors who predicted and were able to profit from the collapse of the country’s overheated housing market.

The movie is full of important lessons for entrepreneurs and anyone who has invested money in the stock market: understand what you’re investing in, follow your gut and never take another person’s advice without fully understanding what you’re getting yourself into.

 

Please share some great movies on entrepreneurship in the comments section below, as I learn just as much from you as you do from me.

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KNOW YOUR BEHAVIOURAL BIASES – Making Better Investment Decisions During Turbulent Times

By
July 29, 2020

Foreword :- 

Global markets,India being no exception, have  taken  a  significant  beating  following  the outbreak of Covid-19 pandemic. While an erosion in value of investments does worry an investor, it brings to the forefront two pertinent questions:

  1. Can you control what is happening in the market?
  2. Can you control how you react to what is happening in the market?

The  answer  to  the  first  question  is  “No”.  As  far  as the second question is concerned, the answer is “Yes”, but it is easier said than done.

Most  conventional  economic  theories that were path-breaking discoveries  of  the  20th  century made a fatal assumption that people are rational, thereby overlooking a key aspect governing human behavior.

Over  the  last  30  years,  a  lot  of  ground  has  been covered  on  this  subject  suggesting  that  it’s  time to   accept   that   humans are  emotional and are subject to cognitive   biases. These biases, from time to time, come in the way of effective decision making  concerning  each  and  every  aspect of our life, including personal finances.

In  this  edition  of  ‘Know  your  behavioral  biases’ , we have tried to elaborate the biases that individual  investors  commit,  thereby  endangering their  hard  earned  wealth.  As  with most complex problems,  the  solutions thereof  are  often  simple, and dealing  with  behavioral  biases  is  no exception.  Herein,  we  present  simple  yet  effective and easy methods to know, accept and overcome these biases.

Index :-

  • How to respond to market cycles.
  • Loss aversion bias.
  • What is mental accounting?.
  • Herd Mentality.
  • Emotional attachment to inherited wealth: Endowment bias.
  • Availability bias.
  • Recency bias.
  • Unable to bring discipline in investing.
  • Is short term thinking a disease?
  • Conclusion.

How to Respond to Market Cycles?

Greed and Fear in Market Cycles

Investor’s experience in the markets is one of the most important factors that determines his/her investment  decisions.  For  example,  someone  who  began  investing  during  the  negative  phase  of the markets (e.g. year 2001 – IT Bubble, 2009 – Global Financial crisis) will prefer to avoid equities compared to an individual who has had a good investment experience (year 2010)

Typical Reaction of an Investor – Joining the Dots

Below  chart  shows  how  greed  and  fear  overrides  investors  emotions  and  how  an average  retail investor  behaves during the ups and downs of the market cycle.

Currently, as the markets have fallen sharply from highs & in the process of again rising , it may not be a right thing to sell-out, instead adopt a long term approach to equity investing. It may even be prudent to go contrarian and make fresh allocations to equities in a staggered manner.

Our emotions often entice us to time the market, while, to make such decisions, we are no more equipped than a gambler before the roll of the next dice. More often than not, these actions driven by emotions are counterproductive. Simply adopting a buy and hold strategy for a long period of time can be more rewarding instead.

Understanding Market Cycles –

Markets are not linear and move in cycles.

Along  with the economy   and   business,   markets   also   go   through   periodic   expansions   and contractions.  Periods  of  expansions  are  characterized  by  business  optimism  and  increase  in business profitability. Conversely, periods of contraction are characterized by business pessimism and decline of business profitability. Markets anticipate these fluctuations and move ahead.

The long term average trends across cycles are typically upward sloping in a growing economy as economies, corporate profits, consumption levels, etc. grow at positive rates in the long run.

From  an  investors’  perspective,  the  turning  points  in  business  cycles  are  hugely  important. Investors who can position their portfolios in line with the cyclicality of the markets can make a fortune. This is different from timing the market, which can be fraught with risks. Understanding of cycles can help an investor position the overall portfolio with varying allocation to different asset classes. When it comes to individual investments, adopting a systematic Investment route would be ideal.

What to see around you?

Peak of a cycle

  • Economy is strong; reports are positive
  • Earnings beat expectation
  • Media is full of good news
  • Everyone around you is confident, optimistic and greedy
  • People are ready to take risks
  • Defaults are few Skepticism is low Euphoria everywhere
  • Di cult to imagine things going wrong

This is the time for caution!

Bottom of a cycle

  • Economy is slowing; reports are negative
  • Earnings are flat or declining
  • Media report only bad news
  • Everyone around you is worried, depressed and fearful
  • People are not ready to take risks
  • Defaults soar Skepticism is high Panic everywhere
  • Everyone assumes things will get worse

This is the time for aggression!

Is it time to be aggressive or defensive?

Loss Aversion Bias

Losses are felt much more than gains of similar value. People do not treat gains and losses in a linear way. It feels better to not lose Rs.100 than to gain Rs.100

I hate losing more than I love winning . Loss aversion is the tendency to avoid loss over maximizing gains.

Lets consider 2 scenarios:

Scenario 1:

While  you  are  walking,  you  find  a  Rs  500  note lying  on  the  ground.  You  pocket  it  and  feel happy about it.

Scenario 2:

While you are walking, you find a Rs 2000 note  lying  on  the  ground.  You  pocket  it and  subsequently  someone picks your pocket  and  you  loose  Rs  1500  (say  from other pocket)

Which scenario will make you happier? Payoff from both the above scenarios are same but the emotional outcomes are different. A loss of Rs 1500 gave you more pain than gain of Rs 2000.

Similar experience is observed in investing; consider the below scenarios:

Scenario 1 :- Investment with cost price of Rs 1000 is sold at Rs 2000

Scenario 2 :- Same  investment  has  touched  a  high  of  say  Rs  3000  and  is  now  trading  at  say  Rs  2000,  the pain  from  notional  loss  of  Rs  1000  will  be  much  more  compared  to  the  overall  gain  on  the investment.

An investor with net worth of Rs 1 cr looks at loss and gain of Rs 1 lac as

This  is  evident  from  the  fact  that  investors  prefer  Fixed  Deposits  over  instruments  with  variable returns but with an ability to beat inflation more effectively.

Pain or Joy, We Remember only Extreme Cases

We all prefer pain to be brief and joy to last longer. Lets consider the below example where you are under medication and have to undergo either of the two options below:

Scenario 1 :- An injection every day for the next 20 days

Scenario 2 :- An injection, which is 20% more painful, everyday for the next 12 days

Individuals  tend  to  remember  the  intensity  of  the  pain  whereas  duration  of  Pain  /  Joy  is  often ignored. Since under option 2, pain is 20% higher, most individuals will prefer option 1.

Similarly,  in  investments,  time  correction  does  not  affect  emotions  as  much  as  price  correction. Investors  often  remember  negative  events  like  “Black  Mondays”,  “Tragic  Tuesdays”,  etc.  Investors often ignore the fact that a big fall in markets on a single day followed by a slow recovery is similar to markets staying flat/ remaining range bound mode over a year.

EMI schemes, Personal Loans, Women’s Kitty Party all follow similar concept.

How to Deal with Loss Aversion Bias?

  • Free yourself of emotions as much as possible
  • Do not invest directly in volatile asset classes like equity
  • Choose a professional fund manager
  • Also take the help of an Investment Advisor
  • Adopt  a portfolio  approach  and  do  not  focus  too  much on  each  individual  investment.  Leave  the  job  of  product/scheme selection to the Investment Advisor
  • Investing is better left to experts.
  • Mutual Funds (MFs) are cost effective and convenient.

What is Mental Accounting?

It shows how individuals separate their budget into different accounts for specific purposes.

Mental Accounting : Money Jar Fallacy

Mental accounting, a behavioral economics concept introduced in 1999 by Nobel Prize-winning economist Richard Thaler, refers to different values people place on money, based on subjective criteria, that often has detrimental results.

The  concept  of  mental  accounting  is  beautifully  explained  by  Thaler  and  Cass  Sunstein  in  their book Nudge: Improving Decisions About Health, Wealth and Happiness through the example of Hollywood actors Gene Hackman and Dustin Hoffman .

Mental Accounting and Investments :-

People also tend to experience mental accounting bias in investing. When it comes to investing, mental accounting can also cause people to make illogical decisions.

Investors  invest  their  wealth  based  on  the  source  of  income.  Higher  weight-age  is  given  to hard  earned  money  like  salary  as  investors  usually  prefer  to  take  lower  risk  while  investing their salary income. An investor who is young should ideally have a higher portion of his/her wealth in equities. However, since there is a emotional attachment to hard earned money; he may not be willing to invest a larger portion of his salary income in equities. (as equities are perceived as risky asset class). The same investor when faced with windfall gains tend to take higher risk with that amount.

Value of money remains the same for an investment made on the advice of a distributor or through own research. However, when evaluating a loss making investment, investors tend to hold on to the same forever if the initial decision to buy was that of the investor himself / herself (as booking a loss hurts his ego). The emotion of regret is in play here. On the other hand, if the initial decision to buy the investment was as per  the recommendation of another person,  say,  the  advisor,  the  investor  would  be  willing  to  sell  the  asset  at  some  point  and move on. This decision to sell is taken at the cost of diversification.

To avoid the mental accounting bias, individuals should treat money as perfectly fungible when they allocate among different accounts, be it a budget account (everyday living expenses), a discretionary spending account, or a wealth account (savings and investments). But it is easier said than done.

Other Examples of mental accounting :-

Overspending on credit card rather than cash

More  impulsive  buying  on  a  shopping  trip  could  be  attributed  to  the  use  of  credit  cards  as compared to giving away cash. However, ‘money’ is ‘money’.

Tax Refunds

Tendency to treat tax refunds as a windfall gain and use it for discretionary spending.

Categorizing money as “Safety Capital” and “Risk Capital”

Investors often categorize portions of their wealth as “Safety Capital”, something that they can never afford to lose (example – salary) and “Risk Capital”, money that they OK to see depreciate, (example – windfall gains).

Money that you “don’t mind losing”

Investors, at times, invest in safe instruments and transfer the appreciation thereof to riskier asset classes, with the mindset that this component is something that they don’t mind losing?

Yearly bonus

Habit  of  treating  yearly  bonus  differently  to  monthly  salary  and  spending  it  lavishly.  This behavior is like that of a kid spending birthday money on immediate gratification.

Would you spend your EPFO corpus on a foreign holiday?

There is a guilt factor associated with spending money earmarked for an important goal like retirement planning on a lavish need.

Use Mental Accounting to Your Advantage

Invest with a Goal!

Once you attach a goal to a particular investment, you mentally allocate that money to a particular purpose. Further, it:

Mutual  Fund  schemes  are  available  for  specific  financial  goals  like  Retirement  Planning  and Children’s Education, as defined by SEBI in mutual fund categorization.

Herd Mentality

It  is  the  phenomenon  where  investors  follow  what  other investors  are  doing,  rather  than  following  their  own  analysis  and  risk appetite and is often driven by the fear of missing out

Fear of Missing Out – Have you felt that?

It is normal to get tempted by prospect of becoming rich quickly. When the markets are on their way up, it gets very frustrating for an onlooker to see people create wealth just by being invested in  the  market.  More  often  than  not,  a  prospective  investor  gets  enticed  to  invest  when  he  sees quick gains being made by others around him.

This mentality is often the result of a reaction to peer pressure which makes investors act in order to avoid ‘feeling left out’ or ‘left behind’ from the group. In the quest to earn quick gains from his investments, investors often chase returns by following the herd.

In the process of following the herd, investors usually end up with the portfolio that is more risky and may not be appropriate as per his/her risk appetite. The outcome has always been a disappointment in terms of returns.

A  classic  example  of  herd  behavior  occurred  in  the  late  1990s.   Investors  followed  the  crowd and invested in stocks of IT companies, even though many of them were loss making and were unlikely to generate significant revenues in the foreseeable future.

Herding = Lazy Thinking :-

It is often observed that investors confidence level, index level and equity allocation usually move in  tandem  and  the  result  has  been  the  largest  chunk  of  their  wealth  is  invested  almost  at  the peak of the cycle.

Investors that follow the herd are left disappointed to see negative returns at the end of the cycle. This is mainly because investors focus turn to the conduct of the herd in search of  earning quick returns instead of fundamentals of the economy, company, etc. that might be more relevant.

Let Asset Allocation Guide You to Overcome Biases :-

Who is happiest during this current episode of equity market volatility?

The answer to this question would be the one who had done asset allocation to some extent. An investor with higher than required equity exposure, obviously, has reasons to worry as the value erosion in portfolio would be felt the maximum. On the other  hand,  even  an  investor  with  zero  or  very  low  equity  exposure  has  little  reason  to  rejoice,  as  it  is  difficult  to  take  the emotional  decision  of  entering  equities  in  these  volatile  times,  in  fact,  the  investor  would  strengthen  her  resolve  to  never touch equity, an asset class that potentially erode in value in such quick time.

An investor with a more balanced allocation to various asset classes including, equities, fixed income, real estate, gold, etc. is likely to be happiest despite one particular asset class decreasing in value. The very reason to do asset allocation is the uncertain nature of each asset classes and is acknowledgment of preparing for rainy days in a particular asset class.

Source: Bloomberg. Data for last 20  fiscal years. Mar ‘98 to March ’20.

Proxies used for asset classes: Equity – NIFTY 50, Debt – NIFTY 10 year benchmark G Sec, Gold – Spot Rate ₹10 /Grams

Emotional Attachment to Inherited Wealth: Endowment Bias

causes  individuals  to value  an  owned object   higher, often irrationally

How to treat Inherited Investments?

You recently inherited a flat worth Rs 3 cr from your grandfather.

Investors  are  emotionally  attached  to  the  inherited  asset  and  give  a  higher  weightage  to  such asset in their portfolio and without considering its usefulness in the overall asset allocation, they continue to hold on to the asset.

In the above example, an investor had inherited a flat worth Rs 3cr from his grandfather; continuing to hold on to the flat changed its asset allocation significantly.

Investors  should  treat  the  inherited  investment  under  one  portfolio  and  “gradually”  change  the asset  allocation  as  per  his/her  risk  profile.  Investors  should  ask  “Would  they  make  the  same investment with new money today?”

Asset Allocation is Key to Financial Success

  • Asset  Allocation  helps  overcome  emotional  attachment  to inherited assets
  • Each asset class has a different Return-Risk-Liquidity profile
  • Diversification  is  needed  to  achieve optimal  balance between rewards and risks
  • Asset  allocation  decision  is  the  most  important  factor  for long-term wealth building
  • There is no “one size fits all” formula for asset allocation. One needs to take professional help during this important step of financial planning.

Availability Bias

is a mental shortcut that

  • Relies heavily on information that is easily available to the investor or
  • Places undue   emphasis on immediate examples that come to mind when evaluating a decision.

Availability bias

Availability  bias  is  the  human  tendency  to  think  of  events  that  come  readily  to  mind;  thus making such events more representative than is actually the case. Naturally, things that are most memorable  can  be  brought  to  mind  most  quickly.  People  tend  to  remember  vivid  events  like plane crashes and lottery wins, leading some of us to overestimate the likelihood that our plane will crash or, more optimistically — but equally erroneously — that we will win the lottery.

A  study  by  Karlsson,  Loewenstein,  and  Ariely  (2008)  showed  that  people  are  more  likely  to purchase insurance to protect themselves after experiencing a natural disaster than they are to purchase insurance before such a disaster happens.

Similarly, in investments, negative events that have led to severe market corrections are always at the top of investor’s mind. However, investors tend to ignore market performance post the sharp correction.  Few  examples  of  such  events  –  DoT  com  burst,  2004  crash  after  formation  of  new Government, Global Financial Crisis, Greece Sovereign Crisis, Chinese devaluation in 2015.

‘Perceived Risk’ is often higher than ‘Real Risk’ during such events.

Implications of this bias

Investors tend to stay away from markets during such scenarios which leads to:

 

How to deal with such bias?

We  have  seen  a  significant  fall  in  equity  markets  over  the past  few  weeks  as  Covid-19  has  become  the  single-point matter of focus among investors. These are, no doubt, tough times  as  entire  humanity  is  battling  the  virus  pandemic deploying  every  tool  at  its  disposal  to  save  lives.  With  a significant  chunk  of  the  human  population  in  lockdown, the global economy is expected to take a major hit, and the impact of which is being felt across global stock markets.

This is neither the first time or nor will it be the last time, the Indian stock markets are undergoing such sharp corrections. 1992, 2001 and 2008 were years in which, markets saw even sharper   crashes,   with   underlying   reasons   different   from one another. However, one common variable among these instances  was  the  bounce  back  witnessed  by  market  in each of these occasions over a period of time. This leads us to a question.

Do we expect Covid-19 to grab headlines one year from now like the way it is doing now?

As  the  virus  scare  alleviates  over  a  period  of  time  with  the economy  coming  back  to  normalcy,  the  stock  markets  are also expected to stage recovery. This makes a strong case for investing  in  equities  by  spreading  them  over  the  next  few months.   Investors   should   use   such   events   as   buying opportunities and invest with a long term view.

As a case in point, an investor who simply invested through SIPs throughout the ups and downs of the 2008 crisis and subsequent  recovery  would  have  performed  well  without undergoing much of the emotions.

Investors  should  consult  their  financial  advisors  on  how  to deal with such events.

Missed best days !!

The above chart shows that if you had stayed fully invested in stocks (as measured by the S&P BSE Sensex) from January 1, 1990 to March 310, 2020, you would have earned compounded annual returns of 12.73%.

However, if you had tried to time the ups and downs of the market, you would have risked missing out on days that registered some of the biggest gains, and the CAGR would have dropped drastically: 9.06% if you missed 10 best days, 6.56% if you missed 20 best days, 4.46% if you missed 30 best days and 2.56% if you missed 40 best days during this period.

CAGR – Compounded Annual Growth Rate

Best days means the days on which the markets have given highest returns. Daily returns are considered for determining best days.

Recency Bias

is the tendency to weigh recent events more heavily than earlier events.

How Recent events overtake our investment decisions?

Investors often overemphasize more recent events than those in the near or distant past.

Thus,  shifting  focus  towards  the  asset  class  in  favor  today.  This  happens  as  investors  have the  tendency  to  extrapolate  recent  experience  into  the  future  which  can  have  disastrous consequences. The result is, it skews our view of reality and the future.

We have seen many such events in India and investors either tend to be overweight or shy away from the trending asset class. Few recent events in Indian context are mentioned below:

Implications of this bias

Investors get swayed by recent events and tend to be either overweight or underweight the asset class in favor/out of favor; thus leading to inappropriate asset allocation.

The overall risk in the portfolio also increases drastically as investors often swing their portfolios to extremes during such situations with the hope that the trend will continue in future.

Recency Bias: Lane Changing doesn’t work

Investors  often  focus  only  on  the  recent  1  year  track  record  of  returns  when  selecting  a  fund, rather  than  analyzing  the  process  of  investment  manager.  Thus,  making  investment  decisions based upon the outcome and ignoring the process that led to that result.

The above chart depicts the ranking of the funds over the past 10 years; it can be observed that chasing the best performing fund of a particular year does not work in the long run.

How to deal with such bias?

Investors should follow the advice of a professional, should not invest directly and should have an asset allocation strategy.

Investors should not get swayed away by the past returns and should ideally look at risk statistics, the investment  process,  the  number  of  securities  purchased  and  other  fundamental  factors when selecting an investment manager.

Investors should follow a portfolio approach and diversify across various investments.

Unable to Bring Discipline in Investing !

Spending habits can impact long term wealth

Studies have shown that spending tends to be greater when consumers use credit cards rather than  cash,  due  in  part  to  certain  behavioral  cues  that  using  credit  cards  may  create.  One  effect is that a credit card “decouples” the act of purchasing from the consumer’s wealth – “get it now, pay later.” – study by RA Feinberg (1986)

People  do  not  act  in  their  best  long-term  interest  because  they  lack  self  control.  Often  people prefer  high  standards  of  living  in  the  present,  rather  than  saving  for  retirement.  People  who suffer from self-control bias often spend today and sacrifice their retirement, and do not invest in equities or take part in the benefits of rupee-cost averaging.

Recent  trend  in  India’s  household  savings  and  household  debt  also  confirms  such  behavior where investors prefer to live in the present, rather than securing their future.

The “save more tomorrow program” is a classic example to counter such behavior which automatically increased savings rates for plan participants each year. (80% remained in the plan through three pay raises). This is a great way to counteract the natural tendency of people who suffer from self-control bias.

Solution?

Again the magic tool – SIP

  • The concept of SIP is in a way similar to “Save More Tomorrow” Campaign
  • By  enrolling  into  an  SIP,  you  make  a  commitment  to  save a  particular  amount  of  money  every  month  for  the  next  ‘n’ number of months
  • The  amount  that  is  mentally  earmarked  for  SIP  helps  us to  avoid  expenses  on  extravagant  /  lavish  needs,  thereby bringing in discipline
  • SIP  Top  up  can  also  be  used  a  tool  to  overcome  this  bias  – SIP  Top  up  allows  you    to  increase  the  amount  of  the  SIP Installment   by   a   fixed   amount   at   pre-defined   intervals. This  facility  enhances  the  flexibility  of  the  investor  to  invest higher amounts during the tenure of the SIP

Is Short Term Thinking a Disease?

What Makes Us Think  Short Term?

Professor Walter Mischel, then a professor at Stanford University, conducted one of psychology’s classic  behavioral  experiments  on  deferred  gratification  named  “marshmallow  test”.  Deferred gratification refers to an individual’s ability to wait in order to achieve a desired object or outcome. The  study  concluded  that  individuals  that  tend  to  delay  gratification  were  less  likely  to  show extreme aggression and less likely to over-react if they became anxious.

Similar  analogy  can  be  drawn  to  the  field  of  investments  wherein  investors  over  react  to  short term market movements and tend to redeem their investments for short term gains.

 

What Makes Us Think Short Term?

Implications of this bias :-

Investors tend to invest with a short term view and focus shifts away from the goal for which investment was made

How to deal with such bias ?

Investors should do goal-based investing. Invest in equities with a long term view. For short to medium term goals, consider debt funds.

To Conclude

For all its limitless powers of imagination, miraculous artistic capabilities, never-ending endeavor for  excellence  and  boundless  achievements  over  the  millennia,  the  ‘human  mind’  is  neither free  from  its  delusions  nor  is  it  resistant  to  making  embarrassing  misjudgments.  Our  mind occasionally lets us down when it comes to data taking and analyzing in a complex world – the world of investing is no different.

When it comes to decision making, whether it is choosing a word in a game of Scrabble, zeroing- in  on  next  holiday  destination  or  whether  to  invest  in  a  stock,  we  try  our  best  to  rely  on  facts and data, while topping it up with a human touch in the form of our best judgments, hunches, intuitions and insights. It is undeniable that emotions like greed and fear are involved when an individual  investor  makes  decisions  as  represented  by  inflows  at  the  time  of  market  highs  and outflows during a market fall.

Even  great  investing  minds  give  in  to  emotions.  Harry  Markowitz,  father  of  Modern  Portfolio Theory and a Nobel Prize winner in Economic Sciences, was once asked as to what was the asset allocation  in  his  personal  portfolio.  He  famously  replied  “It’s  a  50:50  split  between  equities  and bonds  as  I  visualized  my  grief  if  the  stock  market  went  way  up  and  I  wasn’t  in  it—or  if  it  went way down and I was completely in it. My intention was to minimize my future regret”. This is an example of one of the best ever minds in the world of finance admitting and accepting human fallacies.

Thankfully  the  solutions  to  overcome  these  emotional  reactions  are  astonishingly  simple.  The key messages of this as detailed above is to embrace the basics like focus on asset allocation, investing through Systematic Plan, investing with a goal and to take help of an advisor. It is exactly these ‘sticking to the basics’ approach that can shield us from the urge to act frequently, to free ourselves from emotions while making decisions and help us stay focused on the path of long-term wealth creation.


Disclaimer

This   Content  is   for  information   purposes only  and   does not constitute  advice  or  offer  to  sell/purchase  of any company product.  The  information  and  content  provided needs to be read from an investment awareness and education  perspective  only.

Website: www.nayakfin.com

 

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Learning how to leave a legacy at work is key to lasting Contentment

By
June 26, 2020

Entrepreneurs go into business for many reasons – to pursue a dream, find alternatives to an unfulfilling career or make more money. Most entrepreneurs are also driven by a desire to leave a legacy through their work.

Now What does it mean to leave a legacy? When you think about your career as your life’s work and not merely a source of income, it takes on a far deeper meaning. When you’re pouring your time, energy and passion into a business, you want to have a lasting impact. It’s the concept of leaving your mark that defines how to leave a legacy. Your legacy is an inheritance – it’s your gift of service to others. Learning how to leave a lasting legacy is also a gift you give yourself, since it paves the way for finding genuine fulfillment in your life.

Understanding How to leave a Legacy – 

Many business owners sense that they want to leave a mark through their work, but they don’t know how to get there. To truly make a lasting impression, you must first answer a pivotal question: What does it mean to leave a legacy? You’re not looking for generic answers here – you’re looking for answers that are meaningful and unique to you. Since your life’s work encapsulates the essence of who you are – your dreams, passions and strengths – understanding how to leave a legacy at work starts with getting to know yourself. Here are some questions to get started learning how to leave a lasting legacy that will speak volumes about you well after you’re finished doing business.

  1. What is your purpose ?

Understanding how to leave a legacy can seem nebulous and out-of-reach if you don’t know what your purpose in life is. Without a sense of purpose, any action you take feels undirected. To discover your purpose, start with the end in mind. You want to be remembered for the ideas you leave behind and the values you express day by day. Learning how to leave a legacy at work is as straightforward as writing down those values. Do you want to be remembered for hard work? Vision? Altruism? By writing down your core values, you’re able to pinpoint the cornerstone of how to leave a lasting legacy.

  1. What are your Natural Skills and abilities ?  

Think of your heroes – the people who inspire, encourage and uplift you. It’s likely that, in addition to treating you with dignity and respect, your heroes also stand out for distinct skills and talents. There’s something fundamentally poignant about watching someone’s gift come to life. It’s in self-actualization – living out the innate talents that make you uniquely you – that you demonstrate how to leave a legacy that others will admire.

  1. What ignites your passion ?

Living out your passions creates contentment in your life. And you’re only able to give to others if you are content. So when you ask “What does it mean to leave a legacy?” what you’re really asking is how your passions meet a need in the world.

 Sharing 4 Tips & Strategies of what does it mean to leave a legacy. 

Once you’ve done the work to discover your true passions, you’re ready to implement practical strategies for mastering how to leave a legacy at work. In the course of doing business, you interact with many people each day. As you ask yourself “What does it mean to leave a legacy?,” also ask, “Who do you want to impact the most?” Your answers might include:

  1. Leaving a legacy for your Clients

Consider how to improve your product or service so that it leaves a lasting impression on your clients. To accomplish this, your product must capture the hearts of your ideal clientele, adding real value to their lives so that no competitor can ever come close.

  1. Leaving a legacy for your Stakeholders.

If you want to know how to leave a legacy for your stakeholders, you’ll need a mastermind business map for achieving record profits so your stakeholders’ dividends soar. When you understand how to leave a lasting legacy for investors, you’re also able to build a business that attracts future investment.

  1. Leaving a legacy for your employees.

Learning how to leave a legacy for your employees is the gift that keeps giving, since building a fulfilling career is the key of finding contentment in life. There are many ways to accomplish this, from being a standout leader to nurturing a vibrant organizational culture. Learning how to leave a legacy at work might mean teaching others to refine company processes, train new talent, mentor junior staff or manage business finances.

  1. Leaving legacy for your clients , Stakeholders and employees .

If your answer to “What does it mean to leave a legacy?” is “I want to impact everyone who comes in contact with my business,” you might consider creating a leadership program or philanthropic foundation. This option is likely appealing if your values include giving, education or financial growth. Creating a customized program aligned with your product is a visionary way to elevate your brand while demonstrating what it means to leave a legacy.

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50 Inspirational Quotes To Motivate You

By
May 9, 2020

No one can deny the power of a good quote. They motivate and inspire us to be our best.

Great quotes have an incredible ability to put things in perspective. Here are 50 of my absolute favorites:

  1. Nothing is impossible, the word itself says “I’m possible”! —Audrey Hepburn
  2. I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel. —Maya Angelou
  3. Whether you think you can or you think you can’t, you’re right. —Henry Ford
  4. Perfection is not attainable, but if we chase perfection we can catch excellence. —Vince Lombardi
  5. Life is 10% what happens to me and 90% of how I react to it. —Charles Swindoll
  6. If you look at what you have in life, you’ll always have more. If you look at what you don’t have in life, you’ll never have enough. —Oprah Winfrey
  7. Remember no one can make you feel inferior without your consent. —Eleanor Roosevelt
  8. I can’t change the direction of the wind, but I can adjust my sails to always reach my destination. —Jimmy Dean
  9. Believe you can and you’re halfway there. —Theodore Roosevelt
  10. “To handle yourself, use your head; to handle others, use your heart.” —Eleanor Roosevelt
  11. Too many of us are not living our dreams because we are living our fears. —Les Brown
  12. Do or do not. There is no try. —Yoda
  13. Whatever the mind of man can conceive and believe, it can achieve. —Napoleon Hill
  14. Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do, so throw off the bowlines, sail away from safe harbor, catch the trade winds in your sails. Explore, Dream, Discover. —Mark Twain
  15. I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed. —Michael Jordan
  16. Strive not to be a success, but rather to be of value. —Albert Einstein
  17. I am not a product of my circumstances. I am a product of my decisions. —Stephen Covey
  18. When everything seems to be going against you, remember that the airplane takes off against the wind, not with it. —Henry Ford
  19. The most common way people give up their power is by thinking they don’t have any. —Alice Walker
  20. The most difficult thing is the decision to act, the rest is merely tenacity. —Amelia Earhart
  21. It is during our darkest moments that we must focus to see the light. —Aristotle Onassis
  22. Don’t judge each day by the harvest you reap but by the seeds that you plant. —Robert Louis Stevenson
  23. The only way to do great work is to love what you do. —Steve Jobs
  24. Change your thoughts and you change your world. —Norman Vincent Peale
  25. The question isn’t who is going to let me; it’s who is going to stop me. —Ayn Rand
  26. If you hear a voice within you say “you cannot paint,” then by all means paint and that voice will be silenced. —Vincent Van Gogh
  27. Build your own dreams, or someone else will hire you to build theirs. —Farrah Gray
  28. Remember that not getting what you want is sometimes a wonderful stroke of luck. —Dalai Lama
  29. You can’t use up creativity. The more you use, the more you have. —Maya Angelou
  30. I have learned over the years that when one’s mind is made up, this diminishes fear. —Rosa Parks
  31. I would rather die of passion than of boredom. —Vincent van Gogh
  32. A truly rich man is one whose children run into his arms when his hands are empty. —Unknown
  33. A person who never made a mistake never tried anything new.——Albert Einstein
  34. What’s money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do. —Bob Dylan
  35. I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do. —Leonardo da Vinci
  36. If you want to lift yourself up, lift up someone else. —Booker T. Washington
  37. Limitations live only in our minds. But if we use our imaginations, our possibilities become limitless. —Jamie Paolinetti
  38. If you’re offered a seat on a rocket ship, don’t ask what seat! Just get on. —Sheryl Sandberg
  39. Certain things catch your eye, but pursue only those that capture the heart. —Ancient Indian Proverb
  40. When one door of happiness closes, another opens, but often we look so long at the closed door that we do not see the one that has been opened for us. —Helen Keller
  41. Everything has beauty, but not everyone can see. —Confucius
  42. How wonderful it is that nobody need wait a single moment before starting to improve the world. —Anne Frank
  43. When I was 5 years old, my mother always told me that happiness was the key to life. When I went to school, they asked me what I wanted to be when I grew up. I wrote down “happy”. They told me I didn’t understand the assignment, and I told them they didn’t understand life. —John Lennon
  44. The only person you are destined to become is the person you decide to be. —Ralph Waldo Emerson
  45. We can’t help everyone, but everyone can help someone. —Ronald Reagan
  46. Everything you’ve ever wanted is on the other side of fear. —George Addair
  47. We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light. —Plato
  48. Nothing will work unless you do. —Maya Angelou
  49. “I alone cannot change the world, but I can cast a stone across the water to create many ripples.” —Mother Teresa
  50. What we achieve inwardly will change outer reality. —Plutarch

Did I miss any? Please share your favorite quotes for others to enjoy in the comments section below.

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How Successful People Stay Calm !

By
March 26, 2020

The ability to manage your emotions and remain calm under pressure has a direct link to your performance. 90% of top performers are skilled at managing their emotions in times of stress in order to remain calm and in control.

The tricky thing about stress (and the anxiety that comes with it) is that it’s an absolutely necessary emotion. Our brains are wired such that it’s difficult to take action until we feel at least some level of this emotional state. In fact, performance peaks under the heightened activation that comes with moderate levels of stress. As long as the stress isn’t prolonged, it’s harmless.

Researcher reinforces how important it is to keep stress under control. A study, found that the onset of stress entices the brain into growing new cells responsible for improved memory. However, this effect is only seen when stress is intermittent. As soon as the stress continues beyond a few moments into a prolonged state, it suppresses the brain’s ability to develop new cells.

As the human brain evolved and increased in complexity, we’ve developed the ability to worry and perseverate on events, which creates frequent experiences of prolonged stress.

Besides increasing your risk of heart disease, depression, and obesity, stress decreases your cognitive performance. Fortunately, though, unless a lion is chasing you, the bulk of your stress is subjective and under your control. Top performers have well-honed coping strategies that they employ under stressful circumstances. This lowers their stress levels regardless of what’s happening in their environment, ensuring that the stress they experience is intermittent and not prolonged.

Sharing 10 best effective strategies that successful people employ when faced with stress, Some of these strategies may seem obvious, but the real challenge lies in recognizing when you need to use them and having the wherewithal to actually do so in spite of your stress.

They Appreciate What They Have

Taking time to contemplate what you’re grateful for isn’t merely the “right” thing to do. It also improves your mood, because it reduces the stress hormone cortisol by 23%. Research conducted at the University of California, Davis found that people who worked daily to cultivate an attitude of gratitude experienced improved mood, energy, and physical well-being. It’s likely that lower levels of cortisol played a major role in this.

They Avoid Asking “What If?”

“What if?” statements throw fuel on the fire of stress and worry. Things can go in a million different directions, and the more time you spend worrying about the possibilities, the less time you’ll spend focusing on taking action that will calm you down and keep your stress under control. Calm people know that asking “what if? will only take them to a place they don’t want—or need—to go.

They Stay Positive

Positive thoughts help make stress intermittent by focusing your brain’s attention onto something that is completely stress-free. You have to give your wandering brain a little help by consciously selecting something positive to think about. Any positive thought will do to refocus your attention. When things are going well, and your mood is good, this is relatively easy. When things are going poorly, and your mind is flooded with negative thoughts, this can be a challenge. In these moments, think about your day and identify one positive thing that happened, no matter how small. If you can’t think of something from the current day, reflect on the previous day or even the previous week. Or perhaps you’re looking forward to an exciting event that you can focus your attention on. The point here is that you must have something positive that you’re ready to shift your attention to when your thoughts turn negative.

They Disconnect

Given the importance of keeping stress intermittent, it’s easy to see how taking regular time off the grid can help keep your stress under control. When you make yourself available to your work 24/7, you expose yourself to a constant barrage of stressors. Forcing yourself offline and even—gulp!—turning off your phone gives your body a break from a constant source of stress. Studies have shown that something as simple as an email break can lower stress levels.

Technology enables constant communication and the expectation that you should be available 24/7. It is extremely difficult to enjoy a stress-free moment outside of work when an email that will change your train of thought and get you thinking (read: stressing) about work can drop onto your phone at any moment. If detaching yourself from work-related communication on weekday evenings is too big a challenge, then how about the weekend? Choose blocks of time where you cut the cord and go offline. You’ll be amazed at how refreshing these breaks are and how they reduce stress by putting a mental recharge into your weekly schedule. If you’re worried about the negative repercussions of taking this step, first try doing it at times when you’re unlikely to be contacted—maybe Sunday morning. As you grow more comfortable with it, and as your coworkers begin to accept the time you spend offline, gradually expand the amount of time you spend away from technology.

They Limit Their Caffeine Intake

Drinking caffeine triggers the release of adrenaline. Adrenaline is the source of the “fight-or-flight” response, a survival mechanism that forces you to stand up and fight or run for the hills when faced with a threat. The fight-or-flight mechanism sidesteps rational thinking in favor of a faster response. This is great when a bear is chasing you, but not so great when you’re responding to a curt email. When caffeine puts your brain and body into this hyperaroused state of stress, your emotions overrun your behavior. The stress that caffeine creates is far from intermittent, as its long half-life ensures that it takes its sweet time working its way out of your body.

They Sleep

I’ve beaten this one to death over the years and can’t say enough about the importance of sleep to increasing your emotional intelligence and managing your stress levels. When you sleep, your brain literally recharges, shuffling through the day’s memories and storing or discarding them (which causes dreams), so that you wake up alert and clear-headed. Your self-control, attention, and memory are all reduced when you don’t get enough—or the right kind—of sleep. Sleep deprivation raises stress hormone levels on its own, even without a stressor present. Stressful projects often make you feel as if you have no time to sleep, but taking the time to get a decent night’s sleep is often the one thing keeping you from getting things under control.

They Squash Negative Self-Talk

A big step in managing stress involves stopping negative self-talk in its tracks. The more you ruminate on negative thoughts, the more power you give them. Most of our negative thoughts are just that—thoughts, not facts. When you find yourself believing the negative and pessimistic things your inner voice says, it’s time to stop and write them down. Literally stop what you’re doing and write down what you’re thinking. Once you’ve taken a moment to slow down the negative momentum of your thoughts, you will be more rational and clear-headed in evaluating their veracity.

You can bet that your statements aren’t true any time you use words like “never,” “worst,” “ever,” etc. If your statements still look like facts once they’re on paper, take them to a friend or colleague you trust and see if he or she agrees with you. Then the truth will surely come out. When it feels like something always or never happens, this is just your brain’s natural threat tendency inflating the perceived frequency or severity of an event. Identifying and labeling your thoughts as thoughts by separating them from the facts will help you escape the cycle of negativity and move toward a positive new outlook.

They Reframe Their Perspective

Stress and worry are fueled by our own skewed perception of events. It’s easy to think that unrealistic deadlines, unforgiving bosses, and out-of-control traffic are the reasons we’re so stressed all the time. You can’t control your circumstances, but you can control how you respond to them. So before you spend too much time dwelling on something, take a minute to put the situation in perspective. If you aren’t sure when you need to do this, try looking for clues that your anxiety may not be proportional to the stressor. If you’re thinking in broad, sweeping statements such as “Everything is going wrong” or “Nothing will work out,” then you need to reframe the situation. A great way to correct this unproductive thought pattern is to list the specific things that actually are going wrong or not working out. Most likely you will come up with just some things—not everything—and the scope of these stressors will look much more limited than it initially appeared.

They Breathe

The easiest way to make stress intermittent lies in something that you have to do everyday anyway: breathing. The practice of being in the moment with your breathing will begin to train your brain to focus solely on the task at hand and get the stress monkey off your back. When you’re feeling stressed, take a couple of minutes to focus on your breathing. Close the door, put away all other distractions, and just sit in a chair and breathe. The goal is to spend the entire time focused only on your breathing, which will prevent your mind from wandering. Think about how it feels to breathe in and out. This sounds simple, but it’s hard to do for more than a minute or two. It’s all right if you get sidetracked by another thought; this is sure to happen at the beginning, and you just need to bring your focus back to your breathing. If staying focused on your breathing proves to be a real struggle, try counting each breath in and out until you get to 20, and then start again from 1. Don’t worry if you lose count; you can always just start over.

This task may seem too easy or even a little silly, but you’ll be surprised by how calm you feel afterward and how much easier it is to let go of distracting thoughts that otherwise seem to have lodged permanently inside your brain.

They Use Their Support System

It’s tempting, yet entirely ineffective, to attempt tackling everything by yourself. To be calm and productive, you need to recognize your weaknesses and ask for help when you need it. This means tapping into your support system when a situation is challenging enough for you to feel overwhelmed. Everyone has someone at work and/or outside work who is on their team, rooting for them, and ready to help them get the best from a difficult situation. Identify these individuals in your life and make an effort to seek their insight and assistance when you need it. Something as simple as talking about your worries will provide an outlet for your anxiety and stress and supply you with a new perspective on the situation. Most of the time, other people can see a solution that you can’t because they are not as emotionally invested in the situation. Asking for help will mitigate your stress and strengthen your relationships with those you rely upon.

Please share your thoughts in the comments section below, as I learn just as much from you as you do from me.

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The 6 Secrets of Self-Control

By
March 17, 2020

What is it about self-control that makes it so difficult to rely on? Self-control is a skill we all possess (honest); yet we tend to give ourselves little credit for it. Most people don’t realize it’s a special skill but never figure in list of  must have skill set.

When it comes to self-control, it is so easy to focus on our failures that our successes tend to pale in comparison. And why shouldn’t they? Self-control is an effort that’s intended to help achieve a goal. Failing to control yourself is just that—a failure. If you’re trying to avoid digging into that bag of chips after dinner because you want to lose a few pounds and you succeed Monday and Tuesday nights only to succumb to temptation on Wednesday by eating four servings’ worth of the empty calories, your failure outweighs your success. You’ve taken two steps forward and four steps back.

With this success/failure dichotomy in mind, I give you six strategies for self-control . Some are obvious, others counter-intuitive, but all will help you eliminate those pesky failures and ensure your efforts to boost your willpower are successful enough to keep you headed in the right direction for achieving your goals.

Self-Control Secret #1 – Meditate

Meditation actually trains your brain to become a self-control machine. Even simple techniques like mindfulness, which involves taking as little as five minutes a day to focus on nothing more than your breathing and your senses, improves your self-awareness and your brain’s ability to resist destructive impulses. Buddhist monks appear calm and in control for a reason.

Self-Control Secret #2 – Eat

File this one in the counter-intuitive category, especially if you’re having trouble controlling your eating. Your brain burns heavily into your stores of glucose when attempting to exert self-control. If your blood sugar is low, you are far more likely to succumb to destructive impulses. Sugary foods spike your sugar levels quickly and leave you drained and vulnerable shortly thereafter. Eating something that provides a slow burn for your body, such as whole grain rice or meat, will give you a longer window of self-control. So, if you’re having trouble keeping yourself out of the company candy bin when you’re hungry, make sure you eat something else if you want to have a fighting chance.

Self-Control Secret #3 – Exercise

Getting your body moving for as little as 10 minutes releases GABA, a neurotransmitter that makes your brain feel soothed and keeps you in control of your impulses. If you’re having trouble resisting the impulse to walk over to the office next door to let somebody have it, just keep on walking. You should have the impulse under control by the time you get back.

Self-Control Secret #4 – Sleep

When you are tired, your brain cells’ ability to absorb glucose is highly diminished. As I explained in Secret #2, your brain’s ability to control impulses is nil without glucose. What’s worse, without enough sleep you are more likely to crave sugary snacks to compensate for low glucose levels. So, if you’re trying to exert self-control over your eating, getting a good night’s sleep—every night—is one of the best moves you can make.

Self-Control Secret #5 – Ride the Wave

Desire has a strong tendency to ebb and flow like the tide. When the impulse you need to control is strong, waiting out this wave of desire is usually enough to keep yourself in control. The rule of thumb here is to wait at least 10 minutes before succumbing to temptation. You’ll often find that the great wave of desire is now little more than a ripple that you have the power to step right over.

Self-Control Secret #6 – Forgive Yourself

A vicious cycle of failing to control oneself followed by feeling intense self-hatred and disgust is common in attempts at self-control. These emotions typically lead to over-indulging in the offending behavior. When you slip up, it is critical that you forgive yourself and move on. Don’t ignore how the mistake makes you feel; just don’t wallow in it. Instead, shift your attention to what you’re going to do to improve yourself in the future.

Putting These Strategies to Work

The important thing to remember is you have to give these strategies the opportunity to work. This means recognizing the moments where you are struggling with self-control and, rather than giving in to impulse, taking a look at the Six Secrets and giving them a go before you give in.

Please share your thoughts in the comments section below, as I learn just as much from you as you do from me.

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Ten Fundamental Truths That Will Change Your Life

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March 2, 2020

It’s surprising how easy it is to lose sight of the important things in life. Busy schedules and regular routines have a tendency to put the brain on autopilot.

When things aren’t going quite the way you’d like them to, it’s often because you’ve lost focus on what really matters. But focusing on life’s fundamental truths can be difficult, especially when they remind you that you’re heading in the wrong direction.

The best things in life don’t come easily, and failing to observe yourself carefully is a sure path to mediocrity. I believe that Socrates said it best:

“The unexamined life isn’t worth living.”

Socrates’ observation also applies to business. When Eric Schmidt was CEO of Google, he famously said, “We run this company on questions, not answers.”

Life and business run on questions, not answers. You should be asking yourself regularly if you’re headed in the right direction.

Many of life’s essential truths need repeating. We need reminders that help us to stay focused on them. Keep these truths handy and they’re sure to give you a much-needed boost.

Great success is often preceded by failure. You will never experience true success until you learn to embrace failure. Your mistakes pave the way for you to succeed by revealing when you’re on the wrong path.

The biggest breakthroughs typically come when you’re feeling the most frustrated and the most stuck. It’s this frustration that forces you to think differently, to look outside the box and see the solution that you’ve been missing.

Success takes patience and the ability to maintain a good attitude even while suffering for what you believe in.

Being busy does not equal being productive. Look at everyone around you. They all seem so busy—running from meeting to meeting and firing off emails. Yet how many of them are really producing, really succeeding at a high level?

Success doesn’t come from movement and activity. It comes from focus—from ensuring that your time is used efficiently and productively.

You get the same number of hours in the day as everyone else. Use yours wisely. After all, you’re the product of your output, not your effort. Make certain your efforts are dedicated to tasks that get results.

You’re only as good as those you associate with. You should strive to surround yourself with people who inspire you, people who make you want to be better. And you probably do. But what about the people who drag you down? Why do you allow them to be a part of your life?

Anyone who makes you feel worthless, anxious, or uninspired is wasting your time and, quite possibly, making you more like them. Life is too short to associate with people like this. Cut them loose.

You’re living the life you’ve created. You are not a victim of circumstance. No one can force you to make decisions and take actions that run contrary to your values and aspirations.

The circumstances you’re living in today are your own—you created them. Likewise, your future is entirely up to you. If you’re feeling stuck, it’s probably because you’re afraid to take the risks necessary to achieve your goals and live your dreams.

When it’s time to take action, remember that it’s always better to be at the bottom of the ladder you want to climb than at the top of one you don’t.

Fear is the #1 source of regret. When it’s all said and done, you will lament the chances you didn’t take far more than you will your failures. Don’t be afraid to take risks.

I often hear people say, “What’s the worst thing that can happen to you? Will it kill you?” Yet, death isn’t the worst thing that can happen to you.

The worst thing that can happen to you is allowing yourself to die inside while you’re still alive.

You don’t have to wait for an apology to forgive. Life goes a lot smoother once you let go of grudges and forgive even those who never said they were sorry. Grudges let negative events from your past ruin today’s happiness. Hate and anger are emotional parasites that destroy your joy in life.

The negative emotions that come with holding on to a grudge create a stress response in your body, and holding on to stress can have devastating health consequences. Researchers at Emory University have shown that holding on to stress contributes to high blood pressure and heart disease.

When you forgive someone, it doesn’t condone their actions; it simply frees you from being their eternal victim.

Live in the moment. You can’t reach your full potential until you learn to live your life in the present.

No amount of guilt can change the past, and no amount of anxiety can change the future. It’s impossible to be happy if you’re constantly somewhere else, unable to fully embrace the reality (good or bad) of this very moment.

To help yourself live in the moment, you must do two things:

1) Accept your past. If you don’t make peace with your past, it will never leave you and, in doing so, it will create your future.

2) Accept the uncertainty of the future. Worry has no place in the here and now. As Mark Twain once said, “Worrying is like paying a debt you don’t owe.”

Your self-worth must come from within. When your sense of pleasure and satisfaction are derived from comparing yourself to others, you are no longer the master of your own destiny. When you feel good about something that you’ve done, don’t allow anyone’s opinions or accomplishments to take that away from you.

While it’s impossible to turn off your reactions to what others think of you, you don’t have to compare yourself to others, and you can always take people’s opinions with a grain of salt. That way, no matter what other people are thinking or doing, your self-worth comes from within. Regardless of what people think of you at any particular moment, one thing is certain—you’re never as good or bad as they say you are.

Life is short. None of us are guaranteed a tomorrow. Yet, when someone dies unexpectedly it causes us to take stock of our own life: what’s really important, how we spend our time, and how we treat other people.

Remind yourself every morning when you wake up that each day is a gift and you’re bound to make the most of the blessing you’ve been given. The moment you start acting like life is a blessing is the moment it will start acting like one.

After all, a great day begins with a great mindset.

Change is inevitable—embrace it. Only when you embrace change can you find the good in it. You need to have an open mind and open arms if you’re going to recognize, and capitalize on, the opportunities that change creates.

You’re bound to fail when you keep doing the same things you always have in the hope that ignoring change will make it go away.

After all, the definition of insanity is doing the same thing over and over again and expecting a different result.

Life doesn’t stop for anyone. When things are going well, appreciate them and enjoy them, as they are bound to change. If you are always searching for something more, something better, that you think is going to make you happy, you’ll never be present enough to enjoy the great moments before they’re gone.

Bringing It All Together

Staying focused and asking the hard questions can be extremely uncomfortable. But we don’t learn and grow by sticking with what’s comfortable.

Please share your thoughts in the comments section below, as I learn just as much from you as you do from me.

 

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Nine Bad Habits You Must Break To Be More Productive !

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February 26, 2020

Nothing sabotages your productivity quite like bad habits. They are insidious, creeping up on you slowly until you don’t even notice the damage they’re causing.

Bad habits slow you down, decrease your accuracy, make you less creative, and stifle your performance. Getting control of your bad habits is critical, and not just for productivity’s sake. A University of Minnesota study found that people who exercise a high degree of self-control tend to be much happier than those who don’t, both in the moment and in the long run.

Some bad habits cause more trouble than others, and the nine that follow are the worst offenders. Shedding these habits will increase your productivity and allow you to enjoy the positive mood that comes with increased self-control.

Impulsively surfing the Internet. It takes you 15 consecutive minutes of focus before you can fully engage in a task. Once you do, you fall into a euphoric state of increased productivity called flow. Research shows that people in a flow state are five times more productive than they otherwise would be. When you click out of your work because you get an itch to check the news, Facebook, a sport’s score, or what have you, this pulls you out of flow. This means you have to go through another 15 minutes of continuous focus to reenter the flow state. Click in and out of your work enough times, and you can go through an entire day without experiencing flow.

Perfectionism. Most writers spend countless hours brainstorming characters and plot, and they even write page after page that they know they’ll never include in the book. They do this because they know that ideas need time to develop. We tend to freeze up when it’s time to get started because we know that our ideas aren’t perfect and what we produce might not be any good. But how can you ever produce something great if you don’t get started and give your ideas time to evolve?

Meetings. Meetings gobble up your precious time like no other. Ultra-productive people avoid meetings as much as humanly possible. They know that a meeting will drag on forever if they let it, so when they must have a meeting they inform everyone at the onset that they’ll stick to the intended schedule. This sets a clear limit that motivates everyone to be more focused and efficient.

Responding to e-mails as they arrive. Productive people don’t allow their e-mail to be a constant interruption. In addition to checking their e-mail on a schedule, they take advantage of features that prioritize messages by sender. They set alerts for their most important vendors and their best customers, and they save the rest until they reach a stopping point in their work. Some people even set up an autoresponder that lets senders know when they’ll be checking their e-mail again.

Hitting the snooze button. When you sleep, your brain moves through an elaborate series of cycles, the last of which prepares you to be alert at your wake up time. This is why you’ll sometimes wake up right before your alarm clock goes off—your brain knows it’s time to wake up and it’s ready to do so. When you hit the snooze button and fall back asleep, you lose this alertness and wake up later, tired and groggy. Worst of all, this grogginess can take hours to wear off. So no matter how tired you think you are when your alarm clock goes off, force yourself out of bed if you want to have a productive morning.

Multitasking. Multitasking is a real productivity killer. Research conducted at Stanford University confirms that multitasking is less productive than doing a single thing at a time. The researchers found that people who are regularly bombarded with several streams of electronic information cannot pay attention, recall information, or switch from one job to another as well as those who complete one task at a time. When you try to do two things at once, your brain lacks the capacity to perform both tasks successfully.

But what if some people have a special gift for multitasking? The Stanford researchers compared groups of people, based on their tendency to multitask and their belief that it helps their performance. They found that heavy multitaskers—those who multitasked a lot and felt that it boosted their performance—were actually worse at multitasking than those who liked to do a single thing at a time. The frequent multitaskers performed worse because they had more trouble organizing their thoughts and filtering out irrelevant information, and they were slower at switching from one task to another. Ouch!

Putting off tough tasks. We have a limited amount of mental energy, and as we exhaust this energy, our decision-making and productivity decline rapidly. This is called decision fatigue. When you put off tough tasks till late in the day because they’re intimidating, you save them for when you’re at your worst. To beat decision fatigue, you must tackle complex tasks in the morning when your mind is fresh.

Using your phone, tablet, or computer in bed. This is a big one that most people don’t even realize harms their sleep and productivity. Short-wavelength blue light plays an important role in your mood, energy level, and sleep quality. In the morning, sunlight contains high concentrations of this blue light. When your eyes are exposed to it directly, the blue light halts production of the sleep-inducing hormone melatonin and makes you feel more alert. In the afternoon, the sun’s rays lose their blue light, which allows your body to produce melatonin and start making you sleepy.

By the evening, your brain doesn’t expect any blue light exposure and is very sensitive to it. Most of our favorite evening devices—laptops, tablets, televisions, and mobile phones—emit short-wavelength blue light, and in the case of your laptop, tablet, and phone, they do so brightly and right in your face. This exposure impairs melatonin production and interferes with your ability to fall asleep as well as with the quality of your sleep once you do nod off. As we’ve all experienced, a poor night’s sleep has disastrous effects upon productivity. The best thing you can do is to avoid these devices after dinner (television is OK for most people as long as they sit far enough away from the set).

Eating too much sugar. Glucose functions as the “gas pedal” for energy in the brain. You need glucose to concentrate on challenging tasks. With too little glucose, you feel tired, unfocused, and slow; too much glucose leaves you jittery and unable to concentrate. Research has shown that the sweet spot is about 25 grams of glucose. The tricky thing is that you can get these 25 grams of glucose any way you want, and you’ll feel the same—at least initially. The difference lies in how long the productivity lasts. Donuts, soda, and other forms of refined sugar lead to an energy boost that lasts a mere 20 minutes, while oatmeal, brown rice, and other foods containing complex carbohydrates release their energy slowly, which enables you to sustain your focus.

Bringing It All Together

Some of these habits may seem minor, but they add up. Most amount to a personal choice between immediate pleasures and lasting ones. After all, the worst habit is losing track of what really matters to you.

Are there any productivity-killing habits that I missed? Please share them in the comments section below, because I learn just as much from you as you do from me.