#040 Heuristics and Biases

If you’ve seen Sully, you will probably get this reference.

If you haven’t, here’s a short anecdote without revealing to you any spoilers.

Captain Sully was an experienced american pilot who realized both his engines had failed mid-way during a flight. He has a small window to make a choice – whether to land the plane in water or in the nearby airport which was a little far.

He finally ended up saving a lot of lives.

What is the point here?

Well, the human mind has biases.

While Captain Sully was bombarded with multiple biases before he could even think of taking a decision, the fact that he was experienced and a very senior pilot, his heuristic allowed him to take a decision at that very moment.

There’s a multitude of biases that are present all the way from recency bias to anchoring bias and what not.

I had written about some of these biases in a post here. In fact, if you’re more of a video / podcast / listening person, you can watch a recent video I had filmed with my man Naren, here.

This is also a good 101 video covering the basics of stocks, personal finance and money.

A great company that I recently started studying about is Piramal Enterprises.

Going through their Annual Report, I was more interested in understanding about their pharmaceuticals business given they have quite a few strategic partners in the names of Allergan, Carlyle, IFC (investing arm of the World Bank) and the likes.

My ‘recency’ and ‘anchoring’ bias led me to thinking that probably the financial services business is not even worth looking at until I found this interesting chart.

To put things into perspective, Capital Adequacy Ratio of Bajaj Finance as on FY21 was 28%, HDFC Bank was 18.8%.

This actually made me start going deeper into understanding more about their financial services play. Taking over DHFL’s loan book may have provided them with a further margin of safety and also a good chunk of their housing loan assets.

Alpha Swing turns #033

This week, the Research team at Alpha Swing has found three interesting picks for the week that is coming by.

One of the stocks was recently in the radar because ace investor Rakesh Jhunjhunwala had upped it’s stake in the same.

Interestingly it also came in the team’s radar. Click here to find out more.

Stockroom Sunday – Episode 17

This week, we have a guest on the show!

Also, Vishal and I discuss about interesting trade ideas, thoughts on the Realty Sector and my thoughts on the Zomato’s IPO.


Podcast of the Week

Song of the Week

This week legendary actor Dilip Kumar passed away. Saregama has done an interesting rendition to pay tribute to him. Here’s the video –

Book of the Week

Ben Horowitz has a no-nonsense approach to his investing style, the way he has founded start-ups and when it comes to his personal life.

The hard thing about hard things is a great book covering all of it.

Check it out here.

If you’re planning to head over to Amazon, just use this link below and continue shopping.

Almost 200+ people wrote to me saying that their life was made easy by the little mobile stand I had started using.

Well, now I have discovered a new product that has made working on my new laptop way easier.

It’s a compact (non-bulky) laptop stand and fits easily in my bag. You can check out the product here.

Trust it helps you too.

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