Frictionlessness in investing is doing something to your decision-making.

While selling a house has over fifteen checkpoints that make you rethink your decision, selling a stock has just one that takes only a click.

And because there’s no pushback, the reason doesn’t need to be airtight.

This is where even experienced investors bleed sometimes. Good businesses, exited too soon, over reasons that felt rigorous in the moment and looked thin six months later.

Kahneman, who essentially built the vocabulary for how investors think irrationally, spent years documenting how the brain retrofits logic onto decisions that were already made.

• A feeling like discomfort or doubt strikes up

• The mind goes looking for evidence to match that feeling

• It finds some, organises it, and hands it back as reasoning

• That reasoning “feels” like the origin of the decision

What happens next? Action-based rumination.

Uncertainty in a portfolio is unsettling. The mind resolves it in the fastest way available. And in investing, the fastest available action is always to sell.

The relief upon selling feels like clarity, and over time, a few exits that worked make you think that you have an instinct for when to get out.

That’s the illusion of skill: You read market signals as a pattern.

Here’s a video that shows you the problem you haven’t solved yet hiding inside the one you think you have.

Check it out️

Finology’s Exclusive Updates

From Ticker: India’s Next Manufacturing Super-Cycle

Corporate India is building physical capacity at a pace not seen in years: capex cycles opening across energy, defence, and power grids simultaneously.

CWIP, or Capital Work-in-Progress, tracks every rupee committed to factories and expansion before it becomes revenue.

Here’s how to track it on Ticker:

• CWIP-to-Assets Surge: Go to the Balance Sheet tab. Look for companies where CWIP has expanded significantly over 24 months. That’s capacity being built that hasn’t touched the sales ledger yet.

• DuPont Analysis (Debt Check): Factories require capital. Use the DuPont Analysis tool to confirm the expansion is funded through operational efficiency and not debt eating into the upside.

Retail investors read last quarter’s earnings. The earlier signal is in what a company is building right now.

Visit Ticker →

Game Time!

Think, Investor, Think

You are tempted to sell your shares because the specific industry the company operates in is currently facing a problem, though the business model itself is not permanently broken.

That’s all in The Finology Letter!

Hope today’s edition felt useful and worth your time.

If it did, drop a like and comment how. Also, if you’d like us to cover more (or less) of such content, do tell. We love to get better for our people.

At some point, almost everyone we know has lost money to something that could have been avoided. A bad tip from a relative. A scheme that sounded legitimate until it wasn’t. A financial product sold by someone whose incentive was commission, not clarity. The losses were not always large. The damage to confidence usually was.

That is where Finology started. A frustration that was impossible to ignore: too many people were making consequential financial decisions with almost no reliable information to guide them.

Financial literacy is the difference between building wealth and haemorrhaging it quietly over decades. That conviction has been at the centre of everything we have built.

Learning Is Only Half of It

Teaching people about money matters. So does giving them the tools to act on what they learn. Knowledge without action creates informed frustration, and covering the full journey has always been the goal: from understanding how markets work, to analysing a stock, to making a confident investment decision.

That is why Finology ONE brings together Quest, our learning platform, and Ticker, our stock research tool, in one place. Quest is for anyone who wants to understand investing from first principles. Ticker is for when you are ready to look at actual companies with actual numbers. Together, they serve the investor who wants both knowledge and the clarity to use it.

For those who want structured guidance rather than independent exploration, Finology 30 offers a set of long-term stock recommendations built on deep, in-house research. It is for investors who want a starting point that has been genuinely thought through.

What Should Never Be Behind a Paywall

Some tools are too fundamental to restrict. Nearly 90% of Ticker is open to everyone, because stock research deserves to be accessible. The Financial Checkup and Goal Planner on Recipe are free for the same reason. If a tool helps someone understand where they stand financially, keeping it open is the only decision consistent with the mission. This is a deliberate choice. Financial awareness at scale requires that the basics remain within reach of everyone.

What Financial Freedom Actually Means

It means being in control of your money.
It means knowing where your money is going and making that choice deliberately rather than by default.
It means having enough understanding to ask the right questions when someone tries to sell you something. It means the gap between what you earn and what you actually build is closing, gradually and consistently, because your decisions are informed ones.

Every course, every tool, every recommendation Finology puts out is built around this. Making investing something anyone can understand and act on, regardless of where they are starting from. The evidence shows up every day. People in this community have made avoidable mistakes, and then the same people have come back, learned, adjusted, and grown. Watching that happen makes the purpose feel immediate rather than aspirational. That is why the name exists. As a standard, every product and every piece of content is held to, every single day.

Financial freedom is something people build for themselves, with the right knowledge and the right tools. Our job is to make sure those are always within reach.

Hello there!

Insurance advice usually comes in two flavours:

• The agent who remembers your birthday.

• The finfluencer who drops “top 5 plans” and vanishes.

Neither tells you how the filtration actually works. So, allow us.

Take health insurance. Of the companies with publicly available data, we ran 4 elimination rounds.

• First, Claim Settlement Ratio: Benchmark set at 95%, against a 91% industry average. Ten companies gone.

• Second, Incurred Claim Ratio. Below 60% means they’re stingy with payouts. Above 100% means they’re heading toward insolvency. We filtered for companies sitting between those two numbers.

• Third, Complaints Ratio: Benchmark tougher than the industry average of 27 complaints per 1,000. More names dropped.

• Fourth, Cashless Hospital Network: Minimum 10,000 hospitals, above the 9,400 industry average. Pan-India coverage isn’t negotiable when you’re in an emergency.

This brought us to recommendations based on who you actually are; family floater, chronic condition, young and looking for simplicity.

Term insurance went through a similar funnel. But here we added a filter that shows how an insurer behaves when the claim runs into crores.

A headline number can hide a lot. And here’s why this is important beyond the filtration.

• A policy that looks good in a brochure becomes useless the moment you hit a room rent cap you didn’t notice.

• A term plan that seemed affordable becomes your family’s biggest regret when a claim gets rejected over something you didn’t disclose at age 25.

The gap between buying insurance and being insured is wider than most people realise.

Here’s a video that connects the dots.

Check it out

Finology’s Exclusive Updates

01. Finology 30 Stock Update: Premium Consumption Fortress

Finology 30’s latest stock is now available.

We picked this company because it dominates a space where new players simply cannot easily enter or catch up, right as demand from high-spending consumers is hitting record levels.

The full research report, along with the company name and Buy It Below price, is available in the Finology 30 dashboard.

Check it Out →

02. Buy it Below Update on a Core Stock

Our research team has shared an annual update on one of our core stocks and revised the Buy it Below price due to near-term tax headwinds.

You can view it on your Finology 30 dashboard.

View Now →

03. From Ticker: The “Efficiency Mode” Opportunity

With crude oil prices surging, PM Modi urged citizens to reduce fuel consumption and adopt Work From Home wherever possible.

For investors, this shift highlights businesses built for efficiency and lower physical dependency.

Here’s what to check on Ticker:

• Track Asset-Light Businesses: Companies that benefit from WFH and digital operations often improve margins during such periods. Check the DuPont Analysis → Look for strong Asset Turnover.

• Strong Cash Flow: When spending slows, businesses with healthy cash generation stay resilient. Use the Cash Flow tab → Find companies with strong Free Cash Flow.

Efficient businesses tend to outperform during “efficiency mode” economies.

Visit Ticker →

Game Time!

How’s Your Insurance IQ?

That’s all in The Finology Letter!

Hope today’s edition felt useful and worth your time.

If it did, drop a like and comment how. Also, if you’d like us to cover more (or less) of such content, do tell. We love to get better for our people.

In 1973, an American family filling up their car waited in a queue that stretched around the block. Not because there was a sale. Because there was almost no petrol left. OPEC had imposed an oil embargo on Western nations, prices had quadrupled in months, factories were slowing down, jobs were disappearing, and the government had no clean answer for any of it, because fixing one problem would make the others worse.
That was stagflation. And the conditions that created it are not as distant as they seem.

What Stagflation Actually Means

The word is exactly what it sounds like. Stagnant growth plus inflation, compressed into one term. It was first used by British politician Iain Macleod in the early 1960s when the UK was navigating a period of simultaneous sluggish growth and rising prices. The word stuck because the situation it described kept recurring.

Stagflation is a specific and particularly difficult kind of bad economy, one where the usual tools stop working cleanly. Normally, when inflation rises, a central bank raises interest rates to cool things down. But higher interest rates also slow growth and push up unemployment. In a stagflationary environment, you are already dealing with slow growth and high unemployment. Raising rates fixes one problem while making the others worse. It is a policy trap, and there is no elegant way out of it.

How It Differs From Regular Inflation

Inflation on its own is manageable and, to a degree, expected. It is simply the rate at which prices rise over time. If inflation runs at 5%, the groceries that cost you ₹100 this year will cost ₹105 next year. Uncomfortable, but workable. Central banks have well-established tools for bringing it under control.

Stagflation is inflation with the government’s hands tied. Prices are rising, the economy is not growing fast enough to absorb the pain, and unemployment is climbing simultaneously. There is no single lever that fixes all three at once. Every available tool involves a tradeoff that, in a stagflationary environment, the economy can barely afford to make.

Why It Happens

There are a few well-documented causes, and they tend to arrive through similar routes.
The most dramatic is an oil shock. Oil is an input for almost everything: manufacturing, transportation, agriculture, and logistics. When oil prices spike suddenly, the cost of producing and moving goods rises across the entire economy. Output slows. Prices rise regardless. The 1970s made this lesson viscerally clear.

In 1973, OPEC imposed an oil embargo on Western nations following a geopolitical dispute. Prices quadrupled almost overnight. The cost of production surged across industries, economic growth stalled, and inflation climbed sharply. The US went through five consecutive quarters of negative GDP growth. The misery index, which simply adds the unemployment rate to the inflation rate, hit levels that had no modern precedent.

Mismanaged policy can produce the same outcome through a different route. Richard Nixon’s decision in the early 1970s to freeze wages and prices for 90 days, while simultaneously imposing import tariffs, is a case study in well-intentioned intervention creating chaos. Supply dried up, shortages emerged, and when the freeze lifted, prices surged to compensate. The medicine made the condition worse.

Supply shocks more broadly follow the same logic. When the availability of goods collapses suddenly, whether from a pandemic, a war, or a trade disruption, prices rise even as economic activity slows. COVID-19 demonstrated this in real time. Global supply chains seized up, unemployment spiked, and inflation followed with a lag that caught most central banks unprepared.

How the 1970s Actually Ended

The US stagflation of the 1970s is the most studied example, and its resolution matters as much as the crisis itself. By 1979, inflation had become self-reinforcing. People were making economic decisions with the expectation of further inflation, which itself generated more inflation. Paul Volcker, appointed as Federal Reserve chairman that year, did something that was painful and politically unpopular: he raised interest rates aggressively and held them there through a severe recession. Unemployment climbed. Growth contracted sharply. And then, gradually, inflation broke.

It worked. But it required accepting significant economic pain in the short term to restore stability in the long term. No government finds it easy to do, and most delay it longer than they should.

Why India Should Be Watching This

The stagflation conversation is no longer purely academic for India. The economy is structurally exposed to the conditions that typically trigger it.

India imports the overwhelming majority of its crude oil. Any sustained disruption to global energy supply, whether from a geopolitical conflict, a trade shock, or a supply bottleneck, feeds directly into domestic inflation through fuel, fertiliser, logistics, and food prices. The transmission is fast and broad.

At the same time, when global uncertainty rises, foreign capital tends to exit emerging markets quickly, weakening the currency and making imports even more expensive. The two pressures compound each other.
On the domestic side, when input costs rise sharply, companies face a difficult choice: absorb the margin hit or pass the cost to consumers. When they pass it on, consumer demand cools. When demand cools alongside constrained supply, the economy finds itself in exactly the kind of low-growth, high-inflation bind that defines stagflation.

India is not in a stagflation crisis today. But the structural vulnerabilities that would make one possible are real and worth understanding before they become urgent.

What This Means for Your Portfolio

Equities broadly struggle because rising input costs compress corporate margins at the same time that slowing growth dampens revenue. Sectors most sensitive to energy prices and interest rates tend to feel it first. Fixed income loses ground because inflation erodes the real value of returns. Cash loses purchasing power by definition.

The asset classes that have historically held their value better during stagflationary periods are commodities, real assets, and gold. These either benefit directly from rising prices or preserve value when currencies are under pressure. This is not an argument to restructure a portfolio around a scenario that may not fully materialise. It is an argument for knowing what you own, understanding its vulnerabilities, and not being caught off guard by an environment that history has visited before.

Volcker’s lesson from the 1970s is that the longer a stagflationary environment goes unaddressed, the more painful the eventual correction. The investors who understood what was happening early had more time to think clearly. That is, ultimately, the only real edge available in a situation like this: not prediction, but preparation.

Before Money Existed

Rewind far enough, and there was no currency at all. People traded directly: grain for cloth, cattle for tools, labour for food. This system, called barter, sounds simple in theory. In practice, it had one fatal flaw.

Both parties had to want exactly what the other was offering. A farmer with excess wheat needed to find a shoemaker who was both hungry and willing to trade, at the same moment, in the same place.

Economists call this the "double coincidence of wants." Most of the time, that coincidence never showed up.

So people started looking for a middle ground, something universally desirable that could hold value and be exchanged for anything. Shells, salt, gold, silver. Eventually, coins. Then paper. The logic was always the same: find something everyone agrees has value, and use it to grease the wheels of exchange.

The Bank's Magic Trick

Here is where it gets interesting, and a little unsettling.

When you deposit money in a bank, you assume it sits there, waiting for you. It does not. The bank takes your deposit and lends most of it out to someone else, at a higher interest rate than it pays you. The difference between what it pays you and what it charges the borrower is how the bank makes its money.

This is not fraud. It is by design, and it is called fractional reserve banking. Banks are required to hold only a fraction of their deposits in reserve. The rest goes out as loans. Those loans get deposited into other banks, which then lend most of that out too. The same money multiplies as it moves through the system.

Think about that for a moment. The bank did not create value. It created money simply by moving it around with enough confidence that nobody questioned it.

What Happens When You Print More

Governments and central banks have the authority to introduce new money into the economy, and sometimes they use it aggressively. In theory, more money means more spending, more growth, more jobs. In practice, it depends entirely on how much money already exists.

If you double the amount of money in circulation overnight without creating any additional goods or services, you have not made anyone wealthier. You have just made every existing unit of money worth less. This is inflation, and it is essentially an invisible tax on everyone who holds cash.

The most dramatic examples read like cautionary tales. Post-World War One Germany printed money so aggressively that people reportedly carried it in wheelbarrows to buy bread. Zimbabwe printed trillion-dollar notes in the 2000s that could not buy a loaf. The math always catches up.

Why This Matters to You

Money is not a neutral, natural thing that has always existed. It is a technology, one that humans invented, refined, and occasionally broke. Every note in your wallet is backed not by gold or silver but by collective belief, a shared agreement that this piece of paper is worth something.

That belief is fragile. It holds as long as the institutions behind it remain credible and disciplined.

The moment a government prints beyond reason, or a banking system lends beyond its means, the agreement starts to fray.

Understanding this does not make you a cynic. It makes you a more deliberate participant in a system you use every single day.

Hello there!

You must have heard these in investor presentations, YouTube videos, and most IPO prospectuses:

“India’s demographic dividend.”
“Structural growth story.”
“Long-term consumption tailwinds.”

Not saying they’re wrong to state all that, but...

Consider Hyundai Motor. The parent company in Korea trades at a ~16x P/E. Its Indian subsidiary? ~28x.

The premium is entirely the “India growth story,” nothing to do with the underlying performance.

And this isn’t isolated. Of the ~79 mainboard IPOs listed in FY25:

• Valuations that seemed justified during the bull market proved unsustainable as markets weakened.

• ~45% of mainboard listings were trading below their issue price as of March 2025.

Stories are beautiful things. They give us confidence to hold. They make us feel smart for buying early.

But stories reverse faster than balance sheets.

When sentiment turns (and it always does), the stock doesn’t correct to fair value but to below fair value, because the same crowd that bought the story will sell the disappointment.

You’re not wrong to believe in India’s future. Just know that belief is already priced in, often twice over.

From Our Socials

01. The Compounding Phase Parents Miss

Small yearly contributions can compound into a surprisingly large tax-free corpus over time through this govt. scheme.

Know More →

02. The Human Layer Behind Every Stock

Products can succeed, industries can grow, and demand can rise. Poor leadership still finds a way to damage outcomes.

Know How →

03. Why Lottery Winners Often End Up Broke

Sudden money changes behaviour faster than it changes judgment. How should one deal with this psychological shift?

Find Out →

Finology’s Exclusive Updates

01. Finology 30 Stock Update: The Scale Architect

Finology 30’s latest stock is now available.

We like this business because its competitive advantage is built on operational discipline rather than transient trends.

The full research report, along with the company name and Buy It Below price, is available in the Finology 30 dashboard.

Check it Out →

02. From Ticker: The “Green Shovels” of India’s Solar Boom

While investors focus on solar developers, demand for companies that supply them is rising.

With stricter ALMM norms pushing developers toward Indian-made components, domestic makers of solar glass, aluminium frames, and high-efficiency cells are seeing strong tailwinds.

What to focus on this week?

• Track Component Makers: Explore Glass and Industrial Products, not just “Solar” stocks.

• Check CWIP: Rising Capital Work in Progress can signal new factory expansion.

• Use DuPont Analysis: See whether growth comes from stronger operations or added debt.

• Compare Inventory Turnover: Faster-moving inventory often signals rising market share.

India’s solar boom needs a manufacturing backbone. Use Ticker to spot the companies powering it behind the scenes

Visit Ticker →

Game Time!

Tell tell?️

That’s all in The Finology Letter!

Hope today’s edition felt useful and worth your time.

If it did, drop a like and comment how. Also, if you’d like us to cover more (or less) of such content, do tell. We love to get better for our people.

Disclaimer:



Finology Ventures Private Limited (RA Division)

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. For more details, click here .

Non-Individual SEBI Registered Research Analyst | SEBI Reg. No: INH000024277 | BSE Enlistment ID : 6877 | Validity : 5 years | PO Details: Antra Mahto | compliance.ra@finology.in | 99816-91677

Do you remember Sushil Kumar from Kaun Banega Crorepati, the one who actually won ₹5 crores? He came from very little before he won. He returned to nothing after. Five crores came and went, and he had nothing to show for it. How does that even happen?
The answer is embarrassingly simple. It comes down to how we mentally categorise money, and how badly that categorisation messes with our decisions.

What is Mental Accounting?

Richard Thaler, the same economist who later won the Nobel Prize, first wrote about this in a paper titled “Mental Accounting Matters.“ His observation was straightforward: people assign money different values depending on where it came from, and that quietly drives some of our worst financial decisions.
The technical term for what we should do is treat money as fungible, meaning ₹100 is ₹100, regardless of whether it came from your salary, a bonus, or a scratch card. We create little mental buckets instead, and the rules we apply to each bucket are completely different.

If you get a ₹1,00,000 year-end bonus, you are probably already spending it in your head: a trip, a new phone, dinner at that place you have been meaning to try. But if someone asked you to cut ₹1,00,000 from your monthly expenses, you would treat that as a crisis. It is the same amount. The math is indifferent to its origin. Your brain is anything but.

Why This Matters for Investing

Mental accounting gets especially dangerous when money is involved in markets.
Consider how people behave with capital gains. If you invest ₹10,000 of your salary and it grows to ₹20,000, most people become noticeably more reckless with the extra ₹10,000. They take risks they would never take with money they “actually earned.” Losing it would hurt just as much. Because it came from the market, it feels like house money.

The same logic plays out with lump sums versus monthly income. People who receive a large amount at once tend to park it in safe, low-yield options: fixed deposits, savings accounts. The same person, receiving that identical amount in smaller monthly instalments, would confidently put it into equities. The money is the same. The behaviour is worlds apart.
This is where the pyramid problem shows up in personal finance. When people mentally silo their money, one bucket for emergencies, one for retirement, one for fun, they stop seeing their finances as a whole. Someone might hold excessive cash in a savings account earning 3% while carrying credit card debt at 36%. On paper, that is indefensible. Mentally, those are two separate accounts with two separate sets of rules.

The Upside

Mental accounting, in fairness, has its uses. Earmarking money for specific goals, retirement, a child’s education, a home, genuinely helps people follow through. Someone who deposits a fixed amount into a retirement account every month is far more likely to retire with savings than someone who invests whatever is left over. The mental commitment creates real behavioural guardrails.
The system works. It just stops working the moment it starts overriding logic.

Where It Goes Wrong

Tax refunds are a good example. Most people treat a refund like a gift from the government. It is simply your own money that was withheld in excess. The government held it for a year, interest-free. You are getting back what was already yours. Because it arrives as a lump sum, it gets spent like a windfall rather than folded into a sensible financial plan.

Bonuses follow the same pattern. Lottery wins are the extreme case, and Sushil Kumar is the cautionary tale. The money feels different, so it gets treated differently, and “differently” almost always means worse.
Thaler’s larger point is worth sitting with. Conventional economics assumed people were rational. His entire career was built on demonstrating that they are predictably irrational, that the deviations follow patterns, and that those patterns can be studied and anticipated. We behave like humans who have invented their own rules about which money counts.

The Fix

Awareness is most of the work. Before spending a bonus, a refund, or any windfall, ask yourself whether you would spend regular income this way. If the answer is no, that is mental accounting at the wheel.

Treat all money as if it came from your salary. Run it through the same filters. Give it the same scrutiny. ₹100 is ₹100. It always was.

Disclaimer:



Finology Ventures Private Limited (RA Division)

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. For more details, click here .

Non-Individual SEBI Registered Research Analyst | SEBI Reg. No: INH000024277 | BSE Enlistment ID : 6877 | Validity : 5 years | PO Details: Antra Mahto | compliance.ra@finology.in | 99816-91677

Hello there!

Over a 20-year holding period, assuming a 14% nominal return from the Nifty and 6% inflation, inflation eats ~74% of your total returns.

Let me say that differently. You think you made 14% a year, but most of that gain is an illusion created by a falling rupee.

Your actual purchasing power grew at barely 8% a year. The other 6%? Vanished into your cost of living.

The irony is, you still pay capital gains tax on the full 14%, including the portion that never made you richer.

Indexation once softened this blow. But after recent budget changes, most assets are now taxed on nominal gains.

That’s why portfolios look rich on screens but feel underwhelming in real life.

That gap between what your statement shows and what your wallet feels? That’s inflation. And over two decades, it takes ₹74 of every ₹100 of return you thought you earned.

So…

• Before you buy:

  Calculate your personal inflation rather than the government’s CPI. If you spend on private schools or healthcare, use 8-9%.

  Check how the asset is taxed.

  👉 Equities and mutual funds are taxed at 12.5% with no indexation.
  👉 Real estate gets indexation only if bought before July 2024.
  👉 SGBs are tax-free only if you’re the original subscriber holding till maturity.

• Every year:

  Divide your current corpus by 1.06 for each year you’ve held it.

  Example: 5 years = divide by 1.06 five times. If it’s flat or down, you’re not growing.

• Before you sell:

  Celebrate only returns above 6% per year. A 2x in 12 years is a zero real return.

From Our Socials

01. The Assumption Behind Buying Flats

Ownership feels like progress, but investing requires something else entirely. Where do the two diverge?

Find Out →

02. When Loss-Making Businesses Come to You

A decade without profits is a signal. The decision to raise money from retail investors is another. What connects the two?

Find Out →

03. Carpenter’s Tool Now a Cultural Icon

Some brands go beyond usage and become instinctive choices. This one followed that path quietly over decades.

Know How →

Finology’s Exclusive Updates

01. Finology 30 Stock Update: The Rent Collector

Finology 30’s latest stock is now available.

We picked it because of its long-term rental moat and operating leverage advantage,

The full research report, along with the company name and Buy It Below price are available in the Finology 30 dashboard.

Check it Out →

02. From Quest: Module 6 - Valuation Over Price

“Price is what you pay, value is what you get.” — Warren Buffett.

Investors track price action, but rarely interrogate the valuation behind it.

Our latest module addition to The Finology Stock Analysis Course forces you to separate the two.

Learn about:

• Enterprise Value: Move beyond P/E and understand what you’re actually paying for the entire business.

• Promoter Holdings: Identify real conviction. Track ownership patterns to see who has skin in the game and who doesn’t.

• ROCE vs ROE: Separate genuine efficiency from leverage-driven returns. Know what’s actually driving performance.

• Banking Deep Dive: Banks operate on a different framework. Learn the metrics and lens required to value financial institutions correctly.

View Module →

03. From Ticker: Powering the AI Backbone

While most focus on AI software, the underlying demand is building in data centres.

India’s capacity is set to hit 1.7 GW by the end of 2026. AI servers consume far more power and generate far more heat, creating demand for cooling and electrical infrastructure.

What to focus on this week?

• Track Cooling Demand:Blue Star and Voltas are expanding into data center cooling.

• Break Down Power Players: Look at ABB India or Hitachi Energy. Use DuPont to check if ROE comes from margins.

• Compare Valuations: Use the Historical P/E chart to see if re-rating has run ahead of fundamentals.

AI needs power and cooling to scale. Use Ticker to spot the companies building that backbone early.

Visit Ticker →

Game Time! 🧠

That’s all in The Finology Letter!

Hope today’s edition felt useful and worth your time.

If it did, drop a like and comment how. Also, if you’d like us to cover more (or less) of such content, do tell. We love to get better for our people.

Disclaimer:

Finology Ventures Private Limited (RA Division)

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. For more details, click here .

Non-Individual SEBI Registered Research Analyst | SEBI Reg. No: INH000024277 | BSE Enlistment ID : 6877 | Validity : 5 years | PO Details: Antra Mahto | compliance.ra@finology.in | 99816-91677

The correction is behind us. Nifty has recovered from its March lows. But a recovery is not a bull run. The market is still finding its footing, between oversold support and overhead resistance, with crude oil, global interest rates, and geopolitical tensions all unsettled.

This is exactly the phase where stock selection matters the most. Buying into a falling market is one decision. Knowing what to hold through a consolidation is a different skill entirely.

Over the years, I have built a set of nine qualities that guide every stock I consider, regardless of what the index is doing. Each one is grounded in business fundamentals, and each one has a specific reason behind it.

If you are looking for a structured way to think about stock selection when the market offers no clear signal, this is a good place to start.

Check out Finology 30: https://tinyurl.com/30-stocks-finology
Explore Finology Quest Courses: https://tinyurl.com/allcourses-quest

Disclaimer: Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, enlistment with the BSE, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Finology Ventures Private Limited, RA Reg. No: INH000024277, BSE Enlistment ID: 6877, Add: 4th Floor, Avinash One, VIP Road, Opposite to Magneto Mall, Raipur, Chhattisgarh - 492001

This makeshift version of the line from “3 Idiots” pretty much sums up the life of Balvant Parekh, before he founded Pidilite. The same Pidilite that is famed for creating the Fevicol range of adhesives.

But Balvant’s life wasn’t as easy as just switching jobs on his whim, and neither were Pidilite or Fevicol the great companies and products that they are today. Let’s find out how the brand and the person reached their current fame.

The Balwant Parekh Origin Story

Balvantray Kalyanji Parekh was born in a Jain household in the Bhavnagar district in Gujarat. To reiterate and expand on today’s story’s opening, he enrolled in the Government Law College Mumbai to follow in his grandfather’s footsteps of becoming a magistrate.

This was during the peak of the Indian Independence movement, and like many youngsters of the country, Balvant too was inspired by Baapu. He dropped out of law school to join the Quit India Movement to follow his inspiration, much to his parents’ disagreement.

After a brief stint in social movements, Balvant resumed his education in law and even finished it. However, he didn’t become a member of the bar council as the need to tell lies associated with the profession of being a lawyer didn’t sit well with his conscience.

And thus began Balvant’s pursuit of a career that he liked. Although he studied law, he was a businessman at heart. But he couldn’t just willy-nilly set up shop, call it a business, and hope to run it successfully. He had to bide his time and collect valuable experience and capital.

During the time that it took to collect both of these, Balvant didn’t shy away from any task that came his way. He worked in a dyeing and printing company, after which he even spent some time as a peon in a wood trader’s office.

During this time, Balvant moved into a warehouse owned by a friend with his wife, as other living arrangements were not affordable for him.

Balvant truly believed that no task was too petty for a man on a mission. And on a mission, Balvant was. So when he met Mohanbhai, a dye trader he had built a rapport with, he offered him the opportunity to invest in his business, importing dyes and chemicals from Western countries like Germany, Italy, and England.

But this association with Mohanbhai didn’t last too long. When Balvant wanted a bigger share in profits, his partnership with Mohanbhai ended.

Around 1954, several things fell into place at once. Balvant joined Fedco, a firm representing the German company Hoechst in India, as a partner for fifty per cent profits. Impressed by Balvant’s business knowledge, Hoechst’s MD invited him to train at one of their German factories.

Balvant returned with both knowledge and ambition, but shortly after, the MD passed away. With Hoechst now wanting to operate independently from Fedco, Balvant bid farewell and wasted no time, joining hands with his brother Sushil to start Parekh Dyechem Industries, with Mohanbhai coming on board not as a departing partner, but as an investor in this new venture. Under Parakh Dyechem, Balvant kept buying stakes in Fedco.

This Parekh Dyechem Industries changed to Parekh Dyechem Lite Industries, then to P.D. Lite Industries, and then to Pidilite Industries.

“Parekh Dyechem Industries changed to PDI Chemicals Pvt. Ltd., then to PDI Chemicals Ltd., and then to Pidilite Industries Ltd.”

Chaunk gaye na? Me too.🤭

The Vegetarian Glue

During his time working at the wood trader’s office, Balvant noticed one thing: the adhesive traditionally used in woodworking was made very cumbersome to use and wasn’t very strong.

As a result, carpenters had a hard time handling the adhesive, and their work wouldn’t last long, irrespective of their skill.

Another thing that the Indian populace couldn’t agree with was that traditional adhesives were made with animal parts. I will spare the details of the animal glue for those with a weak stomach. But in the largely vegetarian demographic of India, Balvant saw a business opportunity.

Balvant created Fevicol right at the very birth of Pidilite, launching it around 1959-1960, almost simultaneously with the company's founding, leveraging his Fedco connections. It was a glue made with synthetic resin instead of animal parts, designed to be far more acceptable to the Indian masses.

Not only that, Fevicol was initially catered to the carpenters because woodworking adhesive was a very user-driven purchase. This meant that the consumer of the furniture didn’t care much about the adhesive used and delegated that decision to the carpenter who would construct the furniture.

The name “Fevicol” was a mix of parts of “Fedco” and the German word “Col”, which meant anything that bonds two things. It had also drawn inspiration from the German adhesive prevalent at that time called “Movicol”.

This name was very beneficial for Pidilite as adhesive had existed for a long time as a product, but “Fevicol” gave Pidilite’s adhesive an edge through brand recall. Customers now had a recognizable adhesive that they could pinpoint as their choice.

But it wasn’t all sunshine and daisies for Balvant and Pidilite. With the “vegetarian glue” clearly being a good idea, the company now faced a new problem, competition from other companies copying Pidilite and Fevicol.

Getting Crafty

While the carpenters were already sold on Fevicol being the best adhesive, Pidilite couldn’t risk losing its recognition among the retail customers. To consolidate their position in the market, Pidilite changed the target of their approach. They went from an industrial product meant only for furniture to a retail consumer product.

While it takes significant marketing maneuvering to successfully make a shift like this (ex. Asian Paints’ ad campaign), Balvant chose to work smart and not too hard. Balvant made Fevicol a product that would appeal to the “Arts & Craft” crowd to approach the retail consumers. This was achieved by switching the packaging of Fevicol and selling it in 30 gm tubes.

This foray into arts and crafts was bolstered by introducing Fevicryl, Fevistic, Rangeela, and other products that were more suitable for students than carpenters.

With the consumers hooked on Pidilite’s products as well, the “Fevi Family” became a product capable of satisfying all of your sticking needs.

Fevicol: A Popstar

It’s one thing to become har ghar ka brand, but Fevicol rose above and beyond and became a sort of a cultural reference in the entire country. But this couldn’t be achieved easily. Adhesive wasn’t exactly the most glamorous or frequently used product, and customers needed a reason to remember the brand.

Pidilite achieved this through a witty ad campaign and left a lasting impression on the masses. These ads gave us the famous “Fevicol ka mazboot jod hai, Tootega nahi” and “Asli Waterproof Adhesive”.

These campaigns made the Fevicol brand name identical to “strong bonds”.

Fevicol also gained even more populace as it was mentioned in various contexts as the famous song “Fevicol Se” in Dabbang 2. During his visit to Japan, Narendra Modi commented on the strength of the relationship with the country by saying, “Yeh fevicol se bhi zyada mazboot jod hai!”

Honestly, what more could a company ask for?

The Bottom Line

Although Balvant grew out and away from his point of origin in good old Bhavnagar, he was not ungrateful or forgetful of his roots. With the success of Pidilite fueling him, Balvant helped in the set-up of Arts & Science College in Bhavnagar and donated close to ₹2 crores for Bhavnagar’s Science City and Gujarati Sahitya Parishad.

And this was the story of how a college dropout who didn’t pursue the profession his education afforded him went on to create one of the biggest brands in India.

Because of sheer determination and concentrated will, Balvant secured a “Fevicol strong” bond with success.

Hello there!

If you’re to compare raw returns of the two asset classes in a vacuum, it won’t help. Because over long holding periods, both assets land in a similar return band.

The outperformance narrative you hear usually comes from someone selling one or the other. So if the numbers don’t separate them, what does?

Well, how you lose money matters more than how you make it.

• Stocks will test your nerve. A 30% drawdown arrives every few years. The screen turns red, headlines scream crisis, and your portfolio halving feels permanent.

  Most equity investors earn far less than the fund’s reported CAGR, because they exit precisely at the bottom.
  

  To utter the blunt truth, this asset class rewards only those who can witness a ₹50 lakh portfolio drop to ₹25 lakh and still execute the next month’s SIP.
  

• Real estate will test your patience. There is no ticker, daily price or exit button. You’ll wait years through delayed possession, tenant vacancies, stamp duty friction, and regulatory shifts.
  

  The illiquidity that frustrates you can also protects you because you can’t panic-sell a flat the way you can a stock. That forced stillness is often the reason why compounding works.
  

• The tax code no longer tilts the scale. Since July 2024, long-term capital gains on both sit at 12.5%:
  

  ➡️ Property under Section 112 (indexation removed)

  ➡️ Equities under Section 112A beyond ₹1.25 lakh
  
  The black money premium that once inflated land is structurally receding.

So here’s how you decide:

• If you want an asset that won’t let you exit in a panic, buy real estate.

• If you want instant liquidity and zero operational hassle, buy equities.

And if you can handle both, own both. They fail at different times and for different reasons, and that’s precisely why they work together.

From Our Socials

01. The Point Where Diversification Stops Helping

A larger portfolio can reduce risk, but it can also reduce conviction and returns. Which one are you trading off?

Know More →

02. The Timing Trap in Gold Investing

The perception of safety increases with price momentum. The actual opportunity often exists elsewhere. Where should you look?

Find Out →

Finology’s Exclusive Updates

01. Finology 30 Stock Update: India’s Dominant Mobility Leader

Finology 30’s latest stock is now available.

An undisputed leader in its segment, we chose it for its structural growth and value.

The full research report, along with the company name and Buy It Below price are available in the Finology 30 dashboard.

Check it Out →

02. From Ticker: Decoding the IT Sell-off

The Nifty IT index has corrected nearly 10% from recent highs, following weak Q4 results from players like HCL Tech.

When an entire sector falls together, prices tell you less. Efficiency starts to matter more.

What to focus on this week?

• Track Cost Discipline: Use Employee Cost to Sales to spot companies holding margins despite sector pressure.

• Break Down ROE: Use DuPont to check if the pressure is operational or temporary.

• Compare Valuations Historically: Use the Historical P/E chart to check if price corrections are ahead of fundamentals.

Use Ticker to focus on operational strength and identify IT companies holding steady through the current correction.

Visit Ticker →

Game Time! 🧠

What Will You Do?️

You have just received ₹10,00,000 to invest. You can’t spend it on shopping or entertainment.

It must be used to grow your wealth and you CANNOT touch this money for 15 years.

That’s all in The Finology Letter!

Hope today’s edition felt useful and worth your time.

If it did, drop a like and comment how. Also, if you’d like us to cover more (or less) of such content, do tell. We love to get better for our people.

Always by your side,
Finology - The Financial Freedom Company

Disclaimer:


Finology Ventures Private Limited (RA Division)

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. For more details, click here .

Non-Individual SEBI Registered Research Analyst | SEBI Reg. No: INH000024277 | BSE Enlistment ID : 6877 | Validity : 5 years | PO Details: Antra Mahto | compliance.ra@finology.in | 99816-91677

Imagine what our country would have lost if the company had dissolved when Muhammad left India? Mahindra and Mahindra, there is something patriotic about this brand that draws it irresistibly close to our hearts. Whenever and wherever I hear a ‘Mahindra’, the first image that pops up in front of my eyes is a happy face of a farmer in his Mahindra tractor, driving it across the fields.

Well, that is in-part marketing-gone-right and in-part actual customer satisfaction.

The beginning of Mera Bharat Mahan

Today’s story starts with two brothers and a friend in pre-independent India. Jagdish Chandra Mahindra and Kailash Chandra Mahindra, with their friend Malik Ghulam Muhammad, were very much inspired by the vision of Jawahar Lal Nehru. The vision was a modern, independent India.

With riots and movements going on around them, there had to be something that sustained India on its own. They wanted to prove that Indians were second to none.

The First Titan

JC Mahindra was the first chairman of Mahindra and Mahindra, followed by Keshub Mahindra, his son. And then the successor to Keshub, Anand Mahindra, the grandson of JC Mahindra. JC Mahindra lost his parents at a very early age. But he was a man of steel. There were eight siblings, and JC Mahindra had shouldered the responsibility of all of them.

He arranged for the education of all his siblings and did his engineering in an era when technical education was Greek to the common public. He then sold his property to start the steel business. The company took off, and there was no turning back.

The second king in the era of Licence Raj - Keshub Mahindra

After JC Mahindra’s death in 1951, his son, Keshub Mahindra, got into the driving seat and steered M&M in an era of Licence Raj.

“Dream the impossible.”- Keshub Mahindra.

Keshub joined M&M in 1947 and was made the chairman in 1963. He headed the company for nearly five decades. And it was in 1963 itself that M&M started producing its world-famous tractors. He is respected for his philanthropy. He believes in giving back to society and is known for his humility.

He is a graduate of Wharton, University of Pennsylvania. When he graduated from Penn, he had a job offer from a company in Brazil, and he decided to go there. But before he left, his father asked him to come home for some time, as he had not been home for nearly six years.

“Foolishly, it didn’t strike me what it would mean to go back to India”, Keshub said. He came back with the intention of going back, but never returned. He stayed. Saw the plight of people. And decided to give back to the people.

In his own words, he is a great believer in people. To connect with what was going on around was very important to him. Keshub Mahindra has been on the board of directors of various public and private institutes. On one such occasion, he was asked to set up India’s first housing finance scheme for the poor. He visited many lowly slums in this time period. “I would come home and wonder how people could live like this. That had a huge influence on my life.”

“What was the most joyous moment he had in this group?” was once asked of Keshub Mahindra. To which he replied, “I get a great joy in creation.”

And rightly so, he created products, jobs, and the Mahindra Group’s reputation that it is today.

What products? What jobs? What reputation?

Keshub Mahindra was the chairman of the Mahindra Group for 48 years. The company expanded from being just an automobile manufacturer to IT, real estate, financial services and hospitality.

The People’s Person - Anand Mahindra

The next is my personal favourite, Anand Mahindra, nephew of Keshub Mahindra.

Anand Mahindra is an alumnus of Harvard University. A fun fact that almost everyone knows but is worth mentioning is that he was friends with Bill Gates at Harvard. Apart from taking M&M forward, he was also the co-founder of Kotak Mahindra Finance Ltd., a leading Kotak Mahindra Bank. So which story would you like to hear first? The Mahindra and Mahindra story or the Kotak and Mahindra story?

Let’s take up M&M first.

Anand Mahindra got in easily in Mahindra Ugine Steel Company (MUSCO) in 1981. He was an Executive Assistant—an advantage of the ‘Mahindra’ title but completely deserving. MUSCO expanded into the real estate and hospitality sector under his leadership. He was soon promoted to the position of President of the company. Fast forward to 2003, Anand Mahindra was made the Vice Chairman of the Mahindra Group.

Ford Escort’s fall, Scorpio’s rise

Anand Mahindra wished to manufacture cars from scratch in India. But his company lacked technology and expertise in management. Mahindra Group decided to enter in Joint Venture with Ford, and they built the Escort. It was a phuss! in the Indian market.

Anand Mahindra, who joined the group in 1981 and rose to key roles by the 1990s, was not personally responsible for initiating this JV under Keshub Mahindra's chairmanship. His major independent success came later with leading the Scorpio project in 2002.

Scorpio. I know! The project cost was ₹550 crore, one-tenth of the cost that any other manufacturer would have required. (Prakash Raj saying Shock laga, shock laga, shock laga, IN. YOUR. FACE!)

After the Escort’s failure, the comeback was essential for M&M. This was the biggest bet Mahindra had ever made in its history. Project Scorpio could not fail at any cost, since, in Mahindra’s words, “all of us, including me, had our careers at risk.”

The three things that made the Scorpio successful were its design, powertrain (100 HP engine ) and pricing (Rs 6 lakh in 2002). The comfort, space luxury, fuel efficiency, design, engine power, every damn thing was on point.

And guess who brought in on roads from a mere concept? Yes, Anand Mahindra.

Anand Mahindra received the Rajiv Gandhi Award for his contribution to the business field back in 2004. It’s been 16 years, and he received the third-highest civilian honour, the Padma Bhushan Award, in 2020.

Where were we last with the expansion scene? Apart from automobiles, they were in four other sectors. And now, they are in aerospace, finance, insurance, agribusiness, components, defence, energy, construction equipment, farm equipment, leisure, hospitality, industrial equipment, information technology, logistics, real estate, and retail. Now, THAT, was a long list.

Moving on, The Kotak-Mahindra Alliance

The Kotak-Mahindra Bank is among the fastest-growing banks in India. When Uday Kotak was just starting, Anand Mahindra lent him ₹1 lakh and promoted his finance firm. Mahindra was smitten by Uday Kotak and saw real potential. I think the tweet below would suffice to exhibit their friendship.

“An investment of ₹ 1,00,000 made in Kotak Group in November 1985 is worth ₹ 1,400 crores today - a compounded growth rate of 40 per cent over the past 32 years,” Uday Kotak said in an interview in 2017. Guess it really was Anand Mahindra’s best decision.

Remember when I told you Anand Mahindra is our favourite hero. Apart from everything I have mentioned above, here is a reason to love and respect him a little more than before.

My favourite tweet of all time.

“Doing more with less” - Anand Mahindra

I could do this all day, but I’ll stop with one. This is just the gist of it. If you are someone who has followed Anand Mahindra’s story for some time now, you truly know what a great visionary and a human being he is. While the numbers are just enough to prove Anand Mahindra’s successful succession, there is one (of many) other thing(s) that absolutely made the Indians fall in love with him.

The Nanhi Kali Project. A project for underprivileged girls to complete their schooling. It has approximately helped thousands of girls since it was founded.

The Mahindras, right from the first generation, believed in serving the people more than putting money in their pockets. They believe in humility, brevity, and self-knowledge. And it shows. It truly shows. It truly shows.

Between 2010 and 2020, 8 out of 10 of Indian companies that launched major unrelated diversification drives (like steel into real estate, telecom, and FMCG all at once), saw their stock price underperform the Nifty for a full decade.

Essel, Videocon, Essar, Kingfisher; you know how those stories ended.

Yet every week, someone looks at a new “conglomerate” with zero profit history, a founder selling a 2030 dream, and thinks: what if they pull it off?

That’s narrative fallacy at work. A compelling story always beats boring math, until the story runs out of other people’s money.

Another killer: dilution blindness. Vodafone Idea is a famous example.

If a company doubles its share count over 5 years through rights issues and QIPs, your ownership gets halved even if the business grows.

So, while most investors lag behind only watching price, smart investors watch outstanding shares.

A few more 🚩🚩🚩:

• Messiah Complex: When founders say “I’m doing this for the country,” they’re so not. Honest founders admit they want profit.

• Intermittent profit syndrome: It’s when a company posts a clean P&L right before an IPO, then slips back into losses the quarter after raising funds.

• Zero-profit companies: Seven years of losses, no friends or family willing to fund them, but a glossy brochure asking for your money. (Yep, it happens.)

These aren’t isolated mistakes. In fact, there’s a pattern running through them, and this video helps you see how it all fits.

Check it Out!

From Our Socials

1. The Uneven Reality of SIP Returns

   You invest consistently, yet the visible reward feels small. The math of compounding doesn’t behave the way people expect and it’s frustrating.

   Know More →
   

2. The Comfort of a Good Narrative

   Growth plans and expansion narratives create movement, but profitability stays distant. What exactly is progressing for an investor?

   Find Out →

Finology’s Exclusive Updates

1. Finology Quest: Sentiment and Liquidity Aren’t an Investment Strategy

While stock price is a function of supply and demand, financial statements are a function of accounting reality.

However imperfect, financial statements are the best available map.

What changes when you know how to read them?

• P&L vs Cash Flow → You stop taking earnings at face value and start tracking cash conversion.

• Balance Sheet → You catch stress early; rising debt, inventory build-up, receivable stretch.

• Annual Report → You track promises vs delivery, instead of narratives.

• Ratios Over Time → You separate real compounders from profitable traps.

This module in our flagship stock analysis course, structures these signals into a repeatable lens for you to practice.

Check it Out →

2. From Ticker: Corporate Actions & Management Confidence

   The market may look volatile on the surface, but beneath that, India Inc. is signaling strength through capital allocation and performance.

   What to focus on this week?

   • Buybacks signaling intent: Wipro’s ₹15,000 Cr. buyback at a premium reflects strong internal confidence

   • Dividends picking up: Sanofi India (₹48), Schaeffler (₹35), and ABB India (₹29.5) returning cash to shareholders

   • Earnings defying sentiment: VST Industries profit up 120%, Waaree Renewable revenue up 131%

   How to use Ticker:

   • Break Down Returns (DuPont): For names like TCS or Wipro, check if returns come from operations or leverage

   • Verify Cash Quality: Ensure dividends are backed by free cash flow, not accounting reserves

   • Track Promoter Behaviour: Stable or increasing promoter holding alongside buybacks signals conviction

   Use Ticker to track Business Action and find quality companies rewarding their shareholders on this dip.

   
   Visit Ticker →

Game Time! 🧠

I’m with you, day and night,
I’m a friend you trust, yet I might bite.
I help you spend when you’re feeling bold,
But if I’m ignored, debts take hold.

That’s all in The Finology Letter!

Hope today’s edition felt useful and worth your time.

If it did, drop a like and comment how. Also, if you’d like us to cover more (or less) of such content, do tell. We love to get better for our people.

Always by your side,
Finology - The Financial Freedom Company

Disclaimer:

Finology Ventures Private Limited (RA Division)

Disclaimer: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by SEBI, enlistment with BSE and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. For more details, click here .

Non-Individual SEBI Registered Research Analyst | SEBI Reg. No: INH000024277 | BSE Enlistment ID : 6877 | Validity : 5 years | PO Details: Antra Mahto | compliance.ra@finology.in | 99816-91677

We often get asked why we stay away from trading. The question comes up in workshops, on YouTube comments, and even in casual conversations with students.

For many, trading feels like the natural entry point into markets. Quick profits, fast action; what’s not to like?

We’re aware of the opportunity we’re walking away from:

• There’s huge money in trading. Even more in teaching trading. Courses sell.

• Add in the promise of “regular income” and you attract larger audiences, more views, and more influence.

• From there, it snowballs; more course sales, brokerage tie-ups, crypto/forex content, brand deals, and whatnot.

And yet, we step back.

Because it would clash with his own principles. For instance, adding trading features to Finology Ticker would instantly boost users. But it would also mean encouraging people to check the markets daily, something we actively discourage. Some other reasons on top of our list:

1. We don’t know it well

It’s a simple philosophy we live by; if we don’t know something, we won’t teach it, pretend to, or build a business around it. Everything we share is meant to be practical and reliable. And, thankfully, our users stand by it too.

2. The zero-sum problem

Trading, especially intraday and F&O, works like this: one person’s win equals another’s loss. Long-term investing, on the other hand, is a positive-sum game. It allows money to grow “across multiple chains” without disturbing anyone’s peace of mind.

This difference is crucial. It means wealth can expand without being someone else’s expense, which aligns with the principles we want to model for our users.

3. Ethical discomfort

Earning money in ways that feel like “taking from someone else” just doesn’t sit right with us. Pranjal says he’d rather not earn at all than earn in a way that feels wrong. The focus is on keeping our approach clean and straightforward, so it’s easier for you to follow too.

4. No room for contentment

We like to keep things minimally comfortable. The company is stable, the team is happy, and everybody takes home their share. We run with and after quality instead of status symbols. And, beyond that, there’s no laalach. This mindset allows us to focus on building meaningful products and content,

5. No scope for improvement

We don’t claim to have all the answers. We make mistakes, learn, and adjust. In trading, decisions are often split-second, outcomes are immediate, and losses are real money. So, long-term investing gives us breathing room to look back, see what went wrong, and fix it without panicking.

The Trade We Won’t Make

Now, just because we don’t trade doesn’t mean we look down on those who do. Everyone has different circumstances, priorities, and pressures. For some, trading feels like the best or only way forward, and that’s their call.

As Gandhi Ji said, “Hate the crime, not the criminal.”

Our takeaway is simple: trading could have made us bigger, richer, maybe even louder. But we’d rather stay consistent with what we believe in and are good at.

Let me break down why so many research reports end up confusing investors instead of helping them.

Unrealistic Projections Packaged as Insights

You’ll see analysts confidently project what a company will do five years from now. Revenue growth, margin expansion, market share gains, all laid out like it’s already decided.

I don’t think anyone can make these predictions reliably. But they’re packaged as insights, and investors believe them because they sound authoritative.

Complexity as a Shield

Ever notice how some reports are deliberately complicated? Jargon, technical terms, complex models that only insiders understand? That’s not depth, actually. That’s a shield. Complexity makes the analyst look credible, but it hides the fact that the underlying logic is often weak.

Investors Get Trapped in Numbers

Reports flood you with data. Growth rates, multiples, projections. It feels like you’ve done your homework just by reading them.

But numbers without understanding are useless. You can have all the metrics memorised and still completely miss what actually matters about a business.

Stop treating research reports as the answer. They’re starting points. Read them, question the assumptions, and form your own view. The best investors think independently; they don’t outsource their judgment.

If you want to think clearly, analyse businesses better, and stop relying on reports that overpromise and underdeliver, start questioning what you read.

Investors deserve clarity.

A: Did you earn any profit from your latest investment?

B: Umm, not really; it didn’t go as I thought.

A: Oh! Didn’t you say you knew the rules and could avoid losses?

B: Of course I do! It is just I got unlucky this time.

Does this exchange sound familiar? Everyone must have experienced a situation like this at least once in their life. Whenever there is an achievement, people credit their exceptional skills.

Failure, however, only happens because external forces take an adverse turn. No one likes taking accountability when it comes to poor performance.

It is a common habit cultivated by almost everyone. Many may not know about it, but this behavioural trait is known as self-attribution bias.

People often recognise this phenomenon (in others more than themselves) but do not know its name. Worry not, though; through this article, one can decode the definition of self-attribution bias.

What is Self-Attribution Bias?

“What makes the bias particularly pernicious is that we all recognize this bias in others but not in ourselves.” - Richard H. Thaler.

Self-serving bias is a cognitive bias where one takes credit for their achievements and blames external factors when things turn downhill.

One can easily find it in every other person. It is a debatable concept in psychology and has fascinated researchers for decades.

However, finance research has contemplated self-attribution bias for a while. It is one of the ruling factors that boosts the confidence of investors to invest more.

They appreciate themselves for positive and high profits when it goes their way, but claim that luck was not with them in other cases.

A continuous gain in the financial market often makes investors overconfident, leading them to believe they have control of the market.

This results in unreasonable actions and investments. Behavioural finance states that feelings and behaviour play a pivotal role in the decision-making process of investors and dealers, with the “bad-luck” card always available as a scapegoat

Self-attribution bias can be observed in several situations. Examples of Self-attribution bias are:

• Sports are prime examples of self-attribution bias. Many athletes attribute their wins to practice and teamwork. However, it is a bad call or the referee’s fault when their team loses.

• When someone gets a job, it is due to their qualifications and abilities. But the reason for their previous failures to secure a job is that the interviewer did not like them.

Where does this Self-Attribution Bias occur?

We can often remember the first instances of self-attribution bias in our lives. It began around the same time for many of us. It was all thanks to our skills when we got good grades, but it was either the teacher’s fault or bad luck whenever the scores weren’t up to par.

It started as something harmless and usual, but its side effects became apparent with time. Now, it is one of the most researched topics in different capacities.

Neural experimentation, naturalistic investigation, and laboratory testing are employed to figure out this cognitive bias, its relation, and ways to reduce it.

Why does Self-Attribution Bias happen?

Self-attribution bias is common, and one can see it in all age groups. As per the studies conducted, researchers have found some reasons that may be the cause of self-serving bias:

1. Self-Esteem

It is one of the prominent factors that lead to the birth of self-attribution bias. We appreciate our success and give ourselves credit to feel good. Accepting one was unable to reach the goal because of others rather than their own faults is much easier to process as it helps preserve one’s self-esteem.

2. Self-Presentation

Humans think funnily. Instead of their views, what others think of them matters more. Therefore, they present themselves not the way they are but how others would like them to be. They attribute their successes to themselves to improve their external image. However, failures are not accepted to avoid the degradation of this image.

3. Age and Culture

Self-serving bias does not develop and end at specific ages. It is an aspect of a person’s psyche that stays with them for their entire life. A person might reduce the degree of bias through self-realisation but might possess it irrespective of age and culture.

4. Unrealistic optimism

For many people, it is either extreme pessimism or unrealistic optimism; there is no “middle ground” between the two. Being optimistic is not an issue as long as you are aware of your actions. But shifting blame to maintain ignorant optimism in the face of adverse reality can have severe repercussions.

Self Attribution in Investors

The Indian stock market is one of the biggest human congregations, with over 7 crore active participants. Naturally, with so many psyches come various biases. The investors’ playground is no stranger to self-attribution bias.

As investors of various capacities pour their valuable funds into the bourses, they do not want the blame for their investments going kaput. The reason is that accepting blame would mean that they own up to being the person who lost their own money.

Blaming market sentiments, market volatility, or several other reasons is always the better option. What are the accused going to do, fight back?

On the other hand, even the slightest green in someone’s portfolio is pure skill. None of the aforementioned variables gets a crumb of recognition for any growth of capital or returns earned.

This fluctuation of ego causes manic buying or panic selling in investors without any legitimate reasons for their actions. From “Bechara Investor“ to “Jhunjhunwala 2.0“, oh, how quickly people’s perspectives change.

How can you reduce Self-Attribution bias?

Is there any way to eliminate this bias? Well, one can not just root it out from their life because it is a psychological phenomenon. But people can reduce its appearance and influence in their lives. One can use several coping and self-help strategies to keep the self-serving bias in control:

• Meditation, yoga, and reading books can keep your behaviour in check. Better mindfulness and improvement of knowledge help correct one’s premature

• Be compassionate to others as well as yourself. Blaming others won’t fix your mistakes, and accepting your faults will not reduce your value.

• Stay reasonably optimistic. Do not let the need to be right cloud the reality of matters from you.

The Bottom Line

It is a natural human tendency to be a hypocrite. When someone else fails, it is entirely that person’s fault; but when we face negative results, it is because of things that are “out of our hands”.

Self-serving bias stems from the drive to overcome adversity for personal improvement. Hence, as said before, there should be a limit that one must not cross. Severe cases of self-attribution bias can turn one into a narcissist. It affects an individual’s thinking process, as this behaviour is not sensible or logical.

As Craig D. Lounsbrough said, “Self-serving biases and self-centered agendas are cotton-jammed in the ears of our conscience. Even if the truth shouts, we can’t hear it.”

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To buy, or not to buy? That is the question.

If Shakespeare were alive today, he’d probably be a millennial artist struggling to make ends meet in the unbearable heat of Mumbai. He’d be standing in line for overpriced food, scrolling through property listings, and cursing the cruel Gods dramatically as he realised that the only way to afford a home is to be born into wealth, win a lottery or a reality show. Or at least that seems to be the case in India.

India has long prided itself on being a welfare state, a country where everyone should have access to the essentials: roti, kapda, and makaan. But while food and clothing remain within reach, housing has become quite elusive, available only to those with a lot of money or an unnatural tolerance for debt.

So maybe the question should be, “Can we buy it at all?”.

Think about it: if 10 years ago, someone had told us that by 2025, a single square foot of property in Mumbai would cost ₹2.71 lakh, would you have believed them?

But here we are in 2025, and billionaires like Uday Kotak and family just spent over ₹200 crore on 12 sea-facing flats, setting a national price record at ₹2.71 lakh per sq. ft. While the average Indian is left to wonder if they need to sell their souls to be able to afford a 1BHK flat.

So, how did we get here?

The Rise of the Housing Hunger Games

Once upon a time, in the pre-COVID-19 era, it was tough to buy a home, but not bordering on impossible. It was a time when people could still tell someone it was their dream to buy a home without having it sound like a joke.

Then, COVID-19 came, left, and took housing affordability with it. Ever since then, real estate prices have been on a 3-year-long bull run, showing no signs of slowing down.

Buying a house has always been an ambitious dream for the middle class, but now, the housing market has become too expensive, leaving us to find the cheapest 1BHK studio apartments on the outskirts. And I do not say that without proof.

Did you know that between 2020 and 2024, property prices in India grew at an annual rate of 9.3%? Household income, on the other hand, only rose by 5.4%. This means that even though your salary is rising, it isn’t enough to keep pace with the cost of living. Naturally, the gap between income and home prices keeps growing.

In the last 2 years, the number of affordable homes (₹1 crore and below) has declined by 36%, from 3.1 lakh in 2022 to 1.98 lakh in 2024. Clearly, nobody wants to build affordable homes that people can actually buy.

If you are dreaming of a home in NCR, Mumbai, or Hyderabad, then it’s time to wake up. These cities have been hit hardest by the housing crisis, and the only thing middle-class buyers can afford there is disappointment or a lifetime (20 or more years) of debt.

Meanwhile, luxury housing (₹1 crore and over) is booming, with supply skyrocketing across major cities:

• Bangalore: 187%

• NCR: 192%

• Chennai: 127%

It seems like the builders and the developers have given up on building affordable homes completely. Why?

It’s simple, really. Luxury homes bring in higher profits. Why sell 10 affordable flats when you can sell just one penthouse for the same profit? Add to that rising construction costs, soaring land prices, and financing challenges, and mid-income projects (the ones middle-class people can afford) start looking far less attractive to developers.

But just how unaffordable have homes become? We can get the answer to this question with the help of 2 metrics.

1. The Indian Price-to-Income (P/I) Ratio

The P/I ratio tells us how many times your annual income would be needed to buy a house. A ratio of 5 or below is considered reasonable. So, if a city’s P/I is 5, it means that you would need 5 times your average annual income to buy a house in that city.

But in India, the P/I ratio is 11, which means homes are more than twice as expensive as they should be. If you wanted to buy a home, you’d have to save every rupee you earn for 11 years straight—without spending a single penny on anything.
Here’s how some major cities compare:

• Mumbai metropolitan region: 14.3

• Delhi: 10.1

• Kolkata: 5.8

• Chennai: 5.1

• Ahmedabad: 5.1

Meanwhile, housing in other countries is far more affordable:

• USA: 3.6

• Australia: 7.6

2. The EMI-to-Income Ratio

This tells us how much of your monthly salary goes into home loan EMIs.

An EMI burden of 50% or more is considered a financial red flag globally. It basically means that either your salary can’t keep up with the market standard or property prices in your area are unusually high.

Want to guess how much the India EMI-to-income ratio is? A whopping 61% (in 2024), a drastic rise from 46% in 2020.

So, chances are that if you buy a house today, you’re signing up for a lifetime of cutting corners, skipping vacations, delaying car upgrades, and pretending to enjoy free YouTube yoga instead of actual gym memberships.

But this unaffordability does not mean that there are no houses to buy. And that is the real plot twist. Yes, there is a mismatch between the demand and supply in the housing market, but despite unaffordable prices, India has 1 million unsold units. And nearly two-thirds of these belong to the affordable and middle-income categories.

You must be wondering, “If homes exist, why aren’t they being bought?” and that brings us to our next act.

The Villains Making Housing Unaffordable

Every crisis has its bad guys, but the villains behind this unfortunate situation are not shadowy figures in dark alleys but perfectly legal forces that make sure homeownership remains a distant dream for the common man.

Let’s unmask them:

Villain #1: Black Money and The Circle Rate Loophole

Real estate may be the ultimate money laundering scheme, thanks to the circle rate loophole (or, shall I say, scam?)

Here’s how it works:

• Every area has a circle rate, which is the official minimum price set by the government at which a property can be registered.

• Then, there is the market price, which is the actual price you pay as a buyer.

• And the difference between these two is what allows the rich to turn their black money into white.

Let me explain with the help of an example:

Normally, if you buy a property with a market price of ₹1 crore, you would have to pay 20% (₹20 lakh) in taxes and registration fees, including 12% GST (for under-construction apartments) and 7-8% as Stamp Duty.

Builders engage in bulk deals with HNIs and large business owners and agree to register the transaction at the circle rate, which is only ₹40 lakh. This allows the buyer to officially purchase the property below market price, at least on paper.

So, let’s suppose that in a 10-unit apartment project, builders sell 5 units in bulk to business buyers at the circle rate. This allows buyers to evade taxes by paying only ₹8 lakhs in taxes per unit instead of ₹20 lakhs, saving them ₹12 lakhs per unit in taxes.

But in reality, the builder still takes the full ₹1 crore (or more than the circle rate), just that the difference is paid under the table in cash. This allows buyers to evade taxes and convert black money into legal assets.

This helps the builder recover construction costs, which means that they are in no hurry to unload the remaining units. So, they raise the price of the remaining 5 units to ₹1.2 crore or more for individual buyers to recover their margins, and brokers create artificial scarcity by telling everyone, “Only one unit left, sir!”

But why does this keep happening? Because both builders and business buyers benefit. The builder loses nothing by selling at the circle rate; he still gets his full amount. Meanwhile, HNIs and business buyers find a convenient way to launder their black money.

The only real victim? The middle class.

They either have to pay inflated prices or give up on the dream of owning a home altogether. The system is rigged in favour of the rich, while the average buyer is left struggling to afford even a basic home.

Villain #2: India’s Low Floor Space Index (FSI)

Ever wondered why cities like New York, Tokyo, and Singapore have countless skyscrapers while India has only a countable number of them?

Why does Mumbai, India’s financial capital, have just 542 high-rises, while Singapore has over 2,687?

The answer lies in India’s Floor Space Index (FSI).

“FSI is a measure of how much construction can happen on a given plot of land.”
A low FSI means developers can’t build more floors easily, restricting the housing supply.

FSI = Total Floor Area of all Floors / Plot Area

For example, let’s assume that the FSI for a 1,000 sq. ft. plot is 6. This means that the builder is allowed to construct 6,000 sq. ft. on this plot. Now, this can be any number of floors, limited to 6,000 sq. ft.

In cities like New York and Hong Kong, high FSIs allow for massive skyscrapers, leading to more housing supply and relatively controlled prices. But in India? Our FSI is tightly controlled, making sure that builders can only construct a limited number of floors. This means that housing remains limited, and prices keep soaring.

You may wonder, “Why not just increase FSI?”

• Increasing FSI overnight would lead to even more migration into already overcrowded cities.

• Infrastructure would collapse—imagine more skyscrapers but the same bad roads, non-existent parking spaces, and water shortages.

• Mumbai’s local trains are already stuffed like tiffin boxes. Adding more high-rises without better public transport would be a disaster.

Simply raising the FSI won’t fix things unless our cities are actually ready to handle vertical expansion.

So, how do we fix this? Can housing actually become affordable again?

The Pursuit of Affordable Housing

And so, dear reader, we find ourselves at the final act of this grand tragedy, the desperate search for solutions. The housing crisis has turned into a full-blown Shakespearean drama, with the middle class playing the role of the helpless hero, striving to survive in an economy that refuses to be fair.

But do we accept our fate? No!
Here’s how we can reclaim the dream of homeownership:

1. Fix the Circle Rate Loophole

• Instead of changing them once a year (or whenever the government feels like it), circle rates should be revised every month to match real market prices.

• Instead of letting builders decide market prices and keeping circle rates artificially low, the government should set a Maximum Retail Price (MRP), not a minimum price.

• Introduce a rule that ensures the gap between the circle rate (government price) and market price (actual selling price) stays within a fixed range, like 5-10%.

2. Make RERA the Centralised Buying & Selling Platform

Currently, there are a lot of middlemen and cash transactions involved while buying real estate. By making RERA (Real Estate Regulatory Authority) a standard platform, all deals will become digital and will, therefore, have a paper trail.

However, every booking should be updated on the RERA website in real time for this to work. And buyers should be able to see the price at which the property was last sold, just like we can see stock market transactions.

3. Develop More Cities

The USA and the UK have 4 cities each for every 1 crore population, but India only has 1.

4. Decentralise Universities:

Do you know why everyone wants to go to Mumbai, Delhi, Pune or Bangalore? Well, it’s because that’s where all the jobs and good universities are.

• 33 of India’s top 100 universities are concentrated in just a few cities.

• 54 lakh tech workers are squeezed into Bangalore, Hyderabad, and Pune.

So if we spread out universities and jobs across PAN India, then our metro cities will have less pressure to accommodate so many people.

5. Tax Empty Flats:

Did you know that 1.14 crore homes in India are not lived in? Apparently, people just buy houses to hoard them or in the hopes of selling them at a profit.

As a solution, the government could introduce a vacancy tax and tax the owner if their home is empty for a certain amount of time. This would encourage owners to rent out their “extra” houses.

6. Regulate NRI Investments:

Between 2019 and 2020 alone, NRIs contributed 10% of all real estate money in India. Why? Because a ₹2 crore home in Mumbai feels “cheap” when you earn in dollars or pounds.

NRIs buy homes in India for investment purposes; this pushes the price up and makes affordability worse. So, to solve this problem, the government could introduce ownership caps or high taxes for non-resident buyers to protect the domestic housing market.

7. Increase FSI in Tier-3 Cities:

Now, I know that we have already discussed why simply raising the FSI is not a solution. However, it would work in tier-3 cities.

If we were to increase the FSI in developing cities, it would attract businesses, create jobs, and ease the housing burden on metro cities.

If something doesn’t change, then the only way to own a home would be to inherit one, at least for the not-rich among us (of course, there are other ways, but those may not be very ethical).

The Bottom Line

For generations, owning a home was the ultimate milestone, proof that “tum apne pairon par khade ho gaye ho”. Our grandparents did it, our parents did it, and we were supposed to do it, too. But the dream seems to be slipping through our fingers.

Turns out, real estate is not only unaffordable but also a money-laundering playground. Who knew? Black money flows in, prices shoot up, and the middle-class dream gets priced out. You probably never even saw it coming. But now that you do, spread the word, because the Indian housing dream isn’t just expensive, it’s rigged.

In this economy, as a middle-class Indian, you might never buy that dream home, at least not on your salary alone. If things stay the same, buying a home will remain out of reach for most, unless you inherit one.

For years, we’ve been fed the same old story: renting is just a phase, a stepping stone to “real” success, owning a home. And, of course, you should buy a home if you have the money and the choice is between renting and buying. But if that’s not the case, don’t drown yourself in debt just to tick a box on society’s checklist.

So maybe it’s time to redefine The Indian Dream. Because a house is only a home if you can actually afford to live in it, without losing your sanity.

Only deploy capital you can leave invested for the next five years. That is how long a full market cycle needs to play out.

Beyond that, ensure you have a steady monthly surplus to keep investing over the next two to four years. Markets grind lower over months, sometimes years, and systematic deployment across that period turns a prolonged decline into an advantage.

Emergency funds stay untouched. Investment capital comes from surplus alone.

Buy Only Proven Businesses

Your money must go to industry leaders, which are companies with at least a decade of operating history. A ten-year track record tells you something a one-year chart never can: how management actually behaves when conditions turn difficult.

Always prioritise strong cash reserves. That cash gives a business the ability to operate and invest while weaker competitors struggle to survive.

Focus on sectors with structural advantages like essential demand, pricing power, or long-term tailwinds. A lower price is not a reason to buy. A fundamentally strong business at a lower price is.

Composure Is the Strategy

Preparation is what makes composure possible. When your financial foundation is solid, and your businesses are built to last, market movements stop being threats and start being opportunities.

That is the entire edge.

If you think you need our help in choosing fundamentally strong businesses, join us at Finology 30.

Finology 30: https://tinyurl.com/30-stocks-finology

Speak of investment risks, and every ordinary Joe & his expert uncle will tell you -- “DIVERSIFY.” But you never bother to ask, ‘HOW MUCH?’ Well, now is the time!

“The market is a pendulum that forever swings between unsustainable optimism and unjustified pessimism.” - Benjamin Graham

You know what, that sentiment bit makes the investment risky. Like, imagine someone who had aggressively bet all his wealth on shares of companies in the hospitality and tourism sector before the pandemic began its spree. No brainer, he would have lost a fortune! And now you know why the wise men advise you to ‘Diversify.’

Well, that’s pure wisdom. Okay, diversify, cool. But how much? Like own 10 assets or 20 or more than a thousand? Ah, never pondered it? As yet, you probably used your rationale to find a suitable portfolio diversification mix. Don’t you feel you should add some logic to it? Like, take the calculated risk of sorts?

Well, look no further. Finology has got you covered.

Diversification - Buffet’s vs Dalio’s theory

“Don’t put all your eggs in one basket” - a single line enough to justify the premise behind Diversification. Not all of your bets can be good. To err is to humans, right? Thus, placing all of your wealth in a single asset is like playing with fire! Before you know, that sector or asset could go bust, and you may end up burning away your hard-earned money! And that brings us to Diversification.

You add some more assets to your portfolio, and then some more, and furthermore and more. The risk gets averaged, and then it’s sorted, right? Well, some wise men chose to differ.

Warren Buffet once said, and we quote, “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”

The essential bit that we miss out when we try to spread the risk by diversifying is that it also averages the return. Suppose there are 10 assets arranged from top to bottom in decreasing order of their returns (and risk). If you allocate your funds between asset no. 1 and asset no. 2, it essentially means you’re losing out on the additional returns that the former would have given you over the latter. But that’s reducing the risk as well, you claim?

Well, that’s true only up to a certain number of additions. Beyond that, the risk reduction would be so insignificant that it would be like giving up higher returns just to cut down negligible risks! And at times, that can be counterproductive as well!

And that’s what the likes of Buffet, Munger and Cuban have been trying to propagate. They feel wide Diversification only leads to mediocre returns. You’d as well be better off investing in an index fund then! Thus, if you can identify good businesses, parking your money in only about five of them would suffice.

However, here’s the catch... not everyone can identify good businesses! Not everyone can be a Buffet or a Munger or a Cuban, right? And that’s why, for novice investors, at least, Diversification makes sense. But back to that question, how much?

Well, a celebrated American businessman, Ray Dalio, seems to have struck a note in his “Holy Grail of Investing”.

How to diversify your portfolio well?

“Knowing how to diversify well is more important than anything else.” - Ray Dalio

Well, just so you know, this theory, in NO way, preaches blind Diversification. The idea is to ‘diversify well’. And how does one do that, you ask? Here’s how…

You’ll have to pay attention to three essential metrics:

• The Volatility of the assets ↓ : It’s the risk or returns component of your portfolio that indicates how much low or high a share’s price can move from its average price.

• Return-to-Risk Ratio ↑ : Simply, if the risk you undertake is of Rs. ‘X’, this ratio will tell you how many times ‘X’ you can expect your return to be.

• Probability of losing money ↓ : It indicates how likely you may lose your invested money in a particular combination of assets in that year.

And it’s no brainer that we would like to find a combination of such a number of assets, that the volatility is low, the return-to-risk ratio is high, and the probability of losing money is less.

And that brings us to the heart of the entire matter, i.e. CORRELATION. It is basically synonymous to the interdependence between variables. It measures how much one variable changes with a change in the other.

For instance, let’s consider shares of HDFC and IDBI banks. As they belong to the same industry, their correlation (interdependency) will be very high. Because if the financial sector trumbles, this will affect both of the companies. So, it makes NO sense if you keep adding as many companies of the same sector to your portfolio. The risk reduction will essentially be very low.

In contrast, consider shares HDFC and Sun Pharma. As they belong to different sectors, the impact of the downturn in one of them may not be reflected in the other. This is because their correlation is very low. And hence, that’s a better risk-proof than owning stocks of two banks only. Owning shares, debt, and gold will be a better shield than owning shares only. Get it, right?

Well, let’s focus on Dalio’s graph to understand this better.

Compare the lines with a correlation of 60% and 0%.

You can very well see that even though you go on increasing the number of assets in the horizontal axis, neither of our three metrics have shown any productive movement in the 60% correlation case.

Whereas where the correlation is nil (0%), you can reduce your risk to a fifth and your probability of losing money to a fourth of that of the 60% correlation case. And now you know why.

Thus, the lower the correlation between assets, the better is the benefit of Diversification. So, better drive home this point that, add assets to your portfolio that have very low correlation among them.

Speaking of the stock market, if you own shares of a company in the auto sector, say, Maruti Suzuki, it may not help a lot adding another from auto ancillary, like Motherson Sumi. You’d be better off diversifying both across and within asset classes.

Like if you allocate your money across asset classes like equity, gold, debt, etc., and across sectors like Pharma, IT, Financial, FMCG, etc., that’s a better guard against market volatility. And as a standard practice, try limiting your exposure to 10-15% in any particular stock or sector.

But again, back to the question of the day, how many assets to add to your portfolio? Just look at any line in the graph, and you’ll notice that after a certain number of asset additions, the decrease in risk is insignificant. Like after you add about 20 assets to your portfolio, the downward-sloping line (indicating reduction in risk) flattens and hence, the decrease in risk beyond that point will be negligible. So, there you are.

The Bottom Line

Now, you’re at a sweet spot between diversification and correlation. As you would have interpreted, about twenty low correlated assets is an ideal combination. That being said, there isn’t any perfect combination as such. You will have to skim across the inflation-growth matrix to evaluate within and across equity, gold, real estate and all other assets and find out a mix that best suits your investment objectives and risk profile.

Practically, that’ll also depend upon how much you have in your wallet. It will make little sense to go on stretching if you only get a minuscule amount of the assets. The bet on your good horses should be sufficient enough to generate adequate returns. Once that’s taken care of, 15-20 uncorrelated good bets would do.

At the end of the day, everything boils down to your homework. So, invest only after you have done thorough research and are well convinced that it’ll work for you. And as we always say --

“Invest in what you know”.

In the first 5 months of 2025, Indians lost ₹7,000 Cr. to online scams. And if you’re thinking, “Well, I’d never fall for that,” you’re exactly who they’re targeting. Because these scams aren’t random spammy links anymore. They look like investments!

Here’s something that one of our users recently reported:

He’d “invested” ₹2 lakh through a platform after watching a reel of Nithin Kamath explaining a trading hack. It led to a Telegram group, where the admin sent charts, signals, and even live sessions. It was all going great until one day, the group vanished. The site was dead. The number stopped working. And you know the rest.

It’s More Common Than You Think!

SEBI’s had to go full detective mode lately. Why? Because, as evident through the event above, scamsters aren’t just sending shady links anymore. They’re:

• Building lookalike platforms

• Creating fake trading dashboards

• Slapping AI-deepfaked faces of real founders (including ours)

And it’s working! According to reports, Indians are losing ₹1,000 crore every month to scams run out of places like Cambodia and Myanmar. These aren’t silly mistakes. These are con jobs with a business model:

1. Hook: A reel or ad with a deepfaked founder promises quick profits.

2. Funnel: You’re added to a WhatsApp/Telegram group that feels active and “expert-led.”

3. Illusion: Fake dashboards show fake profits. Fake people share fake wins.

4. Trap: You invest more. Then the site vanishes. So do they.

5. Repeat: Same scam, new name. On to the next victim.

So, Why Do People Fall For It?

Simple answer: they don’t think it’s a scam. Because it doesn’t look like one. It’s engineered trust.

And when you’re:

• Broke or financially stressed

• Looking for a shortcut

• Or desperate to catch up after missing out

...you stop asking questions.

This is exactly who scammers target. Not just “uneducated” people, but smart, emotional, financially anxious ones.

Here’s the Pattern to Watch For

If you remember one thing, let it be this: Scams are less about what they promise. More about what you’re hoping for. So when someone promises:

• 2% weekly returns

• Passive income through “signals”

• Or guaranteed results from stock trading groups

Ask yourself: If this worked, why isn’t Mukesh Ambani doing it? Why are only random usernames on Telegram getting rich? And above all…

Who’s Letting This Happen?

It’s easy to say, “Be more careful.” It’s harder to say: Hold platforms accountable. Meta (Facebook, Instagram), WhatsApp, and Telegram aren’t just bystanders.

• They’re active participants.

• They let the scammers run the ads.

• They host the groups.

• They profit from the reach.

And when you report the scam? They “review the case” and move on. We’ve normalised this, but we shouldn’t. Because society is paying the price for platforms that scaled faster than they could moderate.

Now, they choose not to moderate because moderation doesn’t pay. Ads do.

So, if we can expect people to be honest, let’s start expecting the same from these platforms.

Coming to Staying Safe…

A quick mental checklist that filters 99% of scams before they even reach your wallet:

• 2% weekly returns? Scam.

• Flood of thank-you messages? Staged.

• Feeling rushed or excited? Pause.

• Familiar face, odd advice? Deepfake.

• Too good to be true? It is.

And what to do if the damage is done?

• Sent money already? Call your bank immediately

• File a cybercrime report at cybercrime.gov.in

• Gather proof: screenshots, chats, payment IDs

• Report fake accounts to the platform (Instagram, WhatsApp, etc.)

• Don’t chase recovery scams. One hit is enough

Finally, remember, you don’t lose money when you trust a scam. You lose it the second you stop thinking. So, act wisely and don’t fall for the wrong shortcuts.