Money Vichara

Think back to March 2020. Or if you were not investing then, try to imagine it. The COVID-19 lockdown had just been announced. Markets were falling every single day — sometimes two, three percent in a single session. The news was overwhelming. Nobody knew how long this would last. Now imagine you were someone who had done everything right. You had not put all your money in one stock. You had spread it carefully — equity mutual funds for growth, debt funds for stability, a little gold for safety, maybe even an international fund for geographical diversification. You had read the advice. You had followed it. You had a proper, balanced portfolio. And then you watched it all wobble. Together. At the same time. Certain debt funds, particularly those exposed to credit risk, came under severe pressure as redemption pressures hit — even as government bond funds and liquid funds largely held their ground. Gold went through a brief, sharp sell-off as investors rushed to raise cash, before recove...

When you invested in that stock, or added to that mutual fund — did you think about how much to put in? Not what to invest in. Most of us think hard about that. We research, compare, ask around. But how much — as a deliberate, reasoned decision — is a question most investors never seriously ask. We invest what feels right. What feels comfortable. What we happened to have lying idle. And in doing so, we make one of the most consequential decisions in our financial lives almost entirely on instinct. There is a better way to think about this. And it comes from an unlikely place. The Man Who Worked at Bell Labs John Kelly was a physicist at Bell Labs in America in the 1950s — the same place where Claude Shannon invented information theory, which we explored in the Shannon's Demon post. In 1956, Kelly asked a precise question: If you have an edge,  How much should you bet to maximize the long-term compound growth of your wealth while avoiding eventual ruin? The answer he arr...

You are reviewing your portfolio at the end of the year. The app shows a green number. Your fund returned 14.2%. The Nifty 50 returned 11.8%. Your fund manager beat the benchmark. You feel good. You feel validated. But then someone asks you a question you were not expecting. "How did the fund beat the benchmark? Was it because the manager made the right sector bets? Or because the stocks they picked inside each sector were better? Or was it just the right sector at the right time?" You pause. You don't know. And honestly? Most investors don't. Not because they are careless — but because we are never taught to ask this question. We see the final number and move on. We accept the outcome without understanding the reason. But here is what matters. If you don't know why a fund outperformed, you cannot know whether it will do so again. Returns Are a Destination. Attribution Is the Map. Think about how we talk about fund performance in India. Your friend says: ...