How to Tell if You Can Be an Entrepreneur

You know you can be an entrepreneur. You have plans, and at some point in time you want to start your business. Currently, you are working for your employer, but you are sure that this will go on for just four-five years and then you will be out on your own. Once you are independent, you will enjoy life, while money will keep coming to you. Sounds great.

If you have the line of thinking detailed above, sorry, it’s highly unlikely that you will ever become an entrepreneur.

I frequently come across people who tell themselves the story given above. Such stories are nothing more than a lullaby that employees sing for themselves. These lullabies soothe them for the moment while postponing the need for any initiative-taking to the future. No wonder things never get done. Four-five years simply go by and they realize that almost nothing has changed. Their lives are still what they used to be—plus they have less energy and ambition now. Time keeps flying away and the goal keeps getting postponed until it reaches a point when it is altogether junked or becomes impractical.

One telltale sign of a true entrepreneur is that he/she never wants to put things to the future. He wants them done now, no matter if on a small scale. The spirit of entrepreneurship lies in doing, not just in imagining or daydreaming. So if you want to start something, start now. Starting now doesn’t mean that you have to quit your main job. It means that you start what you want to do on the side. Pursue it in your spare time.

Starting a venture is just a start of a new journey. Just because you start a venture doesn’t mean you will get successful. But in order to get successful, you must start. And the right time is now.

The Only Prediction for 2017 You Will Need

It’s that time of the year again. With the start of the new year, financial pundits have taken out their crystal balls and magnifying glasses and are queuing up to give their predictions for 2017 and analysis of 2016. The media have found a lot of content to keep themselves busy. Newspapers are overflowing with graphical stories on the trends for the new year. 

Here is the problem: they had done the same thing when 2016 was coming. They kept forecasting throughout 2016. And they were wrong almost always. What really happened was very different from what was forecast—remember Brexit and Trump win or the rally in metal stocks when everyone was so pessimistic about their outlook? 

The next “big” event that has got analysts’ and media’s attention is the Union budget. For the next one month, there will be a barrage of what is expected from the budget. News channels will have panels of experts passionately discussing what the budget is going to have. As usual, the reality will turn out to be much different. 

The one prediction for 2017 that is useful to the investor is that the experts are going to be wrong yet again. Don’t trust them. Follow your investment strategies and don’t look here and there. Here is another effective tool: don’t discount the power of the non-event. While most experts paint either a flowery or a gloomy picture, the one possibility nobody talks about is “nothing will happen.” Apply this argument to Trump presidency and demonetization after-effects. 

The penchant of the pundits to predict the future and go wrong isn’t new, yet the stubbornness to do so doesn’t go. In spite of being proved wrong countless times, they can’t help their urge to forecast. It’s pointless expecting them to shut up. As an investor, it’s your responsibility to insulate yourself from their forecasts. That could be the best new-year resolution you can make.

How to Get Rid of Demonetization Pains

Standing in long queues in front of banks seems to have become a full-time profession. People wake up early in the morning, get ready, pack their lunch boxes, and stand in bank queues to withdraw cash. With many employees receiving their salaries, normal snake-like queues are turning into anacondas. Some people have started “hoarding” cash for “bad” times. The political opposition has yet again found another agenda to not let the parliament work.

While the market seems to have recovered from the demonetization setback, the common man (and woman) remains in trouble. Fortunately, there’s a way out: go cashless. Though this solution looks rather obvious, yet it’s not accepted and appreciated both by people and businessmen as much as it should be. The real problem is not a lack of cash. The real problem is the unwillingness to adapt to the change.

Just imagine a scenario where most small businesses and sellers started accepting digital currency. Would the demonetization still look so grim? The other day a news channel was featuring a story that many small-business owners aren’t willing to accept digital cash; they want hard cash. These people who use expensive smartphones don’t want to accept digital payments. Why? Leaving out the tax-evasion angle, the only other explanation is that they are unwilling to adapt to the change. Their unwillingness is causing pains to the general public.

Kudos to those small-business owners who have switched to digital payments and quickly adapted to the change. They show the real flexibility that a true entrepreneur has. As a matter of fact, they have started to reap the benefits of digital before those who are still in their comfort zones. How fast others adapt themselves to digital will determine their existence in business.

Similar argument goes for the consumer also. Consumers should also switch to digital as soon as possible. They should seek out help if they have any reservations regarding it; children should help their parents to adapt to digital. As the business and the consumer push each other toward digital, what looks like insurmountable will turn easy. 

The demonetization has ruffled us out of our comfort zones. It’s time to see the brighter side rather than go after the government and criticize it for the bold step it has taken. Mind you, the world is watching.

Should You Worry about the Demonetization?

The recent demonetization of Rs 500 and Rs 1,000 notes has again unleashed intellectuals, who are debating the positives and negatives of it. The obvious positive is the economic clean-up; the negative is a loss of jobs and the fears of a recession. The market has reacted sharply to the demonetization.

Similar to what I wrote for US election outcome in my previous blog, “How to Protect Your Portfolio from the US Election Outcome,” your best response to the demonetization is no response at all. Don’t let it derail your investments. Don’t wait for some “better” times to make your investments. Don’t exit the market in haste to cut your losses. Simply carry on with your investments normally.

The worst thing you can do in the current uncertainty is respond to it in any way. Many investors feel that it’s smart to sell out presently and buy again at lower levels. Don’t fall for this trap. That’s not smartness but outright fear. Volatility is a part and parcel of the stock market, and this is the time when you need to show some courage rather than run away. Those who run away now will soon find the market taking a U-turn and they will never be able to reenter it, for they will then fear about the market falling again.

The latest evidence of this lies in the way the market reacted on Trump’s victory. It did fall but the very same day, it recovered. What’s more, the US and European markets actually rose. It looked like the market was poking fun at those who had tried to outwit it.

Only time will tell whether the demonetization turns out to be good or not. For now, the financial community has found itself a new stressor to stay busy. If you must worry about something, worry about insulating yourself from the financial pundits.

How to Protect Your Portfolio from the US Election Outcome

US election results will be announced soon. It’s going to be either Hillary Clinton or Donald Trump. Experts are worried that if Trump wins, that could seriously roil the markets worldwide, including the Indian one. Trump has become infamous for his anti-trade, anti-globalization rhetoric, and since the US is an important market for many countries, his getting elected is quite worrisome. On the other hand, Clinton has earned the reputation of being the “politician next door”; not many things are going to change if she gets elected. Since markets hate uncertainty, Clinton’s win is what it wants.

As I write this, the gap between Trump’s and Clinton’s electoral numbers is narrowing. Clinton was ahead of Trump by several percentage points, but thanks to her email controversy, that difference is fast disappearing. The market has also sniffed the trouble in making and has quickly fallen a couple of percentage points. What should you do now? Every market pundit has a strategy to offer, which can only serve to confuse you even more.

Here is the only thing you need to do: Do nothing. Carry on with your investments as usual. If you have money to buy stocks, don’t wait for a better time. Don’t wait for more clarity to emerge. Simply keep investing.

As you may have noticed, there is always something troublesome going on in the market; that’s the way it has been. The financial community will always find something to worry about. Previously, it was Brexit. Still before that, it was the Chinese slowdown. And so on. Once US elections get over, the financial community will quickly find another stressor for itself. Finding new stressors and then musing about them is what earns bread for it, and it’s only natural that it will remain entangled in some event.

Coming to the US elections, I feel that the fears regarding Trump getting elected are overblown. What both political and economic analysts are underestimating is the power of institutions. The US is a strong democracy. Democracies aren’t run by a single person; they are run by the constitution. To me, what seems most likely to happen if Trump gets elected is that he will also be working like any other president, without any boom and bang. Pre-election promises and claims quickly get tapered as a person gets into the governance business. Running a government is altogether a different affair and no matter how much radical a person looks, in a democracy, he has to soon come to terms with reality. Apart from that, given his business acumen, Trump can actually prove good for the world and the US.

So, just digest the temporary volatility in the market and let this phase pass.

The Mistake that Indian Small-Business Owners Have Been Making

I have seen quite a few small-business owners in India who want their children to study hard and get into some high-paying job. As the story goes, these people have themselves struggled a lot in their lives and hence they want their children to be shielded from what they had to face. Unknowingly, they are making a terrible mistake.

When business owners want their children to become employees, they are doing injustice both to their children and the nation. By shepherding their children to employment, they are taking away from them the opportunity to experience true freedom and prosperity; they are asking them to resign to a life of mediocrity. The economic development of any nation directly depends on entrepreneurs and small-business owners. In absence of them, a nation can’t progress. In absence of the jobs created by businesses and entrepreneurs, even small-business owners’ children can’t find a place to work.

So, what is required on the part of small-business owners is to motivate their children to take to small businesses or even join their own businesses. Also, just because small-business owners have seen tough times, it doesn’t mean that now they need to be overly protective about their children. On the contrary, they should keep their children in discipline so that they understand the importance of resources. Indulgent attitude toward their children can actually spoil them. They should be inspired to take risk and seek challenges. If given the right environment, their children can actually do very well in business, given the already-available platform.

Why Stock Analysts Should Hire Someone Else to Manage Their Money

Most investors equate stock analysis with making money in the stock market. In reality, these are two different things. Just because you are good at analyzing equities doesn't mean that you can make money off them. On the contrary, the more thoroughly you analyze stocks, the fewer are the chances that you will profit from them. Call it the stock-market paradox, if you will.

This doesn't mean that making money in the market is all about luck and fluke. It's not. But it's not about stock analysis either. The right answer lies somewhere in between. You do need to have some strategy for buying stocks, but analyzing stocks should not become an obsession. Stock-market investing is an art, not a science.

The market doesn't care about your analysis. It doesn't know how accomplished an analyst you are. All it cares about is certain triggers. For instance, companies that turn around see their stock prices racing. If your strategy can spot a turnaround in making, you can make money. Another trigger is rising profits and so on. Aligning yourself with what the market cares about is the secret of making money in the market.

Seeing everything from analytical perspective soon becomes an end in itself. The stock analyst forgets why he is there in the market. He is no longer making money but is getting deeper and deeper into a company's books. Naturally, this leads to analysis paralysis. The analyst can't act now. He just knows too much. Meanwhile, the stock keeps racing. Given that it has now gone up, the analyst enters into a dilemma if he should buy it now. The outcome is that he is left with reams of analysis but no money.

While the stock analyst can still keep analyzing stocks as a part of his job, he would do himself a great favor by leaving the money-making function to someone else.