Mike, Mike
Member Since Aug, 2016

How can I become an attacking maniac in chess like Mikhail Tal?

Mikhail Tal’s style is one of the most difficult to replicate in the world of chess. I know, because I spent the first portion of my chess career trying to do so.

I read his excellent autobiography The Life and Games of Mikhail Tal (1976) cover to cover, playing through every game. Afterwards, I would actively look for Tal-like sacrifices and unexpected attacking possibilities in my own games. I was never able to play quite like Tal, but it made me a much better player and I won many beautiful games playing like this.

The thing about Tal is that although his play seems maniacal on the surface, there was a method to his madness. If anyone else plays like that, you could indeed consider them maniacs, but Tal made these crazy sacrifices work. Although many of his combinations were objectively unsound, they became sound at his hands. That’s how he earned the nickname “The Wizard of Riga”.

How did he do it?

In his heyday, Tal could calculate variations better than anyone, and he had one of the best intuitions for attacking play in the history of chess, along with the likes of Alekhine and Kasparov. Tal consciously used this skillset to his advantage, by entering muddy tactical waters where he could confuse his opponents. In his own words, he would take his opponent “into a deep, dark forest where 2+2=5 and the path leading out is only wide enough for one”.

What would happen if the Vatican City disappeared?

  • There would be a giant hole in Rome where once a city stood.
  • There would be several hundred dead clergy, including most likely the Pope and a number of cardinals.
  • The world’s Catholics would probably freak out, thinking that God had somehow taken the Pope and company to heaven and left them behind. Panic and mass hysteria might follow.
  • Scientists would freak out as many laws of physics would be violated.
  • Art historians would freak out as many irreplaceable works of art would be lost.

I think this would be incredibly bad for planet Earth.

Is day trading profitable?

Day trading is really only a good idea if you have a large amount of money to invest. I say this for the exact reason you pointing out: you don't want to get eaten alive by commissions. The exception to this rule is if you use a discount broker than charges on a per-share basis (like InteractiveBrokers for example).

Let's run through a super quick example: GOOG closed last at 595 (July 18th). If you look back earlier in that day, around 10AM (CST for me), you'll see GOOG dipped to 582. Do some quick math and if you bought and sold at both the trough and peak (let's acknowledge that's rare as is), you'd bank about $13/ share.

Multiply that by say 10 shares, and you'd need at least $6K to make the trade, and you'd bank $130... something like a 2% return.

100 shares would mean you'd need $60K to make the trade, but you'd bank $1300... again something like a 2% return.

But here's the fun part: say you did this trade (both ways through ETrade). Subtract $20 from each return ($9.99 each way). With 1 share, you made $13, and spent $20... you're out $7.

With 10 shares, you made $130, spent $20, and cleared $110, or about 1.8%.

With 100 shares, you made $1300, spent $20, and cleared $1280, or about 2% again.

While this might not be a great example, the takeaway here is that unless you've got a large amount of capital, day-trading is a tricky game. If you don't have much capital, you may consider looking into options trading (do your research though!), as you can leverage smaller investments into greater returns.

Also, if you want to be the best at forex, you should check out this book which helped me the most.

Is day trading profitable?

Day trading is really only a good idea if you have a large amount of money to invest. I say this for the exact reason you pointing out: you don't want to get eaten alive by commissions. The exception to this rule is if you use a discount broker than charges on a per-share basis (like InteractiveBrokers for example).

Let's run through a super quick example: GOOG closed last at 595 (July 18th). If you look back earlier in that day, around 10AM (CST for me), you'll see GOOG dipped to 582. Do some quick math and if you bought and sold at both the trough and peak (let's acknowledge that's rare as is), you'd bank about $13/ share.

Multiply that by say 10 shares, and you'd need at least $6K to make the trade, and you'd bank $130... something like a 2% return.

100 shares would mean you'd need $60K to make the trade, but you'd bank $1300... again something like a 2% return.

But here's the fun part: say you did this trade (both ways through ETrade). Subtract $20 from each return ($9.99 each way). With 1 share, you made $13, and spent $20... you're out $7.

With 10 shares, you made $130, spent $20, and cleared $110, or about 1.8%.

With 100 shares, you made $1300, spent $20, and cleared $1280, or about 2% again.

While this might not be a great example, the takeaway here is that unless you've got a large amount of capital, day-trading is a tricky game. If you don't have much capital, you may consider looking into options trading (do your research though!), as you can leverage smaller investments into greater returns.

Also, if you want to be the best at forex, you should check out this book which helped me the most.

How does the stock market work? Who decides the price of stocks?

So, you want to know how Stock Markets works. Okay, then Let me tell you about that but it will be a bit long. Are you Ready ?

Okay, here I come.

In order to know what exactly Stock market is and how it works, let me first tell you What is a share ? Because that is really necessary.

An equity share is like a piece of paper that represents that you own a specific percentage of company. For eg:- If there's a company which consists of 100 shares. I mean full company can be bought for 100 shares and I own 10 shares of that company then I own 10% of that company and by 10% I mean Total 10% of that company.

I own 10% of all the Assets, Liabilities, Loans, Buildings, Parking loats, Cars etc, but there's a thing that I can't say I want to take that 10% and detach it from the company. I mean I cannot say that I want 10% of the car that i own let's just share that or that parking lot. I cannot say that hey, that 100 sq foot area is mine i own 10% of that company, what I basically mean is i own 10% of shares of that company and i am entitled to 10% of profits of that company,I have voting rights. One more thing is if you own a share then you own debts also but only to the extent you have invested your money in that equity share. So even if the debt is so large that it is more than twice the actual value of the company then also my maximum risk is the amount I have invested in the company.

People buy shares because they expect to profit when the company profits or expects the increase in price of share and sell at a higher rate than they bought. It's kind of like Retailers they buy some goods at a low price and sell in market at high price, here the difference is selling of that good at a higher price is more predictable than stock market.

So, I think your concepts of What is an Equity share is now clear , so let's move on to Where do we buy shares ? Well, Ask yourself first if you want to shop for something then where do you go ? Preferably a Mall or if you want to buy something online then pretty much AmazonEbay or Flipkart. Right ?

Now, here one thing is common in all of the above websites and Mall and that is -  They are a Marketplace of goods & services. Here, a lot of Sellers are selling their products & a lot of buyers are buying various products which they want to buy. So, You get to choose a lot of products here and you can buy them at a specific price.

Similarly, Stock Exchange is nothing but a marketplace of financial Instruments and the typical financial instruments are StocksBondsFuturesOptions and similar other instruments. Here also, there are a lot of sellers and a lot of buyers of a particular product. Now, always think that whenever you buy a financial instrument or in simple terms, a share then someone is selling to you and when you sold a share, there is some other person who bought it and that is how a transaction takes place.

SO, now you know what is an equity share and what is an exchange. Great, we're moving ahead pretty good, but it's not the end I have some more things to share. I promise I am not gonna make it complex and will explain it in the best possible way. You will get it even if you're a ten year old kid. Okay, now let me just unfold the next part which is How companies list their shares on Stock Exchange ?

Previously I told you that there is a Marketplace and that is Exchange and I compared that Marketplace to something. Okay, don't guess too much. I compared it to websites like Amazon, Ebay and Flipkart and just like these websites require their sellers to go through some terms and conditions and only after meeting a lot of requirements they allow sellers to sell their products. Similarly, Companies who want to sell shares through a stock exchange also have to go through a process which is a lengthy and time consuming process but the rewards are great and typically this process is called IPO.

Now, you must be wondering What the Hell is an IPO ?

Well, don't worry ,it's quite simple but it will take me a bit to explain it in detail.

So, an IPO is basically selling the shares of a Company to the the public for the first time to raise money in order to expand the company or for any other reason, is known as Initial Public Offering or IPO. Now, I have mentioned first time. It's first time because if the company is already listed on stock market and issues more shares then it is called Follow on public offer but if the company is issuing shares for the very first time then it's an Ipo.

The process of going public is quite time consuming, first of all the company doesn't know all these stock market rules and functions as to how to get listed and what are exchange requirements and stuff like that so they first of all go to Investment banks because they are the experts in this type of business and they know how to deal with Ipos because this is their business, this is their bread and butter,so they do all the paperwork, formalities and all that stuff , but the most important reasons for approaching an investment bank for an ipo is they take the risk of Underwriting and I believe you don't know what underwriting means, so let me explain that, Its quite simple.

Underwriting basically means taking risk of selling shares of company to public by buying those shares. So, if a company wants to issue shares to public it doesn't do it directly instead it goes to an investment bank and the bank buys all those shares that the company wants to sell at a fixed price on which both the parties have agreed upon and gives them the money accordingly then the bank makes sure that it sells the securities that it has bought from the company to the public in stock market. Now as the investment bank is taking risk here of buying the shares of the company as there is no guarantee that the bank would be able to sell all  the shares to the public, also even if bank manages to sell the shares there's still no guarantee that the banks would be able to sell the shares at a price equal to or more than what they have paid for the shares. So for taking the risk they charge a fees typically called commission. they take commission in proportion to the total deal value. i.e If the company wants to sell 100 million$ of shares. Total deal value would be 100 million$. Usually companies for big IPOs charge a fee of 3 to 5% of the total deal value. Some deals are worth hundreds of millions of dollars but some go into billions.

The largest IPO ever was in 2014 of e-commerce giant Alibaba where the company raised a whopping 25 billion$. The IPO was so big that there wasn't any single investment bank to handle this but six banks managed this monstrous IPO. These are Citigroup Inc, Credit Suisse Group AG, Deutsche Bank, Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley.

Underwriters when helping a company go public do some strict examination of the company whether the company is good enough to take a bet upon or not. I mean these bankers are not stupid if they are risking their money then they have their reasons. Some factors after meeting which investment bankers takes the risk of helping companies go public are -

1) Sound business history and financial statements.

2) Innovative product.

3) Strong player in the industry.

4) Financial audit of the companies.

5 )Minimum annual revenue and earnings etc

And finally when the deal has been finalized between the company and the bank and some other formalities and paperwork has been done then the bank files  a Registration statement which means filing the company with the concerned regulating authority with various documents which are required to be submitted by the regulatory agency. Regulating agencies differ from country to country. In usa, it's SEC. These documents are about company the company’s business, potential risk factors, ways it will use the money raised in the IPO, current ownership of the company’s stock,management background etc. Now the SEC takes time to take a deep look at these statements so as to figure out all necessary information has been disclosed. During the time SEC is looking at the documents, companies issue a red-herring prospectus to the prospective investors.

Prospectus is a document which explains about the company's business in detail, its past history, financial statements and other important information about the issue. This is first version of the prospectus and is known as a "red herring" because the first page has a red warning that the prospectus is not final and is subject to change because the documents are still with SEC there can be some changes. In short the registration statement is itself red herring prospectus once it is filed with SEC. This is usually presented to prospective investors so that they can analyze the company and make decision whether to invest in the company or not. Now, before the date on which the company should go public, corporations usually go on road show.

Road show is a typical promotion event where the company goes from one place to another to attract big institutional investors, the management shows presentations to the investors in order to induce them to invest in the IPO. After the SEC looks after all the submitted documents and if there are some changes then after the company amend those changes. the SEC gives a green signal to the company and assigns them the date on which the company will go public. the promotions of the company and expected demand of the shares determines the pricing of the company which is shown in final prospectus and then the company issues final prospectus to the public so as to attract more investors and finally on the offering date assigned by the SEC the company goes public.

I told you it is a time consuming process. Till now I explained everything in detail and I assume that you know how the stock market works. Okay, let me just tell you in short. Shares are piece of paper which represents ownership in a company. These shares can be bought through a marketplace typically called an Exchange. Companies here act as sellers and sell their shares to public before which they have to go through a rigorous process typically called an IPO and this is how stock market works but I need to tell one last thing and that is Who decides share prices?

Well, it's the easiest concept and the answer is Buyers and Sellers. So, let me give you a recent example. Just a few days back We saw Chennai floods and that is a not really connected to what I'm explaining, but one thing happened that is very similar to how prices are determined in the market. So, that is Demand and supply. When that disaster happened that lead to really short supply of food, eatables and similar stuff because floods destroyed most of that stuff but people still needed food to eat and that's why seeing this opportunity various sellers increased their price because now they knew that people will buy even at a higher price. So, Similarly in stock market when supply decreases to an extent sellers don't want to sell their shares at a higher price and if buyers see the value in the company then they will buy at a high price and as chennai will go back to a normal stage where everything will be fine then prices will be fall because of rise in supply. Similarly, stock prices are determined fundamentally by demand and supply although There are a lot of reasons why stock prices rise and fall and it's not that simple but the fundamental reasons are always demand and supply.

So, now I think I have explained everything that you need to know about what stock market is, how it works and how stock prices are determined and if you still have questions. Feel free to ask me.

 

How does the stock market work? Who decides the price of stocks?

So, you want to know how Stock Markets works. Okay, then Let me tell you about that but it will be a bit long. Are you Ready ?

Okay, here I come.

In order to know what exactly Stock market is and how it works, let me first tell you What is a share ? Because that is really necessary.

An equity share is like a piece of paper that represents that you own a specific percentage of company. For eg:- If there's a company which consists of 100 shares. I mean full company can be bought for 100 shares and I own 10 shares of that company then I own 10% of that company and by 10% I mean Total 10% of that company.

I own 10% of all the Assets, Liabilities, Loans, Buildings, Parking loats, Cars etc, but there's a thing that I can't say I want to take that 10% and detach it from the company. I mean I cannot say that I want 10% of the car that i own let's just share that or that parking lot. I cannot say that hey, that 100 sq foot area is mine i own 10% of that company, what I basically mean is i own 10% of shares of that company and i am entitled to 10% of profits of that company,I have voting rights. One more thing is if you own a share then you own debts also but only to the extent you have invested your money in that equity share. So even if the debt is so large that it is more than twice the actual value of the company then also my maximum risk is the amount I have invested in the company.

People buy shares because they expect to profit when the company profits or expects the increase in price of share and sell at a higher rate than they bought. It's kind of like Retailers they buy some goods at a low price and sell in market at high price, here the difference is selling of that good at a higher price is more predictable than stock market.

So, I think your concepts of What is an Equity share is now clear , so let's move on to Where do we buy shares ? Well, Ask yourself first if you want to shop for something then where do you go ? Preferably a Mall or if you want to buy something online then pretty much AmazonEbay or Flipkart. Right ?

Now, here one thing is common in all of the above websites and Mall and that is -  They are a Marketplace of goods & services. Here, a lot of Sellers are selling their products & a lot of buyers are buying various products which they want to buy. So, You get to choose a lot of products here and you can buy them at a specific price.

Similarly, Stock Exchange is nothing but a marketplace of financial Instruments and the typical financial instruments are StocksBondsFuturesOptions and similar other instruments. Here also, there are a lot of sellers and a lot of buyers of a particular product. Now, always think that whenever you buy a financial instrument or in simple terms, a share then someone is selling to you and when you sold a share, there is some other person who bought it and that is how a transaction takes place.

SO, now you know what is an equity share and what is an exchange. Great, we're moving ahead pretty good, but it's not the end I have some more things to share. I promise I am not gonna make it complex and will explain it in the best possible way. You will get it even if you're a ten year old kid. Okay, now let me just unfold the next part which is How companies list their shares on Stock Exchange ?

Previously I told you that there is a Marketplace and that is Exchange and I compared that Marketplace to something. Okay, don't guess too much. I compared it to websites like Amazon, Ebay and Flipkart and just like these websites require their sellers to go through some terms and conditions and only after meeting a lot of requirements they allow sellers to sell their products. Similarly, Companies who want to sell shares through a stock exchange also have to go through a process which is a lengthy and time consuming process but the rewards are great and typically this process is called IPO.

Now, you must be wondering What the Hell is an IPO ?

Well, don't worry ,it's quite simple but it will take me a bit to explain it in detail.

So, an IPO is basically selling the shares of a Company to the the public for the first time to raise money in order to expand the company or for any other reason, is known as Initial Public Offering or IPO. Now, I have mentioned first time. It's first time because if the company is already listed on stock market and issues more shares then it is called Follow on public offer but if the company is issuing shares for the very first time then it's an Ipo.

The process of going public is quite time consuming, first of all the company doesn't know all these stock market rules and functions as to how to get listed and what are exchange requirements and stuff like that so they first of all go to Investment banks because they are the experts in this type of business and they know how to deal with Ipos because this is their business, this is their bread and butter,so they do all the paperwork, formalities and all that stuff , but the most important reasons for approaching an investment bank for an ipo is they take the risk of Underwriting and I believe you don't know what underwriting means, so let me explain that, Its quite simple.

Underwriting basically means taking risk of selling shares of company to public by buying those shares. So, if a company wants to issue shares to public it doesn't do it directly instead it goes to an investment bank and the bank buys all those shares that the company wants to sell at a fixed price on which both the parties have agreed upon and gives them the money accordingly then the bank makes sure that it sells the securities that it has bought from the company to the public in stock market. Now as the investment bank is taking risk here of buying the shares of the company as there is no guarantee that the bank would be able to sell all  the shares to the public, also even if bank manages to sell the shares there's still no guarantee that the banks would be able to sell the shares at a price equal to or more than what they have paid for the shares. So for taking the risk they charge a fees typically called commission. they take commission in proportion to the total deal value. i.e If the company wants to sell 100 million$ of shares. Total deal value would be 100 million$. Usually companies for big IPOs charge a fee of 3 to 5% of the total deal value. Some deals are worth hundreds of millions of dollars but some go into billions.

The largest IPO ever was in 2014 of e-commerce giant Alibaba where the company raised a whopping 25 billion$. The IPO was so big that there wasn't any single investment bank to handle this but six banks managed this monstrous IPO. These are Citigroup Inc, Credit Suisse Group AG, Deutsche Bank, Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley.

Underwriters when helping a company go public do some strict examination of the company whether the company is good enough to take a bet upon or not. I mean these bankers are not stupid if they are risking their money then they have their reasons. Some factors after meeting which investment bankers takes the risk of helping companies go public are -

1) Sound business history and financial statements.

2) Innovative product.

3) Strong player in the industry.

4) Financial audit of the companies.

5 )Minimum annual revenue and earnings etc

And finally when the deal has been finalized between the company and the bank and some other formalities and paperwork has been done then the bank files  a Registration statement which means filing the company with the concerned regulating authority with various documents which are required to be submitted by the regulatory agency. Regulating agencies differ from country to country. In usa, it's SEC. These documents are about company the company’s business, potential risk factors, ways it will use the money raised in the IPO, current ownership of the company’s stock,management background etc. Now the SEC takes time to take a deep look at these statements so as to figure out all necessary information has been disclosed. During the time SEC is looking at the documents, companies issue a red-herring prospectus to the prospective investors.

Prospectus is a document which explains about the company's business in detail, its past history, financial statements and other important information about the issue. This is first version of the prospectus and is known as a "red herring" because the first page has a red warning that the prospectus is not final and is subject to change because the documents are still with SEC there can be some changes. In short the registration statement is itself red herring prospectus once it is filed with SEC. This is usually presented to prospective investors so that they can analyze the company and make decision whether to invest in the company or not. Now, before the date on which the company should go public, corporations usually go on road show.

Road show is a typical promotion event where the company goes from one place to another to attract big institutional investors, the management shows presentations to the investors in order to induce them to invest in the IPO. After the SEC looks after all the submitted documents and if there are some changes then after the company amend those changes. the SEC gives a green signal to the company and assigns them the date on which the company will go public. the promotions of the company and expected demand of the shares determines the pricing of the company which is shown in final prospectus and then the company issues final prospectus to the public so as to attract more investors and finally on the offering date assigned by the SEC the company goes public.

I told you it is a time consuming process. Till now I explained everything in detail and I assume that you know how the stock market works. Okay, let me just tell you in short. Shares are piece of paper which represents ownership in a company. These shares can be bought through a marketplace typically called an Exchange. Companies here act as sellers and sell their shares to public before which they have to go through a rigorous process typically called an IPO and this is how stock market works but I need to tell one last thing and that is Who decides share prices?

Well, it's the easiest concept and the answer is Buyers and Sellers. So, let me give you a recent example. Just a few days back We saw Chennai floods and that is a not really connected to what I'm explaining, but one thing happened that is very similar to how prices are determined in the market. So, that is Demand and supply. When that disaster happened that lead to really short supply of food, eatables and similar stuff because floods destroyed most of that stuff but people still needed food to eat and that's why seeing this opportunity various sellers increased their price because now they knew that people will buy even at a higher price. So, Similarly in stock market when supply decreases to an extent sellers don't want to sell their shares at a higher price and if buyers see the value in the company then they will buy at a high price and as chennai will go back to a normal stage where everything will be fine then prices will be fall because of rise in supply. Similarly, stock prices are determined fundamentally by demand and supply although There are a lot of reasons why stock prices rise and fall and it's not that simple but the fundamental reasons are always demand and supply.

So, now I think I have explained everything that you need to know about what stock market is, how it works and how stock prices are determined and if you still have questions. Feel free to ask me.

 

Is it possible to predict the stock market?

Some investors think they can predict the market a few days or weeks out using technical indicators.

Most of these investors are traders, momentum investors, or are playing on short term macro trends.

Most value and other long term investors don't believe in or use technicals at all.

The best thing I've ever read on trying to predict the short and long term movements of the markets went something like this: "If it was possible to predict where the market was going in the future with specificity, why does anyone get caught with their pants down when the bubble pops?"

Another of my favorites on predicting future market movements is from Ben Graham:  “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

Meaning that in the short term markets move based on emotion, psychology, fear, and hope.  But in the long term investments are based on what the company has for assets.  And what the company earns from its operations.

 

What was your biggest culture shock while living or visiting India?

I visited India last week. I crammed a lot into eight days - I spent time in Agra, New Delhi, Bengaluru, and Mumbai.

The thing that hit me the hardest was the sheer disregard every person and animal displayed for their well-being.

I saw people walk across roads, barely checking for traffic, stopping between two lanes of freely-flowing traffic, and pulling manoeuvres that would, in the UK, invite a barrage of comments that can be summed up as “Are you trying to fucking kill yourself?!”

And the animals? Man, Indian dogs and cows don’t have a shit left to give. I saw a cow walking between two lanes of traffic doing about seventy kilometres-per-hour. I saw a pack of stray dogs lazing about in the road. I saw six or seven cows sat doing the same, closing one of the road’s three lanes down.

But I don’t want anyone to think I didn’t love every second I spent in India; I had the time of my life, and I’ve already drawn a list up of things I want to do and see when I go back, and the lack of bureaucracy was refreshing, if nothing else.

What was your biggest culture shock while living or visiting India?

I visited India last week. I crammed a lot into eight days - I spent time in Agra, New Delhi, Bengaluru, and Mumbai.

The thing that hit me the hardest was the sheer disregard every person and animal displayed for their well-being.

I saw people walk across roads, barely checking for traffic, stopping between two lanes of freely-flowing traffic, and pulling manoeuvres that would, in the UK, invite a barrage of comments that can be summed up as “Are you trying to fucking kill yourself?!”

And the animals? Man, Indian dogs and cows don’t have a shit left to give. I saw a cow walking between two lanes of traffic doing about seventy kilometres-per-hour. I saw a pack of stray dogs lazing about in the road. I saw six or seven cows sat doing the same, closing one of the road’s three lanes down.

But I don’t want anyone to think I didn’t love every second I spent in India; I had the time of my life, and I’ve already drawn a list up of things I want to do and see when I go back, and the lack of bureaucracy was refreshing, if nothing else.

What are the unknown/less known facts about the Andaman and Nicobar Islands?

The natural scene that is drawn in a red colored 20 rupee note (Indian currency) has been captured from Andaman and Nicobar islands..