Wealth Lessons from Guru Nanak Dev Ji

Five centuries after the passing of Guru Nanak Dev Ji, his words still resonate with his followers. As in all areas, his teachings related to money and wealth are also as relevant today as when he originally preached.
On his 550^th birth Anniversary today, lets recollect and learn from what he taught about wealth.
In the Sikh scripture, Shree Guru Granth Sahib, wealth is called Maya.

In Sikhism, the concept of Maya/ Wealth is understood in two contexts: material wealth and an illusion, which is applied to describe the essence of the world as real but also impermanent.
 It is attachment to material wealth, and greed to accumulate more and more wealth, which is strongly condemned by the Sikh Gurus. For example, Guru Amar Das Ji says: ‘mayadhari ut andha bola' ('the worshipper of Maya/ wealth is utterly blind and deaf').
 The Sikhs are known to be a hard-working community. In Punjab, India and abroad they have earned the reputation of being successful industrialists and businessmen. In the Sikh diaspora, they have displayed an enormous capacity for rapid achievement.
How do we explain the emergence of an ambitious class of Sikh millionaires?
The answer lies in their commitment to the ethical principles of:

1. Kirat Karna: Earn money honestly and without ever resorting to fraud or exploitation. 
2. Naam Japna: Always remember God and practice ceaseless devotion to Him by constantly chanting His name.
3. Vand Chhakna: Always share what you have with others. Help those who are in need.
   

Another interesting concept adopted by Sikhs, is the concept of “Chardi Kala”. It is the central attitude on how one should live their life.
Chardi Kala, also meaning “the positive attitude”, is an equivalence of a mind that never despairs, never admits defeat and refuses to be crushed by adversities. It means “In High Spirits of the Lord”.
Although the Gurus encouraged the creation of wealth, they categorically rejected unethical means to accumulate wealth. For example, the Rehat Maryada (Sikh code of discipline approved by the Supreme Management Committee of Gurdwaras in Punjab) strongly disapproves of gambling as it contravenes the principle of kirat karni (earning one's living by honest work).
Reflecting on the harmful effects of attachment to wealth, Guru Amar Das Ji further states: “Maya/ wealth is (a) she-serpent; it clings to the whole world. And so, he who serves her, him she eats [GGS: 510].”
The episode of Guru Nanak's meeting with a wealthy man called Duni Chand is very popular in Sikh tradition; clearly it demonstrates Guru Nanak's concern about hoarding wealth. It is believed that Guru Nanak once met Duni Chand, who was very proud of his wealth and had the desire to become the richest man in Lahore. Guru Nanak gave a needle to Duni Chand and said, ‘Please keep it with you and give it to me in the next world'.
Duni Chand paused for a while and then said, ‘You know well enough that I cannot carry it to the next world - we cannot take anything with us to the next world!'. Guru Nanak looked at Duni Chand and remarked, ‘If you cannot take this smallest of things with you, how can you carry your millions with you? '
Hence, Guru Nanak advised him to share his wealth with needy people and use it for charitable purposes.

Does it then mean that Sikh teachings are against creating wealth?
Let’s attempt to unlock this riddle by looking at the notion of poverty according to the scripture.
Literally, poverty or “gareebi,” denotes the economic state of a poor person; i.e., gareeb means a poor person. In Sikh teachings, the concept of gareebi/ poverty has been extensively applied to denote humility and the term gareeb has been used for a humble and meek person and this word is proudly used by Guru Nanak Dev Ji for himself. He says: 'main gareeb main maskeen ... tera naam hai adhara' ('I am poor and humble, I have only the support of your Name').
Guru Arjan Dev Ji also applies the term gareeb (Poor) to himself. He writes, ‘for me the meek one, the only true Support art Thou, O, my true Guru.' [GGS: 398].

 In Sikh teachings the doctrine of Dharmsal sets the agenda for daily conduct. It means that one must earn one's living by honest and hard work and be prepared to share it with others.
Guru Nanak Ji says: "He who works hard honestly for what he eats, and shares it with others has found the true path." [GGS: 1245]
It is also significant to note the notion of “Daswandh” (literally, reserving one tenth of one's earnings for charitable purposes) or tithing as in other religions, is an integral part of Sikh tradition. The practice is widely prevalent among Sikhs, of contributing in the name of the Guru, one-tenth of their earnings, towards the common resources of the community.
This is a Sikh's religious obligation — a religious requirement or duty; a form of Seva or humble service which is highly valued in the Sikh system. The concept of “Dasvandh” was implicit in Guru Nanak Dev Ji’s own Gurbani in the line: “One who works for what he eats, and gives some of what he has - O Nanak, he knows the Path (1)" (SGGS p 1245)
The idea of sharing and giving is symbolised by the institutions of langar (community kitchen) for the sangat (holy assembly) that the Guru has established.
This giving is a seed. It is a seed of trust that actually has the effect of multiplying your income just as a seed sprouts and grows into more plants.
Another example of one tenth is, one tenth of your day (24 hours) is 2 1/2 hours. Sikhs have the practice of dedicating one tenth of the day, 2 1/2 hours (Amrit Vela) to devotion and meditation. As Guru Ram Das Ji described it, rise before the coming of the dawn, bathe and meditate on God's Name and inspire others to do this.
As we celebrate the 550th Birth anniversary( Prakash Utsav) year of Guru Nanak Dev Ji, Let’s adopt the fundamental beliefs and pillars of this wonderful religion:
“kirat karo, 
Naam japo, 
Vand chhako, and
Haq halal.”
 The Sikhs end their Ardas (Prayer) with the following words and so shall I like to end this piece,
“Nanak Naam chardi Kalaa, Tere Bhane Sarbat Da Bhala”.
(Nanak, with your name comes positivity and prosperity, and with your blessings, there will be peace for everyone, and may everyone prosper.)
Best wishes to you and your family on this auspicious occasion. 
May this Gurpurab bring lots of Joy, Prosperity and Happiness to you and your family.
Happy Gurpurab!

Stay Blessed Forever!
Happy Investing!
Sandeep Sahni

This blog was 1st posted on 22nd Nov,2018

Note: All information provided in this blog is for educational purposes only and does not constitute any professional advice or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.

About The author

Sandeep Sahni

Sandeep is an alum of IIM Lucknow with a Post Graduate Degree (MBA class of 1988). His also an alum of Shri Ram College of Commerce, Delhi University (B.Com. Hons. Class of 1985.)

Sandeep's investing experience and study of the Financial Markets spans over 30 years. He is based in Chandigarh and has been advising more than 500 clients across the globe on Financial Planning and Wealth Management.

He has promoted “Sahayak Gurukul” which is an attempt to share thoughts and knowledge on aspects related to Personal Finance and Wealth Management. Sahayak Gurukul provides financial insights into the markets, economy and Investments. Whether you are new to the personal finance domain or a professional looking to make your money work for you, the Sahayak Gurukul blogs and workshops are curated to demystify investing, simplify complex personal finance topics and help investors make better decisions about their money.

Alongside, Sandeep conducts regular Investor Awareness Programs and workshops for Training of Mutual Fund Distributors, and workshops and seminars on Financial Planning for Corporate groups, Teachers, Doctors and Other professionals.

Through his interactions and workshops, Sandeep works towards breaking the myths and illusions about money and finance.He also writes a well-read blog;

https://sahayakgurukul.blogspot.com https://www.sahayakassociates.in/resources/our-blog

He has also conducted presentations, workshops and guest lectures at Management institutes for students on Financial Planning and Wealth Creation. He can be reached at:

91-9888220088, 9814112988

sandeepsahni@sahayakassociates.in

Follow us on:

www.sahayakassociates.in 

www.facebook.com/sahayakassociates

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Prospects of Samvat 2076

We all love forecasts and making guesses. An end of a period and the start of the new Year is the most popular time to have another round of forecasts on the prospects for the year ahead.

Diwali and the start of Samvat 2076- The Hindu Calendar Year- has brought with it a flood of forecasts on prospects in the coming year splashed all across media.

Most of guesses that we try to make end up being wrong, as we suffer from a lot of inherent Behavioural biases and limitations.

Just to prove the point, Let’s just play a game, “If you were to count from 1 to 1 crore (10 million), how much time will it take.”

I have raised this question in various Investor programs, that we regularly hold. Most of the time, the participants are way off the mark. Even after adding that, “assume counting one number will take one second, how much time will it take?” The participants are still not able to guess the right answer. Most replies are in the range of 1 hour to 5-6 hours. You also try it and we shall tell you the correct answer at the end of the blog.

In the equity markets, given the many variables involved, it is virtually impossible to guess or predict the prospects for the next one year. A 3-5 years prediction can however be more accurate. Data and market valuations can help in the process of guessing but, it is pertinent to remember what Keynes said in the 1930s, “Markets can stay irrational longer than you can stay solvent.”

Thus as they say, “ The most courageous will attempt to predict the market in the short run and the most foolish will follow those predictions”

However, as it is in fashion at the moment, lets also try our hand at predicting the prospects of Samvat 2076, albeit with a strong disclaimer that it is purely an attempt to forecast based on some data, our limited understanding and analysis of the current market and historical trends. You should follow the forecasts only at your own risk and we strongly recommend that,asInvestments are subject to market risks, you consult your financial advisor before making any investment decision.

Let’s start with what happened in Samvat 2075.

Gold and silver have proved to be the most rewarding for investors in the recently-concluded Samvat 2075.  After three years, the two precious metals have out-performed equities with returns of over 21 per cent each. The performance of the equity market was yet again divergent, with the large-cap-focused Nifty index gaining 10 per cent and the mid-cap and small-cap indices dropping 6.4 per cent and 9.6 per cent, respectively.

For the equity investor, Samvat 2075 was a choppy ride. While the Sensex saw a high of 40,312.07 & a low of 33,291.58 it still delivered a healthy ~11.5% (from Diwali to Diwali, i.e. 6th Nov 2018 to 24th Oct 2018).

The benchmark indices gained as much as 16 per cent and climbed to all-time highs immediately after the re-election of the Narendra Modi government. However, sluggish economic and corporate earnings growth, rising instances of corporate defaults, and a turmoil in the financial sector was a dampener. The markets came off by 10 per cent between June and September.

The Centre’s decision to lower the corporate tax rates, however, boosted market sentiment, with most stocks bouncing back sharply from their September levels.

Most market players are expecting modest returns in Samvat 2076. They say economic recovery could be a prolonged one and at best will only gain momentum from the next Financial Year.

Economic recovery can only happen with a sustained pick up in consumption demand or major investment initiative by the Government. Steps are being taken to stimulate demand and improve sentiment. The Government is looking at various methods to garner resources to push investment without disturbing the fiscal calculations.We are sure that the recent reforms undertaken  by the government and policy measures announced by the RBI will start having an impact and bear fruit in the next couple of quarters.

Gold, meanwhile, could continue to shine till the time there is turbulence in the equity world.

However, the best way to make big money in the market is by taking advantage of the irrationalities in the market.

And the last time we experienced an irrational market like the present was during the 2009 market crash.

Currently, though the Indices are trading at all-time highs, the earnings are not there. Few stocks as mentioned below are taking the index higher because of lofty valuations and TINA (There is no alternative) factor.

But herein lies the irrationality. For every stock which is trading at a 52 wk high, there are 2-3 stocks, which are at a 52 wk low. For every stock which is up 50%, there are also 2-3 stocks which are down 50%.

The stage however appears set for a new cycle to begin.On several cyclical measures of corporate performance, such as return on equity, profit margins, and corporate profits as percentage of GDP, we are at multi-year lows. This is very similar to the levels seen at the beginning of this century. The same is true for economic growth, both real which had dipped below 5% and nominal which is in single digits, also similar to the trend in 2000-2003 period.

A direct consequence of this will be a change in the kind of stocks that will perform and give returns. The past few years have been characterized by a significant polarization as reduced earnings, Misgovernance issues and high debt levels has led to investors flocking into the safety of the select few companies that continue to grow, albeit slowly. Certain companies and market favourites like Asian Paints, HUL, Nestle, etc are trading at valuations which are more than 2- 3 times the Nifty Valuations and at more than 50% premium to their historic valuations. This great blue-chip corporate governance stocks have held the market together.

 It was a flight of  to safety, but the market will now look for new stories and new action in the new year.
During 2001 to 2004 period, after the tech bubble burst, two things stood out. First, the PSU sector performed dramatically and was up 600% in the next three years. It seems like a similar situation now.

Certain PSUs are at a very compelling valuation. The total valuation of all PSU stocks is less than Rs 10 lac crore ( Rs 10 Trillion) and the HDFC Twins alone are valued at more than that. I may be wrong but the real estate value of the PSUs may also be a significant amount apart from the earnings multiple that it should command in certain monopolistic industries they operate in, thus calling for a relook based on valuations alone.

Secondly, the smallcaps and mid-caps at current valuations can be ignored only at your own peril. The small cap Index to Nifty ratio currently stands at 0.52, in 2004 before the major bull run started, it was at 0.46, in October 2009, it was at 0.50 and during the lows of 2013, it was at 0.45 thus indicating a near bottom.

Similarly, India midcap valuation is cheaper than its larger peers by most since 2012 and close to the 2009 levels.

There are a lot of extremely well run small and mid-cap companies with good corporate governance standards which can be looked at and easily fit in the stock picking framework to bottom pick those stocks.
Since we are in a pessimistic environment, there are very good shopping opportunities for the discerning investor.Sectors like Real Estate, Public Sector Banks should start looking up as their stress comes down. Listed private Insurance Companies and AMCs will keep doing well despite lofty valuations because of very low industry penetration levels.
Since last Diwali, while the Nifty is up over 9%, the Nifty Midcap 100 and the Nifty Small cap 100 indices are down over 7% and 10% respectively. Going forward, the market breadth should improve as investment cycle revives and profit growth becomes more broad-based.
“You know that after every winter, there will be spring. It is true of seasons and stock markets also. It is very important keep that in mind. Great business will find a way to create value. Good stocks compound over a long period of time.”

Some experts are of the opinion that, “The reason why markets might turn, despite the economy doing badly, is that we will hit such a trough in valuations, that people will stop thinking about the next six months and start thinking about the next 3-5 years. Usually, that’s how the bottoms are made in the market.”
“The market is getting narrow by the day. The leaders continue to move up while the bad stocks keep slipping by the wayside. To understand the theme this time one needs to read through all the past bull market history.

It is evident from the table that booms have been followed by crashes and crashes have led to sharp recoveries, which took the market to higher levels. The current market trend will be no different.

Therefore, the only strategy, and the best one, for investors is to put money systematically, unmindful of the short-term ups and downs of the market. Investors should remember that stocks are available at attractive valuations during periods of pessimism.
Selective Stock picking will be the answer for making profit in the New Samvat, or it is best to stick to quality multicap Mutual funds with a good record. Consult your financial advisor and concentrate on your financial goals and the Samvat 2076 will surely be a rewarding one for you.

Happy Investing!

Stay Blessed Forever,

Sandeep Sahni

P.S. It will take you more than 115 days to count till 1 crore(10 million)

Assuming 1 no will take 1 second to count,1 day has 86400 seconds, hence 100,00,000/86400 = 115.74 days

Note: All information provided in this blog is for educational purposes only and does not constitute any professional advice or service. Readers are requested to consult a financial advisor before investing as investments are subject to Market Risks.

About The author

Sandeep Sahni

Sandeep is an alum of IIM Lucknow with a Post Graduate Degree (MBA class of 1988). His also an alum of Shri Ram College of Commerce, Delhi University (B.Com. Hons. Class of 1985.)

Sandeep's investing experience and study of the Financial Markets spans over 30 years. He is based in Chandigarh and has been advising more than 500 clients across the globe on Financial Planning and Wealth Management.

He has promoted “Sahayak Gurukul” which is an attempt to share thoughts and knowledge on aspects related to Personal Finance and Wealth Management. Sahayak Gurukul provides financial insights into the markets, economy and Investments. Whether you are new to the personal finance domain or a professional looking to make your money work for you, the Sahayak Gurukul blogs and workshops are curated to demystify investing, simplify complex personal finance topics and help investors make better decisions about their money.

Alongside, Sandeep conducts regular Investor Awareness Programs and workshops for Training of Mutual Fund Distributors, and workshops and seminars on Financial Planning for Corporate groups, Teachers, Doctors and Other professionals.
Through his interactions and workshops, Sandeep works towards breaking the myths and illusions about money and finance.He also writes a well-read blog;
https://sahayakgurukul.blogspot.com https://www.sahayakassociates.in/resources/our-blog

He has also conducted presentations, workshops and guest lectures at Management institutes for students on Financial Planning and Wealth Creation.He can be reached at:
91-9888220088, 9814112988
sandeepsahni@sahayakassociates.in

Follow us on:
www.sahayakassociates.in
www.facebook.com/sahayakassociates
www.twitter.com/sahayakassociat,
https://www.instagram.com/sahayakassociates
https://sahayakgurukul.blogspot.com
https://www.sahayakassociates.in/resources/our-blog

Blog Comment Policy
Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. We will do our very best to respond to all comments ASAP. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and we reserve the right to delete the entire comment or remove the links before approving them.