Posted On Thursday, May 02, 2019
"Ahimsa" or non-violence is one of the core principles of Gandhiji's philosophy. He was a fervent follower of the principle of non-violence in both theory and practice. Gandhiji committed his whole life to practicing and furthering the doctrine of non-violence which has directed, regulated and moulded most of his beliefs and actions. According to Gandhiji, non-violence is not simply abstaining from physical injury or killing. His definition of non-violence casts a far wider net and also means not harming anyone in thought, words or deed, out of ill will or selfishness. For him, non-violence was not merely not-negative; it was eminently positive. He said "it is a positive state of love, of doing good even to the evil-doer". He further said, "for me non-violence is not a mere philosophical principle, it is the rule and it breathes". He equated non-violence with patience, tolerance, self-restraint, self-sacrifice and moral duty and emphasized the need to observe non-violence in one's daily life. He also believed that non-violence should not just be about inaction but also about the way we think and speak. According to Gandhiji, true non-violence must be non-violence in word, deed and thought. Moreover, for Gandhiji, non-violence was the greatest force at the disposal of mankind and it was mightier than the mightiest weapon of destruction devised by man. He applied the principle of non-violence with strong moral conviction in the social, economic and political field to eradicate the evils of exploitation and to establish justice and peace.
Non-Violence in Violent Markets
Markets are volatile and in a constant state of flux. On an average, stock prices can witness sharp movements in either direction. These sharp movements cause stocks to sometimes trade way above or way below their intrinsic value. Frenzied activity geared towards reaping short-term gains is not an optimal option for an average investor. Investors must understand that such violent stock price movements are just noise and should adopt a steady and non-violent approach to investing. No one profits from violence. A non-violent approach in investing would mean not reacting to intermittent new flows and price actions and staying tethered to the larger investment goals. Value investing embodies this.
Value Investing - A Non-Violent Approach
Nearly 80 years ago, Benjamin Graham and David Dodd introduced to the investing world the then revolutionary and interlinked concepts of 'value investing' and 'margin of safety' in their book Security Analysis. Value investing is an investment strategy where one chooses to invest in stocks that appear to trade for less than their intrinsic or book value. Value investors search for discrepancies between the actual value of a business and the perceived value of a business and seek to exploit these discrepancies. Graham & Dodd suggested that this could be accomplished by investing in companies that trade at a low P/B, low P/E multiples relative to their peers and have low debt on their books. Such investments meant that your purchase price would be significantly below the fair value of the stock thus providing a 'margin of safety' for the investor.
The very foundation of value investing is simple and steady: seek out stocks that you believe are currently under-valued by the markets and then hold the stocks till their true value is reflected in the price. Investors who use this strategy think that the market overreacts to good and bad news, resulting in stock price movements which do not correspond to a company's long-term fundamentals. This overreaction gives the value investor an opportunity to profit by purchasing stocks at a deflated price. By shunning violent stock market behaviour in favour of a non-violent steady approach, value investors can reap the benefits of long-term investing and are not unnecessarily influenced by stock market volatility.
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