PPT-BEHAVIOURAL FINANCE-CHARUSAT-MBA.pptx

THIS PPT IS PREPARED BY AFTER REFERING THREE BOOKS OF BEHAVIOURAL FINANCE

1. WORKSHOP-BEHAVIOURAL FINANCE 1- Psychology + Finance 2- Sentiments + Investment Decision 3- Refereral + Investment Decision 4- Lack of Fundamental Research 5- Fast Changes in Investment Industry

2. FINANCE AND PSYCHOLOGY “Creating wealth from equity investing is not purely a number game. In fact, it is more of a mind game. Each one of us reacts to a financial situation differently. Unless an investor considers psychological angle to investing, wealth creation will always remain an illusion”

3. FINANCE AND PSYCHOLOGY Equities are considered inherently riskier than investments in bonds.What makes equity investing risky? Is it because of the inconsistent performance of businesses behind the stocks or is it because of thebehavior of the market participants, who as a result of greed and fear get excessively optimistic and pessimistic about the future resulting in bull and bear phases?

4. DR.RITESH AMARSELA BBA(HR),MBA(MARKETING), M.COM(FINANCE),PH.D(MARKETING) ASSOCIATE PROFESSOR SEBI - FINANCE TRAINER RESEARCHER EDUPRENEUR BUSINESS CONSULTANT CAREER COUNSELLOR PLACMENT OFFICER INVESTMENT PLANNER 6 YEARS CORPORATE 16 YEARS TEACHING 8 YEARS TRAINING

5. Quiz 1 You Are Given Rs.1000 And Two Options A: Guaranteed win of additional Rs.500 B:Chance to flip a coin.If it’s heads you receive another Rs.1000 and with tails you get nothing more

6. Quiz 2 You Are Given Rs.2000 and Two Options You are guaranteed to lose Rs.500 Chance to flip a coin.If it’s heads you lose Rs.1000 and with tails you lose nothing

7. Loss Aversion Investors take more risk when faced with a loss and are more conservative to lock in sure profits

8. Investor Behavior Due To Loss Aversion Investors tend to go for sure gains Take more risk when threatened with a loss. Investors prefer fixed income investments over stocks Tendency to hold losers and sell winners

9. Quiz 3 You Have Complimentary Tickets For Filmfare Awards On the evening of the program there is a severe rainstorm and traffic is disrupted due to floods You have to travel from your home in Nadiad to Ahmedabad Would you go?

10. Quiz 4 You Have Bought Rs.1500/-Tickets For the Filmfare Awards On the evening of the program there is a severe rainstorm and traffic is disrupted due to floods You have to travel from your home in Nadiad to Ahmedabad Would you go?

11. Sunk Cost Fallacy Increasing your commitment to justify past actions. Ego gets tied to commitment

12. Banking Industry Borrowers business runs into trouble Bankers lend additional funds to borrowers

13. Sunk Cost Fallacy And Investment Decisions Averaging cost of purchases Spending on repairs Government spending on favorite unviable projects

14. FINANCIAL BEHAVIOUR-CASE STUDY You inherited from your Uncle Rs 50 Lakh on the condition that you invest in the capital markets Will you invest in Bond or FD?

15. FINANCIAL BEHAVIOUR-CASE STUDY You inherited from your uncle Rs 50 Lakh in a portfolio of stock Will You ? Leave the portfolio as it is Sell the stocks and invest in Bonds

16. Decision Paralysis / Status Quo going wrong make a loss look foolish unwillingness to take risks

17. FINANCIAL BEHAVIOUR- CASE STUDY You have been gifted a Souvenir jug worth Rs. 100 (in the marketplace). Someone offers to buy it from you What is the very least that you would expect to be paid for the jug? A- Rs-100 B- Rs-50 C-Rs-500

18. FINANCIAL BEHAVIOUR- CASE STUDY Your neighbor has received a Souvenir jug worth Rs. 100 (in the marketplace) as a gift. He offers you the jug for sale What is the most that you are willing to pay for the jug? A- Rs-50 B- Rs-100 C Rs-200

19. Endowment Effect The value of a good increases when it becomes a part of a person’s endowment.

20. Endowment Effects In Capital Markets Investors always mentally overvalue the stocks they hold

21. Example of Behavioural Anomalies Mr. A Holding 7000 shares of HFCL @ 70 March 2000 – HFCL price - Rs 2500 (Anchored to this price) June 2000 – HFCL price - Rs 1500 (Loss Aversion at this price) Needs money but suffers from (Decision Paralysis between 2 options) Real Estate or HFCL shares June 2000 – Sold off real estate instead of HFCL shares. June 2002 – HFCL price - Rs 56 (Endowment Effect at this price) Thinks market is undervaluing HFCL & is still holding on to it.

22. You Are A Victim Of Loss Aversion and Sunk Cost Prefer Fixed income securities over Stocks Sell winning investments more readily Exit the stock Market when prices fall Make important spending decisions based on your past spending

23. Be Free from Loss Aversion and Sunk Cost Fallacy Test your threshold for loss Diversify The big picture: Investment Plan Start Afresh Reframe losses as gains Segregate gains and integrate losses

24. You May Be Suffering From Decision Paralysis If You…. Cannot choose between Investment Options Do not have a retirement plan Delay making decisions Buy on trials but never return Fall in love with stocks you own Go to company visits and buy stocks

25. Freedom from Status Quo Bias and Endowment Effect Don’t forget opportunity costs Put yourself on autopilot Change frame of reference Don’t fall in love with your stocks There is no free lunch

26. Plan Of Action Investment Plan On Paper Knowledge is important: Hire the right professionals Ignore money already spent and focus on future cost and benefits Don’t get married to your stocks Understand your bias and use it to your advantage

27. Mental Accounting - Pillars of Behavioral Finance Money Is Fungible This means that Rs. 100 in lottery winnings, Rs.100 in salary and a Rs. 100 tax refund should have the same meaning as they have the same purchasing power It is the tendency to place different values to the same sum of money

28. Types of Mental Accounts Earned income v/s gift income Size of the money in question Large financial decision v/s small purchases Cheap money v/s costly money Sacred money

29. Investor Behavior due to Mental Accounting Hold on to losing investments Earn less interest and pay more interest Bonus shares Day traders

30. Cognitive Illusions Are Like Optical Illusions Which Line Appears Longer?

31. Which Line Appears Longer?

32. Measurement Tools Help Identify Illusions

33. Mental Heuristics Cause Investors to form Biased Expectations

34. Five Types Of Heuristics Availability Representative Saliency Overconfidence Anchoring

35. Availability: React to recall value Mid Cap story IPO fad India Shining Leads to…… HERD MENTALITY

36. Representative: Similarity Over react to new information Over react to new information Second rated stocks : steel, banking, cement Biocon…….. Company changing names to be with the current fads

37. Saliency:Events which occur infrequently Over react to new information Over react to new information Good or bad quarterly results by a company Commodities Boom Treasury gains Higher expectations from Indian Equities

38. Overconfidence: Smarter than they really are Under React to New Information Under React to New Information UTI misses opportunity to become NAV based Mutual Funds launching Mid Cap schemes Mega expansions due to low interest rates

39. Anchoring: Locked to the Past Under React to New Information Investors could not exit IT stocks Black Monday pains High returns from Debt Funds Causes Decision Paralysis

40. Warren Buffet “Success in investing doesn’t correlate with IQ once you are above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people in to trouble in investing”

41. You are prone to Mental Accounting if You… Don’t think you are a reckless spender but unable to save enough Have savings in your bank but revolving balances on your credit cards Are more likely to splurge with a tax refund than with savings. Tend to spend more when you use credit cards Put retirement savings in fixed income or other conservative investments.

42. Plan of Action Be Patient Imagine all income is earned income

43. FORM OF OVERCONFIDENCE 1-Miscalibration people make probability judgements by looking for similarities to other known observations, forgetting that there are many other possible observations. Yet another explanation is that people nurture illusions. For example, an investor may say, “If I buy a stock, it will go up afterwards.”

44. FORM OF OVERCONFIDENCE 2- Better than average effect When people are asked to rate themselves on some positive personal attribute (such as driving skill or teaching ability) relative to others, most tend to rate themselves above average on those attributes. This is called the better-than-average effect For example, in one survey done by O. Svenson, 82% of the respondents rated themselves.however, only 50% of the people in any group can be better-than-average.

45. FORM OF OVERCONFIDENCE 3- Optimistic Bias While optimism is a great life strategy, it isn’t a good investment strategy. Benjamin Graham noted, “Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions. To defend ourselves against over-optimism, we must learn to become more critical

46. Overconfidence and Earnings Manipulation As Ramalinga Raju confessed in his 2009 letter to the board of Satyam Computers: “What started as a marginal gap between actual operating profit and the one reflected in the books of accounts (and publicly reported) continued to grow over the years. It has attained unmanageable proportions.”

47. CAUSES OF OVERCONFIDENCE 1-Illusion of Knowledge People tend to believe that the more information they have, the more knowledgeable they are, and the more accurate their forecasts are likely to be. However, greater information does not necessarily lead to greater knowledge “The whole investment industry is obsessed with learning more and more about less and less, until we know absolutely everything about nothing.”

48. CAUSES OF OVERCONFIDENCE 2- Illusion of Control People tend to become more overconfident when they feel that they have control over the outcome. This misconception create the overcofidence which result in wrong investment decision because investment outcome is no more controllable because external factors affecting to the investment outcome

49. CAUSES OF OVERCONFIDENCE 3- Illusion of Understanding ” We fool ourselves by constructing flimsy stories and nurture the illusion of understanding “ I am only knowledgeable in my peer group and everyone must follow my advice or suggestion. This affect to investment decision because investment is not only depend on fundamental analysis but it also depend on technical analysis Illusion of undestanding may affect to right investment decision in irrelevant investment tool

50. CAUSES OF OVERCONFIDENCE 4- Illusion of Validity As Kahneman put it: “For some of our most important beliefs, we have no evidence at all, except that people we love and trust hold these beliefs. Considering how little we know, the confidence we have in our beliefs is preposterous – and it is also essential.” He coined the term the illusion of validity to describe this cognitive illusion. For Example- investment decision only on the trust of relatives working as an insurance agent

51. CAUSES OF OVERCONFIDENCE 5-Illusion of Skill Billions of shares are traded every day because buyers think the price is too low and likely to rise and sellers think the price is too high and likely to fall. Why do they have different opinions when most of the buyers and sellers have access to the same information? Why do they believe that they know more about what the price should be than the market does? In general, that belief is an illusion of skill. Terry Odeon studied the trading records of 10,000 brokerage accounts of individual investors over a seven-year period. He identified all instances in which an investor sold some stock and soon after bought another stock The result is 4% loss due to sale of previous stock and buying new stock plus transaction charges

52. FORMS OF SELF-DECEPTION 1-Avoidance of Cognitive Dissonance When newly acquired information is at variance with pre-existing understanding, people usually experience mental discomfort which is referred to as cognitive dissonance. In psychology, cognitions represent attitudes, emotions, beliefs, or values and cognitive. dissonance is the imbalance that arises when contradictory cognitions interact.Example- On tips we bought the applied for IPO and but then negative information flow about IPO then our behaviour change about IPO

53. FORMS OF SELF-DECEPTION 2- Self-Attribution Bias Self-attribution bias means that people tend to ascribe their success to their skill and their failure to their bad luck. Harvard psychologist Langer called this phenomenon as “head I win, tail it’s a chance.” When our investment products give good return we belive that it is due to good finance knowledge that investor have and when investment products give negative return investor start blaming to their investment advisor

54. FORMS OF SELF-DECEPTION 3-Confirmation Bias People tend to overlook information that is contrary to their views in favour of information that confirms their views. While we think that our beliefs are the result of years of experience and objective analysis, the reality is that all of us are susceptible to confirmation bias. As Tim Sanderson put it, “We all ignore information that disputes our expectations.

55. FORMS OF SELF-DECEPTION 4-Hindsight Bias People have a tendency to view events as more predictable than they really are. This bias is called the hindsight bias It is often referred to as the “I-knew-it-all-along phenomenon.” For Example- Expectations of investors from Reliance Power IPO

56. FORMS OF SELF-DECEPTION 5-Naïve Realism People think that they see the world directly, as it really is. They further believe that the facts as they see are there for all to see and hence others should agree with them. This may be called naïve realism and it causes a great deal of Conflict Many insurance adviosrs sold the ULIP plan in 2007 as a guaranted return product only on the belief that stock market will perform well

57. FORMS OF SELF-DECEPTION 6- Distorted Self-perceptions It seems easier to spot a cheater when we are looking outward, but harder when we are looking inward. A Nigerian proverb says, “A he-goat doesn’t realise that he smells.” Japanese proverb says, “Though we see the seven defects of others, we don’t see our own ten defects.” For Example- When we see the 10% loss in our investment portfolio we feel sad but when we see the 15% loss of our negihbour we feel less sad

58. Prospect Theory and Mental Accounting Daniel Kahneman and Amos Tversky looked at how people make decisions in the face of risk. They established a dozen facts and several of these were inconsistent with expected utility theory. So, they developed a theory that modified expected utility theory just enough to explain the collection of their observations and called it prospect theory in their seminal paper titled “Prospect Theory: An Analysis of Decision under Risk.” This chapter discusses the essentials of prospect theory along with mental accounting, two cornerstone ideas of behavioural finance. It also discusses SP/A theory and framing effects. It is divided into five sections as follows

59. ERROR IN BERNOULLI’S THEORY According to Bernoulli’s theory, utility depends on wealth and since Ram and Shyam have the same wealth, they should be equally happy Today Ram and Shyam have a wealth of ` 10 million. Yesterday, Ram had ` 5 million and Shyam had ` 15 million.Is their happiness the same? (Do they have the same utility?) The happiness that Ram and Shyam experience is a function of the recent change in wealth

60. PROSPECT THEORY In their 1979 Econometrica paper mentioned earlier, Daniel Kahneman and Amos Tvesky provided a new theory of risk attitudes, called “prospect theory,” According to utility theory happiness increases when profit increases but what amout of happiness increases at what level of profit is not defined in utility theory In prospect theory author had given the overview about the level of happiness and level of profit through value function

61. PROSPECT THEORY

62. PROSPECT THEORY

63. PROSPECT THEORY The value function is concave for gains. This means that people feel good when they gain, but twice the gain does not make them feel twice as good The value function is convex for losses. This means that people experience a pain when they lose, but twice the loss does not mean twice the pain. If you gain 100 grams in weight, you won’t notice it, but if you are buying gold, the difference, between 100 grams and 200 grams is obvious.

64. SP/A THEORY SP/A theory, a psychologically based theory of choice among risky alternatives, was proposed by Lola Lopes and further developed by Lopes and Oden. Lopes’ 1987 article “The Psychology of Risk: Between Hope and Fear,” captures the idea that the emotions of hope and fear influence the choice among risky alternatives According to SP/A theory, people evaluate risky alternatives by using an objective function which has three arguments, viz., security (S), potential (P), and aspiration (A)

65. SP/A THEORY According to this theroy there are two main elements important for investors 1- HOPE 2- FEAR On the basis of above two elements behavioural scientist had given the following type of investors 1- Investor who experiences neither fear nor hope 2- Investor who experiences only fear, and no hope 3- Investor who experiences only hope, and no fear 4-Investor who experiences both fear and hope,

66. SP/A THEORY

67. FRAMING There can be different ways of presenting a decision problem and it appears that people’s decisions are influenced by the manner of presentation A decision frame represents how a decision maker views the problem and its possible consequences. EXAMPLE- How many student want to start job after study? Chances of getting job is 80% and How many students want to start business ? chances of failure in business is 100% during first two years Example- Job will give you maximum salary of Rs-200000 pm within five years and Business will give you income of Rs-200000 per day after five years In general, our response depends on whether something is presented in terms of gains or in terms of losses.

68. MENTAL ACCOUNTING The concept of mental accounting was proposed by Richard Thaler, one of the brightest stars of behavioural finance Businesses, governments, and other establishments use accounting systems to track, separate, and categorise various financial transactions People, on the other hand, use a system of mental accounting. The human brain is similar to a file cabinet in which there is a separate folder (account) for each decision, which contains the costs and benefi ts associated with that decision.

69. MENTAL ACCOUNTING Mental accounting can influence a person’s decisions in unexpected ways as the following example suggests Mr. and Mrs. Sharma have saved ` 10 lakhs for their daughter’s wedding that may take place 3 years from now. The money earns interest at the rate of 9% in a bank fixed deposit account. They just bought a new car for ` 6 lakhs on which they have taken a 3 year car loan at 12%. The above example suggests that people often have money in a fixed deposit account (earmarked for a certain purpose) that earns a low rate of interest and yet they borrow money at a high rate of interest for some other purpose While money does not come with labels, the human mind puts labels on it. Mr. and Mrs.Sharma labelled their fixed deposit as “daughter’s wedding provision”

70. THEORIES OF EMOTIONS Philosophers, researchers, and psychologists have proposed different theories to explain the what, why, and how behind human emotions. The major theories of emotions may be grouped into two main categories: Physiological theories Cognitive theories

71. THEORIES OF EMOTIONS 1- James–Lange theory of emotions According to this theory, an external stimulus leads to a physiological response which, in turn, leads to an emotional reaction, depending on how the person interprets the physiological response. For example, suppose you see a snake in your backyard and you begin to tremble and conclude that you’re frightened (“I am trembling, so I am afraid”).

72. THEORIES OF EMOTIONS 2-Cannon–Bard theory of emotions this theory says that both the emotion and physiological reaction occur when the thalamus sends a message to the brain in response to a stimulus. 3- Facial feedback theory of emotions According to this theory, facial expressions are not only the results of our emotions but are also capable of infl uencing our emotions. For example, when we smile, we experience pleasure or happiness. Likewise, when we frown, we experience sadness

73. THEORIES OF EMOTIONS The Schachter–Singer theory of emotions known as the two-factor theory of emotion, is an example of a cognitive theory of emotion. According to this theory, there are two key components of an emotion: physical arousal and cognitive label. This theory says that a mere physical arousal is not enough; the person must also identify the arousal in order to feel the emotion According to the two-factor theory, when you see a cobra snake in your backyard, the sequence that follows would be much like this. 1. I see a cobra snake in my backyard. 2. My heart races. 3. My rapid heart rate is caused by fear. 4. I am frightened.

74. Two Dimensions of Emotions Emotional experiences may be measured along two dimensions, viz., valence (how negative or positive the experience feels) and arousal (how energising or enervating the experience feels)

75. EMOTIONS AND INVESTING Emotions have a bearing on risk tolerance, and risk tolerance influences portfolio selection.

76. FAIRNESS, RECIPROCITY, AND TRUST While most people accept that fairness is valued in our society, the notion of fairness has been largely overlooked in traditional finance which assumes that economic agents are driven by self-interest. In recent years, however, some researchers have recognised the importance of fairness, reciprocity, and trust in the conduct of business transactions. Trust is a prerequisite for an efficiently functioning economy. The costs of business and personal transactions are Behavioural Finance significantly reduced if people trust each other and treat each other fairly. Empirical evidence suggests that a large number of people trust and treat others fairly, even when they are not likely to deal with them in future. Tipping servers in restaurants is a commonplace example of fairness and trust. People normally tip the servers, as long as the service is above a threshold level. Although tipping is not required, people often do it out of a sense of fairness.

77. SOCIAL INFLUENCE ON INVESTMENT Investing has become an integral part of social life. Not only do we invest, but we also like to talk about them. People discuss investments with their friends, coworkers, neighbours, family members, or even strangers through the web. This has created an interesting paradox. While you want to invest independently, you also want to go by the consensus view. Indeed the popular consensus acts like social pressure. A- Herd Instincts and Overreaction For example- Reliance Power IPO & Bajaj Finance IPO

78. Conformity - Social Influance Conformity in psychology is the tendency of people to change their attitudes, behaviors, or beliefs to match those of the people around them. Conformity can be a result of social pressure or unconscious influence The impact of conformity can vary depending on factors like age, gender, cultural background, and personality

79. BEHAVIOURAL PORTFOLIO THEORY Introduced by Hersh Shefrin and Meir Statman, behavioural portfolio theory is a goal-based theory. In this theory, investors divide their money into several mental account layers, arranged as a portfolio pyramid. Each layer corresponds to a specifi c goal such as buying a house, paying for children’s education, having a secure retirement, or being affluent enough to go on a world tour whenever one chooses to.

80. BEHAVIOUR PORTFOLIO THEORY

81. KNOWING YOURSELF: PSYCHOGRAPHIC MODELS Psychographic models seek to classify individuals according to certain characteristics, tendencies, or behaviours. They are helpful in understanding risk tolerance and developing investment strategy Passive Investors As Barnewell notes: “Passive investors are defi ned as those investors who have become wealthy passively, for example, by inheritance or by risking the capital of others rather than risking their own capital. Active Investors Barnewell notes: “Active investors are defined as those individuals who have earned their own wealth in their lifetimes. They have been actively involved in the wealth creation, and they have risked their own capital in achieving their wealth objectives.”

82. BASIC INGREDIENTS OF A SOUND INVESTMENT PHILOSOPHY 1- Focus on Process- In any probabilistic fi eld-investing, business, or gambling, the emphasis should be on the process, not on the short-term outcome Long-term Perspective In the world of investments, there is too much randomness in the short run. A sound investment philosophy calls for a long-term orientation Probabilistic Approach It is important to adopt a probabilistic approach in the field of investing

83. GUIDELINES FOR OVERCOMING PSYCHOLOGICAL BIASES Understand the Biases Focus on the Big Picture Rely on Words and Numbers, not Sights and Sounds Follow a Set of Quantitative Investment Criteria Diversify Take Care of the Downside Control Your Investment Environment Review Your Biases Periodically

84. The Four Stages of a Bubble

85. BOOK - BEHAVIOURAL FINANCE

86. THE EVIDENCE ON EQUITY RETURNS

87. Is Equity Investing Really Risky? It is the behavioral traits of the investor in particular and the crowd behavior of the markets in general which makes equity investing appear a risky proposition. Understanding the behavior of the stock markets is the most difficult because markets are made on the basis of varied opinions expressed by their participants.

88. WARREN BUFFETT- EQ The most successful investment money managers like Warren Buffett, Charlie Munger, Peter Lynch owe their success not only to their intellectual ability but also to their discipline and emotional control.

89. Mr. Market Oscillates between Greed and Fear Markets are made up of emotional people whose decisions are based upon the prevailing sentiments in the environment. At times they display greed and at other times this greed is displaced by fear. Bouts of greed and fear make the stock prices volatile and investors get trapped in such volatility to lose fortunes.

90. INVESTMENT DISCIPLINE Being disciplined in your investment approach is very important.You don’t get opportunities everyday and one must be prepared and ready with the money when opportunities come. It so happens that investors tend to chase stocks wheN they get tips and they are so much stuck up with expensive stocks that when the markets tan and opportunities arise they don’t have the money

91. ACID TEST- MIND AND HEART Real discipline and courage is: you buy when you emotionally do not feel like buying, and sell when your heart says no but the mind and the logic say yes.

92. 10% Investors Follow the Emotional Way When your friends tell you about a great investment opportunity, which could be a ten-bagger, and they feel that it is a great time to buy or an opportunity will be lost: don’t buy. When your favorite TV channel everyday has analysts talking about great investment opportunities don’t buy.

93. BEHAVIOURAL FINANCE Behavioral finance is an emerging field that combines the understanding of behavioral and cognitive psychology with financial decision-making processes Most common of these mistakes involve selling winners too soon and holding onto losers

94. ASSETS ALLOCATION asset allocation is the first step an investor should take before even choosing how to invest. The ability to understand the risk-reward ratio discounted in various asset classes is critical in designing an asset allocation strategy. Age - Risk Taking Ability - Equity and Safe investment allocation of saving

95. Value Investing “Price is what you pay, Value is what you get.” Benjamin Graham Growth stock investing is based on hunches, dreams,illusions or popular opinion.They are better termed as‘dream stocks’. Herd behavior is one of the reasons that growth stocks goup very fast and attract investor attraction. They alsofall very fast as the herd comesto sell

96. WHAT IS CONTRARIAN INVESTING? “If everybody else is doing it one way, there’s a good chance you can find your niche by going in exactly the opposite direction. [But] be prepared for a lot of folks to wave you down and tell you you’re headed the wrong way”—Sam Walton A contrarian investor can be defined as one who attemptsto profit by betting against conventional wisdom

97. FOCUS ON VALUE NOT ON RETURN For an investor, the financial statements representing the recent performance of the enterprise constitute an indispensable tool. But the value is a function of the ability of the enterprise to generate cash flows in the future.

98. QUESTIONS ALWAYS WELCOME REMEMBER “LESS MARKS WITH SKILLS IS BETTER THAN GOOD MARKS WITHOUT SKILLS”