Archives for June 2015

When I Took Warren Buffett’s Advice Very Seriously (It’s Not About Investing)

June 29, 2015 | Reading Time: 4 minutes | 39 Comments |

“I trust you Anshul. Would you want to work with me at Safal Niveshak?”

“I trust you Vishal. Yes, I would want to work with you at Safal Niveshak.”

“Welcome aboard, Anshul!”

…and thus ended the fastest ever interview I’ve ever been a part of. 🙂

Well, the reason I’m writing to you is to formally announce my partnership with Anshul Khare in taking the Safal Niveshak initiative forward.

And the reason I’m doing it today is because Anshul is now my full-time partner at Safal Niveshak, after having quit his well-paying job at a well-to-do startup.

Life 2.0: Serendipity

June 28, 2015 | Reading Time: 15 minutes | Leave a Comment |

When was the last time you did something for the first time?

It’s an ordinary looking question but it has the power to create magic in our lives. How? Please allow me to digress a bit for a while and I’ll circle back to this line of thought little later in the post.

It’s common knowledge that every action produces an equal and opposite reaction. That’s Newton’s Law. Simply put, every cause has an effect. What’s noteworthy about this phenomenon is that some actions produce immediate effect, for example if you put your hand in fire you get burnt. Some other actions have delayed effect like you overeat unhealthy food and it makes you fat but the result isn’t immediate.

The above two cause-effect relationships are well known to everybody but there are some actions which may not seem to produce any recognizable effects, immediately or even in perceivable near future, but they end up creating significant unintended consequences.

Notice the term ‘unintended’ which means you could never have known in advance about the kind of consequences or results that will eventually be produced by your actions. Let me tell you a story.

This is a story of a guy with an uninteresting and dead end corporate job. There was no hope for him to become wealthy in his career. However in his spare time, i.e., weekends and evenings, he was always involved in some hobby projects or activities.

He learnt computer programming and developed few computer games which nobody bought. He came up with few business plans but could never convince any investors for his ideas. He attended business writing classes. He used to draw cartoons and send them for publication. He did public speaking courses. He learnt about human psychology.
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Latticework of Mental Models: Critical Mass

June 24, 2015 | Reading Time: 16 minutes | 17 Comments |

This article is the tenth of this weekly series called Latticework of Mental Models, which will be authored by my friend and partner in writing the Value Investing Almanack, Anshul Khare. Anshul will write on various mental models – big ideas from various disciplines – which can help you think more rationally while analyzing businesses and making your stock investment decisions.

It’s said that you can find extraordinary intelligence in nature. To unearth this brilliance, all you need is curious eyes and close observation. In that spirit, let me start today with the story of a Chinese bamboo tree.

Imagine that you were given few Chinese bamboo seeds and asked to grow them. You take the little seed, plant it, and start watering it. You add fertilizer and wait patiently for the seed to turn into a plant. You wait for a whole year, and nothing happens.

The second year you continue to water it and fertilize it, but still nothing happens. Looks like somebody is testing your patience.

The third year you water it and fertilize it, and the same story repeats i.e., no visible results. Many people would have given up on the tree by this time. But not you. At least not in my story.

Overpriced

June 22, 2015 | Reading Time: 7 minutes | 23 Comments |

When I was looking to acquire the first client for my writing business in 2011, I had no idea how much to charge. I had no point of reference as far as content writing fee was concerned. For me, there were a few hours of work involved.

Anyways, to my first prospective client, I dared to ask for a hefty sum of Rs 2,500 per article, simply going by the understanding that you charge not for how much work it is for you, but how much the service is worth for the client.

It took me several clients to figure this out. My next client, I tried charging Rs 3,000 per article. He went for it. The next client Rs 3,500. The next client Rs 4,000. I kept charging more and more until finally three clients all turned down my Rs 5,000 fee. So I lowered the price back to Rs 4,000.

Essentially, at Rs 5,000, my prospective clients were telling me, “Your services are overpriced, and not worth it!”

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Governance: Know Thy Manager

June 20, 2015 | Reading Time: 14 minutes | Leave a Comment |

In the original version of his book The Intelligent Investor, Ben Graham began his discussion of a chapter on “The Investor as Business Owner” by pointing out that, in theory…

“…the stockholders as a class are king. Acting as a majority they can hire and fire managements and bend them completely to their will.”

But he changed this part in the subsequent editions of the book. In practice, says Graham…

“…the shareholders are a complete washout. As a class they show neither intelligence nor alertness. They vote in sheeplike fashion for whatever the management recommends and no matter how poor the management’s record of accomplishment may be.

The only way to inspire the average American shareholder to take any independently intelligent action would be by exploding a firecracker under him.”

Well, this is a fact that is true for not just American shareholders, but all shareholders. Most of us overlook the human aspect of operating a business. This is despite the fact that, in most cases, the future success of a business is directly tied to the quality of its people.
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