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You are here: Home / 2015 / Archives for June 2015

Archives for June 2015

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

June 29, 2015 | 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.

[Read more…] about When I Took Warren Buffett’s Advice Very Seriously (It’s Not About Investing)

Life 2.0: Serendipity

June 28, 2015 | 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.
[Read more…] about Life 2.0: Serendipity

Latticework of Mental Models: Critical Mass

June 24, 2015 | 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.

[Read more…] about Latticework of Mental Models: Critical Mass

Overpriced

June 22, 2015 | 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!”

[Read more…] about Overpriced

Governance: Know Thy Manager

June 20, 2015 | 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.
[Read more…] about Governance: Know Thy Manager

Latticework of Mental Models: Law of Small Numbers

June 17, 2015 | 18 Comments

This article is the ninth 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.



Outside of the closed glass chambers in the corporate world, there is another very unusual place where grand scheming about workplace strategies (read, office politics) happens regularly. Don’t worry, there is nothing hush-hush about this place and it’s not at all surrounded by thick soundproof walls.

Wondering what I am talking about? Let me give you another hint.

It’s the designated open area in every large company, where people go out in fresh air to fill their lungs with freshly brewed smoke. You guessed it right. I am talking about the smoking areas.

Mind you, it’s not just a place trafficked by the smoke billowing nicotine guzzlers, but you’ll often find those hapless passive smokers too who don’t realize that their lungs are going to collapse sooner than their active smoker buddies.

[Read more…] about Latticework of Mental Models: Law of Small Numbers

StockTalk (June 2015)

June 15, 2015 | Leave a Comment

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Latticework of Mental Models: Kantian Fairness Tendency

June 10, 2015 | 10 Comments

This article is the eighth 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.



I was almost at the end of a beautiful evening drive. Refreshing cold breeze gently blowing on my face through the car windows coupled with minuscule traffic was like heaven on earth. Sporting an ear-to-ear smile I felt confident that nothing in the world had the power to take away my inner peace at that moment.

But, as usual, my faithful and ever reliable nemesis, the chaos-monkey, had different plans for me that evening.

Just when I was about to take a smooth turn on a closing traffic signal, a taxi cut me off while overtaking my car. The surprising rash maneuver from the taxi called for sudden brakes and by that time signal had turned red. As a result I missed my turn because of the insensitive driving by the taxi driver.

In the next few seconds, my Buddha smile turned into an angry frown and I was thrown out of my “appreciating the good things in life” mode.

Why did I feel so agitated? Well, for one, I was ahead of the taxi and it was me who was supposed to cross the signal first.

[Read more…] about Latticework of Mental Models: Kantian Fairness Tendency

InvestorInsights: Arpit Ranka

June 10, 2015 | Leave a Comment

This is maybe the first time I am introducing someone here not on my own, but through a testimonial, and that too from a legend himself.

Here’s how Prof. Sanjay Bakshi describes the investor I am profiling today, Arpit Ranka –

Arpit is one of the finest human beings I have ever met. He is trustworthy, ethical, humble, spiritual, and diligent. Many years ago when he approached me through his wonderful brother Arpan (who was my student at MDI), I allowed him to sit in my class. He was the best student in my class. Later he worked with me for many years.

Arpit is a very successful value investor who loves his craft. Anyone who associates with him should consider himself or herself lucky. I am lucky to have him in my life.

Now for a more formal introduction. Arpit is a value investor based out of Mumbai. He is an avid reader and considers himself fortunate to have found his passion in value investing. He has worked with two of the leading value investors in India, Prof. Sanjay Bakshi and Late Mr. Parag Parikh before starting out on his own. Apart from investing, his interests include movies, music, Buddhism, and travelling.

For whatever little I’ve known Arpit for the past few years, I count him amongst the finest thinkers among the younger lot of value investors in India. That he breathes value investing would be an understatement.

For this interview, Arpit has been generous in letting his thoughts flow freely. And as you would realize by the end of the interview, there are great lessons that we can draw from his invaluable experience.

Let’s now dive straight into the interview.

Safal Niveshak (SN): Could you tell us a little about your background and how you got interested in investing?

Arpit Ranka (AR): It’s been a roller-coaster ride — growing up in a small town in Tamil Nadu called Tirukoilur, to dropping out of engineering within the first couple of weeks, to spending an year learning the pharmaceutical wholesale business at my maternal uncle’s shop in Jodhpur, to working for a month or two as an operator at a BOLT in Jodhpur, to get to work with two of the leading value investors in the country, to eventually becoming a full time investor and starting out on my own, twice over.

I will not bore you with the details except for highlighting two important developments along the way, which led me to value investing.

Firstly, in hindsight, dropping out of the engineering college is one of the best decisions I have taken as yet. While I had no clue what I would be doing with my life when I made that decision (I had not even heard of value investing then) but I became a voracious reader the very day I dropped out. I was scared to death that I might end up a failure and introducing myself to books seemed like my best bet to avoid that fate. After dropping out, I read like a maniac for a few years.
[Read more…] about InvestorInsights: Arpit Ranka

When I Met the Legends of Investing – Part 4

June 8, 2015 | 11 Comments

“I have noticed one thing…” I told my wife, “…that whenever we are on a holiday, the stock markets take a nosedive.”

“Oh, you and your stock market!” she replied with expected frustration. “You always promise at the start of the holidays that you won’t look at stocks, but then…”

“Yes dear, you know I don’t look at daily stock prices while on a holiday or even otherwise, but the way stock prices are moving these days, I can’t help but take notice.”

“Forget it! Let me sleep now for we have a long day tomorrow touring the entire city.”

“Yeah, even I need a good night’s sleep,” I said, “…and possibly continue my dream of meeting the legends of investing who have guided me well in the past.

“Amidst this excessive stock market volatility, I surely need to get my thoughts re-aligned.”

And the dream follows…

[Read more…] about When I Met the Legends of Investing – Part 4

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