Archives for 2017

Safal Niveshak’s 2017 Annual Letter to Tribe Members

Dear Tribe Member,

Trust 2017 treated you well. It certainly was great for Safal Niveshak.

Here is a brief update on what transpired during the year. The tribe crossed 40,000 members (readers of our free newsletter, Safal Niveshak Post). We conducted nine value investing workshops during the year, meeting 430+ tribe members in the process.

The Mastermind Value Investing Course student count increased by 25%. Our premium newsletter – Value Investing Almanack – which is about to complete three years, gained 20% new members. It continues to receive inspiring reviews from its subscribers.

We also relaunched our free online value investing course – Value Investing Masterclass – in a new avatar. It now consists of updated and more lessons than the previous version. The subscription to this course jumped from 7,500 to 15,000 in less than a year after the relaunch, much better than our expectations.

Latticework of Mental Models: Domain Dependence

Imagine this. You are escorted into a room. On one corner there’s a table with three items on it: a box of board-pins, a matchbox, and a candle. Your task is to attach the candle to the wall, so the wax doesn’t drip onto the table.

A psychologist named Karl Duncker first designed this experiment in 1945.

About seventy-five percent of the participants who take part in this experiment try following solutions.

First, they try to pin the candle onto the wall. It doesn’t work. Then they try to light the candle and use the dripping wax to attach it to the wall, but that’s usually not strong enough to hold the candle. So that doesn’t work either.

What about you? How would you solve this? Take a moment and think about it.

Very few people see the solution at once. Some people find it after only a minute or two of thought. Others see it after stumbling through several unsuccessful attempts. Most fail to solve it without some outside help.

A Short Guide to Reading and Learning for Investors

I had written a lengthy post in 2015 on the subject of required reading for investors, which also included thoughts from Prof. Sanjay Bakshi and my own reading spectrum.

This latest post is an update on the same and includes my revised reading spectrum (not a major change over last time, but some meaningful additions).

For a change, I am not writing much in today’s post and would rather let the following two illustrations do the talking (Click on the images below to download them in large size).

The core idea is that, in true pursuit of wisdom in investing and life, we must read much more of what has endured over time (like supertexts, history, biographies, etc.) than what is ephemeral (like newspapers etc.)

I will end with a thought from Elon Musk on how to learn things deeper. Musk answered this to a question on how he does that himself –

It is important to view knowledge as sort of a semantic tree — make sure you understand the fundamental principles, i.e. the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang onto.

You see, often it happens that we want to dive into the deep end before we learn how to swim. So when you want to learn a new subject, identify the fundamental principles first – the trunk and big branches. Learn those things first and deep, and you’ll be able to figure out the leaves and figs – mostly noise – much easier.

Finally, use the Feynman Technique when you want to learn something clearer and deeper…

Let me know your thoughts on these illustrations in the Comments section of this post, and a few of the supertexts – on investing, human, behavior, thinking, learning, etc. – that you think others and I must read and that are not covered above.

Lecture Presentation and Notes: Seeking Wisdom in the Age of Information

I recently spoke at a finance and business conclave in Chennai, organized by Naanayam Vikatan, a leading Tamil language finance magazine. The topic was ‘Seeking Wisdom in the Age of Information.’

Click here to download the presentation and notes, or read it in the panel below.

My Thoughts on Investing in 2017, 2018, and Beyond (Video)

I was on ET Now yesterday to share my thoughts on investing in 2017 and 2018. While I managed to duck their questions on specific stocks, you can see the nervousness on my face even when I talk about a few old names. 🙂

Here is the video of the chat (click here if you are not able to watch the video below) –

Here are some notes from my talk that I prepared just to make the task a bit easier for you –

Circle of Competence: What and Why

Tom Watson [the founder of IBM] said – “I’m no genius. I’m smart in spots and I stay around those spots.”

Charlie Munger and Warren Buffett define these spots where you are smart as your ‘circle of competence’ – the area beyond which you must not venture out if you were to make effective, profitable investment decisions.

I have talked about the circle of competence numerous times in my posts and presentations. But if you still have doubts on this concept, its relevance, the dangers of not adhering to it, when do you know something is within your circle, and how to grow that circle, here is an illustration that, to the best of my knowledge, may help you with the answers.

Click here to download a larger image
Let me know if you think I may have missed out on anything related to the subject in the above illustration.

P.S. You may read a detailed explanation on ‘circle of competence’ here.

The 39th Lesson

Life’s passing by too fast, or so it seems. I complete 39 years in my present state of existence today. That’s 14,245 days or around 57% of the average life expectancy of an Indian male.

While spiritualists would want me to believe that I have existed from anadi (before the beginning of cosmos), and will exist till ananta (infinity), I see thirty-nine years as a good enough time to find some meaning in one’s life. At least, my rapidly greying hair and receding hairline help me realize that.

Now, while it amazes me that I’ve been around that long — I feel like I’ve barely begun.

I’m not usually one to make a big deal about my birthday, but as always, it has given me an opportunity to reflect.

So, like I have done over the past three years – see here, here, and here – let me share one of the key life lessons that have guided my life over the years, and two small but wonderful books that have brought this lesson to fore every time I have read them, including when I read them this year.

[Read more…] about The 39th Lesson

What We Are Listening To: Our Favourite Podcasts on Business, Investing, and Learning

If you don’t know who Charlie Munger is, then here’s a quick introduction. He’s a billionaire and he’s 93 years old. He’s not the oldest and he is not the wealthiest but when it comes to being the “oldest billionaire”, he doesn’t have any competition.

In other words, he has the two most coveted things in this world – wealth and a long life.

His advice to us – minimize stupidity. Remarkably simple, isn’t it?

The most effective way to follow Charlie’s advice is to learn from others’ mistakes. That’s where books come into the picture. They’re the best source of vicarious knowledge.

When humans first discovered that they could persist their words and other information in physical form, it was revolutionary. According to some historians, between the years 3500 BC and 3000 BC, ancient Sumerians from Mesopotamia civilization invented the first system for storing and processing information outside their brains.

In the timescale of millions of years of human evolution, this invention is pretty recent one. Irrespective of how trivial the ability to read/write sounds, it was nothing less than a disrupting technology when it came out. Probably thousands of talented Sumerians, who were employed for memorizing information, lost their jobs.

You don’t have to teach an infant how to swallow liquid or give walking lessons to a toddler. These skills are built into the human genome. But reading isn’t part of our DNA.

My Thoughts on Value Investing, Personal Finance, and Life (Podcast)

I recently had the opportunity to get interviewed by Paisa Vaisa, an audio show/podcast based on topics around money, investing, and personal finance.

In the interview, I discuss my background, what got me to the stock market, thoughts on value investing, buying and selling stocks, core rules of personal finance, and my way of living a prosperous life without the paycheque.

I thought you might be interested in hearing me out (my kids did, for the first time). 😉

Here are the links to the podcast (around 15 minutes each) –

Part 1 (background, education, what drove me towards value investing, my teachers, biggest succcesses and failures)
Part 2 (thoughts on value investing, simple tips on building your portfolio, when to buy and when to sell stocks)
Part 3 (thoughts on personal finance, how to lead a better life by making smart money decisions)

Thanks for listening!

Latticework of Mental Models: Manufactured Memories

Yesterday when I logged into my Facebook account, it showed a picture I had posted six years back. In the frame, I was having lunch with an old school friend.

It brought a smile on my face.

Interestingly, I had completely forgotten about the lunch. I just couldn’t remember being present when that picture was taken. My brain had conveniently erased that incident from memory.

I am sure it happens to others too. Also, Facebook knows it, so they introduced this feature. Bringing back those lost memories creates a pleasant experience which isn’t much different from the one when you find money in your old pant pockets.

How would it be if we never forgot anything? Why does our brain choose to remember something and spaces out on others? Is there an evolutionary reason behind this behavioural quirk? Let’s explore these questions today.