Archives for May 2017

One Powerful Success Secret from Ben Franklin that Changed My Life

When I tell people how I manage my entire business on my own – from website management, to reading, writing, sending mailers, to organizing workshops and also booking a lot of travel tickets – a lot of them are in disbelief.

They disbelieve me even more when I tell them that I work for just 5-6 hours a day and take a lot of family holidays.

Well, I do not have any Masters degree in time management, but one thing that has really helped me manage my time well is a simple secret I’ve learned from people like Ben Franklin and Warren Buffett.

That simple secret is that of…

Safal Niveshak Stream – Advice from Buffett, Munger, and Gates

Some nice stuff I am reading, watching, and observing at the start of this weekend…

Parenting Advice from Buffett & Munger

As parents, we often ask, then ask again, and ask again our kids to do something we desire they do. And if we are lucky, our kids cooperate after the fourth or fifth request or after a loud but otherwise harmless scolding. We complain that our kids never listen to us, and ask other parents how they get their kids to behave, eat healthy food, and go to sleep on time. If that’s not all, we consult the Internet and several books on bringing up well-cultured and disciplined children. Then, even as we apply all those techniques, our kids just don’t listen.

But, amidst all this, there’s something we often fail to notice with our kids. Even when they are not listening to us, they are busy observing us.

I have often noticed this with my kids. They would often not listen to what I have to tell them. But they would always be observing my actions. And that keeps me on my toes, simply because my kids are ‘watching’ me.

I found this thought reiterated in this wonderful book I am reading for the second time – Peter Bevelin’s All I Want to Know is Where I’m Going to Die So I’ll Never Go There. Here is an excerpt from that book where Warren Buffett and Charlie Munger, in conversation with a seeker of wisdom, share with him the best method of training children…

If you haven’t picked up this book, I suggest you do. It’s slightly expensive, but one of the best investments in seeking wisdom you would ever make.

StockTalk (May 2017)

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How NOT to Teach Your Children about Money (A Personal Experiment)

“Kavya, what is money?” I asked my twelve-year old daughter recently, as she was deeply engrossed in a book.

Her answer stumped me, simply because I was not expecting it and in the way she said it.

She said, “Papa, money is something that, if we don’t waste, can get us bigger and better things in the future.”

“Wow!” I told her. “You deserve a hug for this.”

How Kavya defined money may not be its perfect definition, but it effectively contains almost the entire essence of how we must handle it (money).

It contains the importance of saving money by spending less money now, and letting the power of compounding grow that money so that we can maintain our purchasing power (and still have more money) in the future.

Latticework of Mental Models: Decision Fatigue

In January 2016, after two months of paternity leave when Mark Zuckerberg returned to work he asked his followers, showing off a picture of his wardrobe, for a suggestion about what he should be wearing to office. This is how his wardrobe looked.

Pretty drab collection, isn’t it? Zuckerberg has been wearing the same outfit, a grey t-shirt, for many years. The reminds us of Steve Jobs and his favourite black turtleneck.

So why do these billionaires who could afford almost anything in this planet, choose to stick to a simple attire?

The answer is – it’s their hack to simplify life.

According to Zuckerberg, making clothing decisions each day was a “frivolous” waste of time. I really want to clear my life, says Zuck, “to make it so that I have to make as few decisions as possible about anything except how best to serve this community.”

According to one estimate, we normally make somewhere around 35,000 decisions every single day. Many of those decisions are unconscious like walking, blinking, breathing and don’t need any extra mental effort. But the sheer volume of even those decisions that require at least some brain power like what to wear, where to eat, how to get to work, who to call when you get there, is staggering.

InvestorInsights: Sean Iddings

Sean Iddings is co-founder of the Intelligent Fanatics Project which helps investors and entrepreneurs see further by standing on the shoulders of organizational and leadership giants.

The book series of the same name, co-authored by Ian Cassel, is the introduction into the overall project. Sean is also a member of MicroCapClub.

Safal Niveshak (SN): Sean, you have graduated magna cum laude with a B.A. in Music Therapy. What led you into this “non-musical” world of investing?

Sean Iddings (SI): I had always been intrigued by the market and entrepreneurship from a young age. Music was my first love, so I never looked further into those other curiosities. It was a friend I worked with during college that told me about the markets/business and encouraged me to look into them. Since I was depressed about my musical future, I was finally ready to entertain those curiosities.

My musical training had revolved around “mastering the masters”, so I immediately sought out the investing masters. After reading Ben Graham’s Mr. Market analogy, I instantly got it and was hooked.

So, while my background is non-traditional for an investor/entrepreneur, I’m blessed to have it.

SN: How have you evolved as an investor and what’s your broad investment philosophy? Has your investment policy changed much through the years as your capital has grown?

SI: Yes, I’ve evolved immensely. I’d say that I’ve found much better tools over the years. I started out looking in the right places, but I had deficiencies and still do. One early one was to gloss over “mastering the masters” and focusing on learning from my own experience.

My broad policy of investment continually morphs. It has been simplified to this: put in the hard work and compound.

Investing Lesson from How Doctors (Don’t) Think

It was a summer afternoon. Sunnybrook Hospital in Canada received an accident case. A young woman driver had a head-on collision with another car. She had suffered broken bones everywhere.

The doctors found multiple fractures in her ankles, feet, hips, and face. Initially, they missed the fracture in her ribs that they later found out.

During her diagnosis, the doctors found something else that was not right with the woman. Her heart was beating unusually. The rhythm of her heartbeat had become wildly irregular. It was either skipping beats or adding extra beats.

The emergency room staff soon diagnosed the heart problem – or thought they had. The woman told them that she had a history of an overactive thyroid. An overactive thyroid can cause an irregular heartbeat. So the staff no longer needed any further investigations for the source of the irregular heartbeat but to treat it.

By this time, they had invited an intern named Don Redelmeier, whose job at the hospital was, in part, to check the understanding of the specialists for mental errors. In other words, Redelmeier’s job was to serve a check on other people’s, especially doctors’, thinking.

As the emergency room staff was about to administer the drugs for hyperthyroidism to the woman patient, Redelmeier asked them to slow down. To wait. Just a moment. Just to check their thinking – and to make sure they were not trying to force the facts into an easy, coherent, but ultimately false story.

BookWorm: Fooled by Randomness

The world we live in today is more random than we would like to think. A human mind is a meaning-making machine. Through millions of years of evolution, nature has hardwired the human brain to seek patterns and consistencies everywhere. But as civilization has progressed the world around us has become increasingly random i.e., uncertain and unpredictable.

Nassim Taleb is one of those thinkers of modern times who is ardently loved by many intellectuals and criticized by probably more. In his talks and public interactions, Taleb comes out as someone who has a knack for rubbing off people the wrong way. His writing style has been labelled as excessively rhetoric and provocative.

Even Howard Marks, a very successful and highly respected value investor, said this about Fooled by Randomness－ the most important badly written book.

As for Nassim, whether you like him or hate him, one thing is for sure － his ideas can’t be ignored. Once you set aside those minor personality issues and get past the resistance created by Taleb’s unique writing style, his books are a treat to read and choc full of thought provoking arguments. In my library, this book is probably the most highlighted, underlined and annotated one.

Latticework of Mental Models: Zeigarnik Effect

“What is not started today is never finished tomorrow.” ~ Johann Wolfgang von Goethe

The most interesting and exciting thing about psychology is that you don’t need expensive lab instruments to experimentally test the validity of theories. The world is your lab and its inhabitants i.e., people, including yourself, are the test subjects (read guinea pigs).

So here is a simple experiment that you can try during your next visit to any restaurant.

You’d often find waiters who don’t need to write down your order. They seem to have this remarkable ability to accurately remember the order for each table. Even if there are half a dozen orders with every order consisting of many different dishes (including special request like – less sugar, no mushrooms in the Pizza etc.) these waiters rarely goof up.

Well, it’s a part of their job and with years of practice, they develop a super-sharp memory. But do they really have a great memory?

Try this – After you are done with your meals and have paid the bills (and a good tip), wait for ten minutes after you have left your table and then go back to the waiter who was waiting on you. Ask him to repeat your order. You’d expect him to rattle off your order without any difficulty. But don’t be surprised if he gives you the look – “I am sorry, who are you?”

It would seem, not just your order but your whole existence has evaporated from waiter’s memory. What happened to his super memory?

Behaviouronomics: Dunning-Kruger Effect

Whether it’s playing poker, singing, writing short stories, or investing, amateurs are far more likely to think they are experts than actual experts are. Without Dunning-Kruger Effect, the Indian Idol auditions would never enjoy high TRPs.

One of the most popular categories of videos on YouTube is clips from reality TV competition shows where amateur participants come to show off their raw talent. Apart from a handful of participants who do have real talent, majority of them usually get insulted by the TV show judges and end up making fools of themselves. Sometimes I feel that entertainment media deliberately dramatize those horrible audition performances (not sure if you can call those acts as performance). What brings initial TRP for these reality shows are those hilarious episodes showcasing novices who believe their talent is nothing less than that of a celebrity superstar.

That’s the interesting part about these competitive reality shows. TV audience soon forgets about the eventual winners but those few episodes, during audition round where amateurs embarrass themselves, continue to garner millions of views on social media.

“What makes you think that you can win Indian Idol?” asked one of the celebrity judges.

“My singing capabilities have always been praised by my friends and family. I have even performed at my school and college multiple times,” replied the participant whose singing was horribly off-key. And to add insult to an injury, his voice was anything but melodious.