Archives for January 2019
Investor Insights: Saurabh Mukherjea – Part 2
Saurabh Mukherjea is the founder of Marcellus Investment Managers. He is the former CEO of Ambit Capital, prior to which he co-founded Clear Capital, a London-based small-cap equity research firm.
Saurabh has written three bestselling books: Gurus of Chaos (2014), The Unusual Billionaires (2016) and Coffee Can Investing: The Low Risk Route to Stupendous Returns (2018). He is a CFA charter holder with a BSc in Economics (with First Class Honours) from the London School of Economics.
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Special Report: Let Me Convince You to Start Teaching
The 50-year-old partnership between Warren Buffett and Charlie Munger is well known to the world. During initial years of their friendship they would spend hours every day on the phone discussing investing and business.
So when Munger told Mohnish Pabrai that he always had someone to talk to about investments, Mohnish guessed, “You mean Warren Buffett?”
“Well, it wasn’t always Warren. But I’ve always had someone to talk to.” Charlie replied. In a recent DJCO meeting, Munger mentioned that even Einstein needed someone to talk to.
Let’s unpack Charlie’s insight.
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Ben Graham: Just Plain Lucky?
Remember Ben Graham, the guy who wrote The Intelligent Investor? And who taught Warren Buffett to become Warren Buffett?
Well, if you really know who Graham was, you also know that he is associated with buying something cheap (one dollar worth at fifty cents) and then selling it when it reaches a value that reflects what it’s worth.
A very copybook, calculated approach, right? Like what a Rahul Dravid would do in cricket.
How to Go from Riches to Rags
Richard Branson is a British business magnate, investor, author, and philanthropist. He’s the founder of the Virgin Group, which controls more than 400 companies.
When someone asked Branson how to be a millionaire, he replied, “Start with a billion dollars and invest in an Airline.”
Vijay Mallya would probably be questioning Branson, “Aisa tha to pehle kyun nahi bataya?” (translation: why didn’t you tell me this earlier?)
So that’s the first way to go from riches to rags — buy an airline. Now, I don’t know of a way to verify if Branson actually said that. So let me tell you another story which is true, verifiable, and recent.
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The Untold Story of A Self-Made Investing Millionaire
In a world dominated by men, here is a rare untold story of a woman who quietly made it big as a stock market investor.
Anne Scheiber was 51 years old when she retired from her job as a low-level auditor from the American Internal Revenue Service in 1944. She never earned a salary of more than $4,000 per year, and although she was an exemplary worker, she never received a promotion. Maybe, because she was a woman and a Jew, the lots that were discriminated against in the workforce in general in the west during that period.
As per the executor of her Will, Benjamin Clark, Scheiber, who was already investing her small savings in the stock market when she retired in 1944, started here post-retirement life with a portfolio of about $21,000. Adjusted for inflation, that was about $297,000 in today’s money. Not really a large sum to retire in the US.
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Stress and Investing: A 20-Point Checklist
I was at my hometown recently and chanced upon a friend who works as an investment banker in Delhi. We had met almost after 15 years, and so I could notice a big contrast in his looks as compared to what it was in the early 2000s. He looked much older than his age, around 39, and so I enquired about his health.
To my utter shock, he said, “I had an angioplasty late last year, where they put a tiny tube in my blood vessel to restore blood flow through my arteries.”
In short, he meant, “I just survived a heart attack.”
“Stress is part of my job profile, you see,” he shrugged it off jokingly.
I had earlier read of a 35-year-old London-based hedge fund trader who died of a heart attack in 2013, and of the head of JP Morgan’s equity sales, aged 37, who had also died of heart failure in 2012. But my friend was, well, my friend, and thus the gravity of the situation weighed heavier this time.
“Is it worth it?” I asked my friend.
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Behaviouronomics: Hanlon’s Razor
In philosophy, a razor is a principle or rule of thumb that allows one to eliminate or shave off unlikely explanations for a phenomenon, or avoid unnecessary actions. Occam’s Razor is one such well-known heuristic. I had written about it a few years back. You can read it here.
When it comes to reasoning, elimination is a more robust strategy than adding. Sherlock Holmes famously said, “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”
Shaving off the untrue guarantees to leave you with the most probable version of the truth. From that logic, investigating any phenomenon using razor like thumb rules is a very efficient way of better thinking. Better thinking leads to better judgment and decision making. Better judgment and decision making result in better action.
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Seven Big Ideas from Fooled by Randomness
I have been re-reading Nassim Taleb’s Fooled by Randomness. The book is about “luck disguised and perceived as non-luck (that is, skills) and, more generally, randomness disguised and perceived as non-randomness (that is, determinism).”
It’s an enlightening read in its entirety, but here are seven key ideas I have picked up from the book.
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Bookworm: Big Mistakes by Michael Batnick
In most fields, studying the patterns of success is a standard way to learn. So when people come to financial markets they try the same approach. All new investors get busy investigating how the wealthy investors made their money in the stock market. They want to know the secret behind the winning strategies. But investing is a world of counterintuitive ways.
All successful investors and traders have made their money in widely varying ways and more often than not, their strategies often contradict each other. If one market pro vouches for his winning method, another market savant would seem to oppose it ardently. Jim Paul, in his book What I Learned Losing A Million Dollars, writes —
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