Dear Tribe Member,
Trust 2018 treated you well. It certainly was great for Safal Niveshak. The tribe crossed 53,000 members. I conducted seven value investing workshops during the year, including two in the US. Our Mastermind Value Investing Course and premium newsletter Value Investing Almanack continue to receive inspiring reviews from subscribers.
Anyways, right before the year ends, I thought I’d share a handful of ideas I’ve learned, re-learned, and wrote about in the past twelve months. Here are 51 of them categorized under investing, learning, and life. I hope you find these useful, as much as I did.
1. Expect randomness
The irresistible urge to seek patterns can get us into serious trouble when we take this tendency to the field of finance and investing. So, as investors, it’s important to know that we’re dealing with something where randomness and chance can distort the expected outcome in the short term.
Time and again it has been proved that majority of stock price changes are nothing more than random jitters in the system for which no explanation is ever required—yet you can find people obsessing over every minuscule movement and explaining them like kids spotting animal shapes in the clouds.
2. Beware the hot hand
Look at the long-term results of business while evaluating a stock. Last few quarter results, even with a clear pattern, don’t reveal any useful insights. Focusing on ten years of financial and business performance lowers the odds of getting fooled by the Hot Hand effect.
Market extremes (bull and bear markets) is nothing but the result of a strong belief in Hot Hand effect. When the broader market starts rising, which could be a random fluctuation, it creates an illusion that something must be good about the economy and business environment in general. People start inventing reasons to explain the short-term patterns, which strengthens their belief further and quickly market can get on a roll for the reason that has nothing to do with the true valuation of the underlying securities.
3. Don’t ignore that doubt
When you start with an investment hypothesis, the job is not to find confirming evidence but to ensure that there’s no reasonable doubt left in your mind before you pull the trigger. Ignoring a reasonable doubt is being dishonest to a rational assessment.
4. Fish where the fish are
Charlie Munger says –
The two rules of fishing are to fish where the fish are, and don’t forget the first rule. Investing is the same thing. In some places, no matter how good a fisherman you are, you won’t do well. Life is a long game. Take it as comes and do the best you can, and if you live to an old age, you will get your full share of opportunities, which will be two in total, maybe, but seize one of the two, and you will be alright.
Nassim Taleb has a chapter in his fascinating book Antifragile on this topic of Via Negativa. Therein, he argues that the solution to many problems in life is by removing things, not adding things. Like, avoiding the doctor for minor illnesses or removing certain food from one’s diet to improve health. Taleb writes –
I would add that, in my own experience, a considerable jump in my personal health has been achieved by removing offensive irritants: the morning newspapers, the boss, the daily commute, air-conditioning, television, emails from documentary filmmakers, economic forecasts, news about the stock market, gym “strength training” machines, and many more.
He then adds –
If true wealth consists in worriless sleeping, clear conscience, reciprocal gratitude, absence of envy, good appetite, muscle strength, physical energy, frequent laughs, no meals alone, no gym class, some physical labor (or hobby), good bowel movements, no meeting rooms, and periodic surprises, then it is largely subtractive.
Via Negativa is one of the most critical lessons I have learned and practiced, and that has helped me simplify my life considerably and brought me tremendous peace.
Right from subtracting the boss from my life, and the monthly paycheque, and office politics, and blame game, and daily commute, and sugar, and refined carbs, and news, and debt, and toxic people, and anxiety, and worried sleeping, and fear of death, and self-doubt, and the need to be liked, and victim’s mentality, and fear of failure, and perfectionism, and multitasking, and the need to control everything, and saying yes often…it seems this journey has brought me a really long way.
6. Learn from history
History serves as a valuable tool and a great friend of the intelligent investor. You not only learn from the mistakes (like failed predictions) that others who came before you made, but if you dig just a bit deeper, you realize it’s a goldmine of ideas and insights that still work. The players change, but the music never stops.
7. Practice equanimity
Making money in stocks when everyone is making money in stocks isn’t a big deal. Rather, it’s the ability to handle good and bad times with equanimity, and stay true to your investment process that matters, because you are looking at the long-term growth of businesses and not short-term stock price fluctuations. And since you seem to be making clear that you don’t know how to handle scary times, you should stay away from, or reduce your exposure to direct stock picking.
8. Do the best you can
Charlie Munger says –
Approach life like [Thomas] Carlyle, and get up every day doing the best you can. Marry the right person. Everyone here who’s your age will do well. You’re not that mad at the world; instead you’re trying to cope with how to make it a little better. If you were here with placards shouting, you wouldn’t have bright future. Avoid extremely intense ideology, because it ruins your mind. The kids with the placards are pounding the idiocy in instead of shouting it out.
9. Focus on the process
With respect to the investment process, Michael Mauboussin writes in The Success Equation –
…in activities where luck plays a strong role, the focus must be on process. Where skill dominates, performance is a dependable barometer of progress. But where luck is a stronger force, the link between process and outcome is broken. A good process can lead to a bad outcome some percentage of the time, and a bad process can lead to a good outcome. Since a good process offers the highest probability of a good outcome over time, the emphasis has to be on process.
10. Give yourself plenty of time
Without doubt, time is the most important element in the compounding formula. If all you have is 7 years to grow your money 10x, you would need a 40% annual return to achieve that. If you have 9 years, you’d still need a 30% annual return. But if you have 17 years, just a 15% rate would be enough. In short, if you really have a 20-year horizon by when you need to meet your major financial goals, why hurry? And why take undue risks in pursuit of unreasonable returns?
11. Never bet the farm
Legendary investor, Howard Marks relates a funny story his father told him about a gambler who bet everything on a race with only one horse in it. How could he lose? “Halfway around the track, the horse jumped over the fence and ran away. Invariably things can get worse than people expect.”
This story has a valuable lesson for investors. Never bet the farm on a single stock no matter how certain you are about the outcome. You never know when the luck hands you the equivalent of a crazy horse or a supercentenarian.
12. Go against the crowd
Most of sensible investing is about going against the crowd. Often, it also requires you to face constant criticism and ridicule. You also need to stay away from the noise to be able to think rationally. You may also have to bear being called a loner. In such times, you must have the stomach to keep playing the game without getting perturbed by what others are wanting and asking you to do. You may have the brain to know what’s right and not right for you. But it’s your stomach that leads you to act on your conviction.
13. Zoom out
Much of the time, in life and in investing, we would be better off zooming out than zooming in. Rather than being ticker watchers of our own lives, and rather than zooming in and magnifying and thus worrying about the daily volatility in our stocks, we would be better off thinking about our lives and investments as pale dots that are just specks on the canvas of eternity.
Within this, if we keep doing our work well, the daily motions and volatility that we pass by must not worry us therefore.
14. Look at things in the aspect of eternity
Marshall Weinberg, one of Ben Graham’s students, said that the biggest lesson he drew out of his class was on long-term thinking –
One sentence changed my life…Ben Graham opened the course by saying: ‘If you want to make money in Wall Street you must have the proper psychological attitude. No one expresses it better than Spinoza the philosopher.’
When he said that, I nearly jumped out of my course. What? I suddenly look up, and he said, and I remember exactly what he said: ‘Spinoza said you must look at things in the aspect of eternity.’ And that’s what suddenly hooked me on Ben Graham.
Here was the father of value investing teaching his students about the value of long-term thinking, and that too in terms of eternity. Now, almost seven decades later, we would be paying true homage to Graham if we could view investing through a wide-angle lens, taking a long-term perspective, and striving for a long, sustained upward trend in our stocks instead of getting worried about the short-term volatility in their prices.
This may not help us eliminate all mistakes we may make as investors, but it can give us the tool to treat our investments and portfolios just a little bit better.
15. Know what you (don’t) control
Consider the formula of compounding, where –
Future Value = Present Value x (1 + Rate of Return) ^ Time
What excites most of us in this formula and where we wish to exert the maximum control and expect the greatest certainty is the ‘rate of return’. This is despite that it is the only variable in this formula that is tentative and most uncertain, and beyond our control.
The two variables that are under our maximum control are ‘present value’, or the initial investment and ‘time’, or the amount of time the money is allowed to compound. And these are the two variables, especially ‘time’, most of us choose to ignore in our race to earn the maximum return.
16. Investing’s success secrets
When it comes to investing in the stock market, it is often going to be scary, and there will always be something to worry about. But if you have a strong stomach, which will happen if you invest your own money, invest for the long run, invest in high-quality businesses, and always expect the unexpected, you will most likely do well.
17. Deal well with adversity
William Hazlitt wrote – “Prosperity is a great teacher; adversity a greater.” In fact, a large part of a person’s character is built through adversity.
The world is not a bed of roses for one to think he can be out of wood all his life. Life has its ups and downs, its peaks and valleys. Though it will be great if all our days on earth are on the up-and-up, and completely sunny. Unfortunately, they are not. This is also true of the stock market where people who have created the maximum wealth have done it through the most trying of times.
In fact, Buffett’s advice of being fearful when others are greedy and being greedy when others are fearful is all about dealing well with adversity.
18. Be the real ‘you’
Authenticity is something no investing book can ever teach you. It’s a daily practice. Now, while it’s difficult to be authentic in a world that discourages imperfection and where everyone else is thinking and acting like others, authenticity can be a great asset for a value investor.
Honestly accepting mistakes and learning from them is one of the ways to cultivate authenticity as an investor. Creating an investment process that suits your temperament – and not one that blindly copies other investors – is another.
The simple idea is that – to succeed in life and in investing, you have to be the real ‘you’. As Oscar Wilde said, “Be yourself; everyone else is already taken.”
19. No stock is safe
The bulls may want you to believe this, but no stock is safe. There are businesses that may remain good for some time, maybe long time, but you must not attach infinite values to them. Everything in this world is momentary. So, your best bet is to just stick with quality (even that is momentary, just for longer moments). The good thing about quality stocks is that you can pay up for them (not overpay), expensive looking prices, and still do well till the underlying businesses remain good. With poor quality, most probably, you have no hope.
20. Don’t look at stocks to make you rich
Blindly banking on the market to make you rich is a dangerous belief. In fact, looking at stocks to make you rich may be a path to financial hell. I had a few friends who quit their high paying jobs as analysts to become full-time investors in 2006-07. Some of them even started managing other people’s money. Some leveraged to buy more of the stocks that were surging in prices. Most of these “risk-takers” were destroyed in 2008, and a few had to wind up their affairs and go back to their home-towns and to their family business. Getting full-time into investing, especially because you start believing you have the skill because you’ve done well in the recent past, can be dangerous. Investing is done best when it’s done part-time. And then you need to see it as a way to keep you rich, not make you rich.
21. First calm, then complacency, then crisis
That’s the way the system works. You must not be complacent when it seems calm, like it did in the period prior to 2008. A long period of growth, with only a minor interruption in 2001, had led to complacency then. Economy looked stronger with each passing year, banks were willing to lend to everyone willing to borrow, and asset prices were rising across the board. It continued for some time, and then, hell broke loose. Seeds of future prosperity are sown in times of despair. Seeds of future despair are sown in times of prosperity. We must remember this.
22. Appreciate the role of luck
Peter Bernstein said – “The riskiest moment is when you are right.” This is because the streak of being right can make you forget how important luck is in determining the outcome. If you realize that you have been right quite a few times in the recent past, you must bear in mind the risk this entails. Most investors forgot this in 2008, and then again recently.
23. Invest right, sleep tight
Always invest to the level of a peaceful night’s sleep. Investing that causes you sleepless nights – for some people, their lives – isn’t worth doing. It’s like the game of Russian Roulette, where you put a gun with one bullet and five empty chambers on your head and shoot. The probability that you may survive is a huge 5/6, or 83%, but the consequence of failure is death. You become a statistic.
24. Respect risk
Keep a healthy sense of respect for the stock market’s inherent risk. As Ben Graham said, Mr. Market has incurable emotional problems. But he often shows us the mirror that contains a clear reflection of the true investors we are. Never disrespect that for a fact.
25. Buffett’s success secrets
In the 2008 shareholder meeting of Wesco Financial, a shareholder asked Charlie Munger to describe what caused Warren Buffett’s success.
“His success…is a lollapalooza,” Munger replied – a confluence of factors moving in the same direction.
Munger outlined the following seven key factors which combined together to cause Buffett’s success –
- Mental aptitude (Being seriously smart)
- Having great interest in the subject (“It’s very hard to succeed in something unless you take the first step – which is to become very interested in it.” ~ Sir William Osler)
- Early start (If something takes a long time to achieve, you better start early)
- Being a learning machine (Keep learning and learning)
- Reinforcement (Human beings work well if they get reinforcement – constant rewards for doing well, which drives you to do more of the same)
- Being correctly trusted by people
- Avoiding envy, jealousy, self-pity, vengeance, and extreme ideology
26. Value investing is a good idea
Jack Schwager, author of Market Wizards series, who invokes the wisdom of Joel Greenblatt, one of the foremost experts on value investing, writes –
Value investing doesn’t always work. The market doesn’t always agree with you. Over time, value is roughly the way the market prices stocks, but over the short term, which sometimes can be as long as two or three years, there are periods when it doesn’t work. And that is a very good thing. The fact that our value approach doesn’t work over periods of time is precisely the reason why it continues to work over the long term.
27. Change your mind
Jason Fried, CEO at Basecamp and the author of Rework, recounts a crucial lesson Amazon’s founder Jeff Bezos shared with the former’s team a few years ago –
During one of his answers, he shared an enlightened observation about people who are “right a lot”.
He said people who were right a lot of the time were people who often changed their minds. He doesn’t think consistency of thought is a particularly positive trait. It’s perfectly healthy — encouraged, even — to have an idea tomorrow that contradicted your idea today.
He’s observed that the smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking.
This doesn’t mean you shouldn’t have a well-formed point of view, but it means you should consider your point of view as temporary.
28. Volatility is a non-event
In the long journey of the stock of a high-quality business, the daily short-term jumps – or volatility as they call it in business news – that makes people nervous are non-events. As Annie Duke writes in her book Thinking in Bets –
In our decision-making lives, we aren’t that good at taking this kind of perspective – at accessing the past and future to get a better view of how any given moment might fit into the scope of time. It just feels how it feels in the moment and we react to it.…We make a long-term stock investment because we want it to appreciate over years or decades. Yet there we are, watching a downward tick over a few minutes, consumed by imagining the worst. What’s the volume? Is it heavier than usual? Better check the news stories. Better check the message boards to find out what rumors are circulating.
Even noted psychologist Daniel Kahneman agrees, “If owning stocks is a long-term project for you, following their changes constantly is a very, very bad idea. It’s the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you’ll be miserable.”
29. Reduce wastefulness
Most of our lives are highlighted by tremendous amounts of wastefulness. But since we don’t pause to think about it, because we often don’t learn to see the harsh truth, we are not able to start on the path to freedom from our financial worries.
Of course, money isn’t everything in life. But it sure does help to consistently work towards reducing such wastefulness, to spend less than you earn and invest the difference well. Over time, compounding will do the rest for you.
30. Get comfortable with uncertainty
Annie Duke shares insights on how we can get comfortable with uncertainty and make better decisions as a result –
Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bets. We are going to do better, and be happier, if we start by recognizing that we’ll never be sure of the future. That changes our task from trying to right every time, and impossible job, to navigating our way through the uncertainty by calibrating our beliefs to move toward, little by little, a more accurate and objective representation of the world.
31. You are your own worst enemy
In an interview with NY Times, Howard Marks, when asked if investors have become smarter in the 50 years he has been investing himself, replies –
They’ve gotten more information. They know more about more asset classes. There are fewer secrets in the world today. On the other hand, I think they are more shortsighted, moreshort term oriented than they used to be.
And while people now understand more about contrarianism and counterintuitiveness, I don’t think the human race has become less emotional.
32. Three powerful rules
Most good decisions in life are marked by peace, detachment, and acceptance. Rising markets may lead us to ignore this. Most investors like to believe they can enjoy stock market gains without losses. And that denial is what causes them stress and conflict. They feel disappointed when the harsh reality doesn’t align with their rosy expectations. And then, such investors feel helpless, which further magnifies their disappointment. After all, most of what happens in the stock market are outside of our control. We can’t stop the market from falling and crashing, nor can we call up companies or the stock market regulator or the central bank when our stocks tumble. Making and losing money is just the nature of investing, and often outside your control. So just do your work well, and then let it go. Yes, let it go.
33. Be vulnerable
In his Feb. 2016 memo, Howard Marks wrote this –
My buddy Sandy was an airline pilot. When asked to describe his job, he always answers, “hours of boredom punctuated by moments of terror.”
Investing follows a similar pattern – hours of boredom punctuated by moments of terror. Now, both these situations make us vulnerable. In the former, we are vulnerable to losing money. In the latter, we are vulnerable to missing opportunities. But it’s upon us how we deal with such vulnerability. Do we buckle under the fear of the unknown or have the courage to face up to it? And if we decide to face up to our fears, all we must do is to play our parts well and let go of what we don’t control.
Nature will take its course then, and a few years later, we may be surprised at what we were able to achieve just because we allowed ourselves to be vulnerable.
34. Be water
Bruce Lee said –
Empty your mind. Be formless, shapeless, like water. Put water into a cup, it becomes the cup. Put water into a teapot, it becomes the teapot. Water can flow or creep or drip or crash. Be water, my friend.
Problems arise all the time in life and in investing, and you can try to keep your rigid shape, smashing into the problems until you break. Or you can be like water and slip through the cracks.
Charlie Munger says, “The game of life is the game of everlasting learning. At least it is if you want to win.”
In fact, a few of life’s great pleasures are to keep learning, letting go of previously cherished ideas, and emptying your mind for new ideas to come in. Then you’re free to look for new ones.
Be formless. Be adaptable. Be open to new ideas. Like water.
35. Work with imperfect information
Trying to increase your confidence by gathering information that is supposedly unknown to most others really only makes you more comfortable with your investment decisions, not better at them, and is generally an unproductive use of your limited time. Seth Klarman wrote in Margin of Safety…
Some investors insist on trying to obtain perfect knowledge about their impending investments, researching companies until they think they know everything there is to know about them.
They study the industry and the competition, contact former employees, industry consultants, and analysts, and become personally acquainted with top management. They analyze financial statements for the past decade and stock price trends for even longer.
This diligence is admirable, but it has two shortcomings. First, no matter how much research is performed, some information always remains elusive; investors have to learn to live with less than complete information.
Second, even if an investor could know all the facts about an investment, he or she would not necessarily profit. This is not to say that fundamental analysis is not useful. It certainly is. But information generally follows the well-known 80/20 rule: the first 80 percent of the available information is gathered in the first 20 percent of the time spent.
Moreover, business information is highly perishable. Economic conditions change, industries are transformed, and business results are volatile. The effort to acquire current, let alone complete information is never-ending. Meanwhile, other market participants are also gathering and updating information, thereby diminishing any investor’s informational advantage.
…Investors frequently benefit from making investment decisions with less than perfect knowledge and are well rewarded for bearing the risk of uncertainty.
The time other investors spend delving into the last unanswered detail may cost them the chance to buy in at prices so low that they offer a margin of safety despite the incomplete information.
36. Recognize your losses
Doing this is hard because it’s also an acknowledgment of your mistake. But it’s important to recognize your losses sooner than later. Don’t be afraid to swallow your pride and move on before your losses become even greater.
37. Quality businesses, not cheap stocks
Avoid having an investment process that starts with looking for cheap stocks. Instead, have one that starts with looking for high-quality businesses that benefit from established competitive advantages and business models that produce large and growing distributable cash flows. And when you find some such businesses, wait for the right valuations (which won’t be cheap but at a premium to their peers) for them, even if you must wait for a long time.
Charlie Munger said –
It’s waiting that helps you as an investor, and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.
38. It’s the journey, not the destination
The pleasure of travel is in the journey and not so much in reaching one’s destination. Like, you will never know how much money is enough, or how much you will need (destination) to be happy and your financial life to be fulfilling. So, there’s no point fretting about it. Rather, focus on building the right process (journey) that you’ll work on the way.
Destinations rarely live up to the traveller’s expectations. By the time you are close to your goal of making your first ten-bagger, it won’t seem like the ambitious goal it once was. It will seem like a boring inevitability of the right process.
39. Enjoy the experience
Stop worrying about future market crashes and stop getting surprised when these actually happen. Because they will. That’s the nature of the market. Simply enjoy the experience and be grateful for it.
40. Write It Down
Writing down your thoughts is the most powerful tool for crystallizing thinking and decision making. People who don’t have a habit of writing down their questions are usually sloppy thinkers. Expressing your question clearly and well is important. If you can’t be bothered to do that, you don’t deserve an answer. The question doesn’t have to be in flawless, stiff and formal language but it has to be precise. There has to be some indication that you’re thinking and paying attention.
41. More you know, more you don’t
In his book, The Island of Knowledge, physicist Marcelo Gleiser writes this –
Consider, then, the sum total of our accumulated knowledge as constituting an island, which I call the Island of Knowledge. A vast ocean surrounds the Island of Knowledge, the unexplored ocean of the unknown, hiding countless tantalizing mysteries. As the Island of Knowledge grows, so do the shores of our ignorance—the boundary between the known and unknown. Learning more about the world doesn’t lead to a point closer to a final destination — whose existence is nothing but a hopeful assumption anyways — but to more questions and mysteries. The more we know, the more exposed we are to our ignorance, and the more we know to ask.
42. Wisdom requires humility
In The Apology, Plato wrote that the oracle at Delphi had pronounced Socrates the wisest man in Athens. No one was more astonished and disbelieving than Socrates himself. So, he immediately set out to disprove the oracle by finding a wiser man. Here is what Socrates found as he met a few supposedly wise men…
I went to one who had the reputation of wisdom, and observed to him – his name I need not mention; he was a politician whom I selected for examination – and the result was as follows: When I began to talk with him, I could not help thinking that he was not really wise, although he was thought wise by many, and wiser still by himself; and I went and tried to explain to him that he thought himself wise, but was not really wise; and the consequence was that he hated me, and his enmity was shared by several who were present and heard me.
So I left him, saying to myself, as I went away: Well, although I do not suppose that either of us knows anything really beautiful and good, I am better off than he is – for he knows nothing, and thinks that he knows. I neither know nor think that I know. In this latter particular, then, I seem to have slightly the advantage of him.
Then I went to another, who had still higher philosophical pretensions, and my conclusion was exactly the same. I made another enemy of him, and of many others besides him.
In the end, Socrates discovered he was indeed the wisest man in Athens. Not because of how much he knew, but because he was the only one who understood how much he did not know.
Knowing that you don’t know is the dawning of wisdom. Knowing that you don’t know, accepting it and not being ashamed about it is the start of a continuing journey of wisdom. Recognizing the darkness is the prerequisite for bringing on the light. Only when the darkness is brought out of hiding does the light have the opportunity to illuminate it.
43. Skip the rush lane
Rushing is rarely worth it. Life is too short to be wasted in the fast lane and is better enjoyed at a leisurely pace. I can vouch for that, from the experience of running in the fast lane during the first eight years of my career and the slow lane during the next seven.
Seneca, the Roman Stoic philosopher, has listed the trappings of a lot of wealth, stuff like “a golden roof, purple clothes, marble floors.” He has described the life of someone who has been blessed mightily by fate and fortune as having imposing statues, the most brilliant art, teams of servants.
“What does having all these things teach?” Seneca asks. “All you learn from this is how to desire more stuff.”
44. It’s the war within
A brilliant book I re-read this year was Eknath Easwaran’s The Bhagavad Gita. Here is an excerpt from the book I found super insightful –
The battlefield is a perfect backdrop, but the Gita’s subject is the war within, the struggle for self-mastery that every human being must wage if he or she is to emerge from life victorious.
Easwaran adds –
Scholars can debate the point forever, but when the Gita is practiced, I think, it becomes clear that the struggle the Gita is concerned with is the struggle for self-mastery. It was Vyasa’s genius to take the whole great Mahabharata epic and see it as metaphor for the perennial war between the forces of light and the forces of darkness in every human heart. Arjuna and Krishna are then no longer merely characters in a literary masterpiece. Arjuna becomes Everyman, asking the Lord himself, Sri Krishna, the perennial questions about life and death – not as a philosopher, but as the quintessential man of action. Thus read, the Gita is not an external dialogue but an internal one: between the ordinary human personality, full of questions about the meaning of life, and our deepest Self, which is divine.
There is, in fact, no other way to read the Gita and grasp it as spiritual instruction. If I could offer only one key to understanding this divine dialogue, it would be to remember that it takes place in the depths of consciousness and that Krishna is not some external being, human or superhuman, but the spark of divinity that lies at the core of the human personality.
If you have an interest in reading the Gita, I suggest you pick up this book.
45. Real success in life
In his book Education of a Value Investor, Guy Spier quotes Warren Buffett as saying this to college students…
When you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually love you. I know people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them. If you get to my age in life and nobody thinks well of you, I don’t care how big your bank account is, your life is a disaster. That’s the ultimate test of how you have lived your life.
He continues –
The trouble with love is that you can’t buy it. You can buy sex. You can buy testimonial dinners. You can buy pamphlets that say how wonderful you are. But the only way to get love is to be lovable. It’s very irritating if you have a lot of money. You’d like to think you could write a check: I’ll buy a million dollars’ worth of love. But it doesn’t work that way. The more you give love away, the more you get.” Of all the lessons that Warren has taught me, perhaps this is the most important.
46. Become antifragile
Life is uncertain, and often random. Things that we think should happen, often don’t. And things we think should not happen, often do. Most of it makes sense after the fact. But when we are facing life’s randomness, we curse it. We think we’ve been dealt an unfair hand, except when things are going our way.
However, the good thing about the randomness of life is that it provides us with the ability to become better at dealing with, well, randomness. Again, in Taleb lingo, randomness provides us with the opportunity to become antifragile – things that get better when exposed to shocks, volatility, randomness, disorders, stressors, risk, and uncertainty.
Taleb writes in Antifragile –
This is the central illusion in life: that randomness is risky, that it is a bad thing—and that eliminating randomness is done by eliminating randomness.
Artisans, say, taxi drivers, prostitutes (a very, very old profession), carpenters, plumbers, tailors, and dentists, have some volatility in their income but they are rather robust to a minor professional Black Swan, one that would bring their income to a complete halt. Their risks are visible. Not so with employees, who have no volatility, but can be surprised to see their income going to zero after a phone call from the personnel department. Employees’ risks are hidden.
47. Life is a single-player game
In his podcast session with Farnam Street, Naval Ravikant talks about the idea of being happy –
When it comes to learn to be happy, train yourself to be happy, completely internal, no external progress, no external validation, 100% you’re competing against yourself, single-player game. We are such social creatures, we’re more like bees or ants, that we’re externally programmed and driven, that we just don’t know how to play and win at these single-player games anymore.
We compete purely on multi-player games. The reality is life is a single-player game. You’re born alone. You’re going to die alone. All your interpretations are alone. All your memories are alone. You’re gone in three generations and nobody cares. Before you showed up, nobody cared. It’s all single-player.
48. What to teach kids
Naval also tells this during his session with Farnam Street –
I think learning should be about learning the basics in all the fields and learning them really well over and over. Life is mostly about applying the basics and only doing the advanced stuff in the things that you truly love and where you understand the basics inside out. That’s not how our system is built.
We teach all these kids calculus and they walk out not understanding calculus at all. Really they would have been better off served doing arithmetic and basic computer programming the entire time. I think there’s a pace of learning issue.
Then there’s finally a what to learn. There’s a whole set of things we don’t even bother trying to teach. We don’t teach nutrition. We don’t teach cooking. We don’t teach how to be in happy, positive relationships. We don’t teach how to keep your body healthy and fit. We just say sports. We don’t teach happiness. We don’t teach meditation. Maybe we shouldn’t teach some of these things because different kids will have different aptitudes, but maybe we should. Maybe we should teach practical construction of technology. Maybe everyone in their science project, instead of building a little chemistry volcano, maybe you should be building a smartphone.
49. Time + Health > Wealth
Ben Carlson, author of the blog and a nice book by the same name – A Wealth of Common Sense – wrote about few financial advices he thinks are not talked about much but offer big financial payoffs. One such advice, and that I believe makes great sense, is about why time and health matter more than wealth. Ben wrote –
Cornelius Vanderbilt’s son William was far and away the richest person in the world after doubling the inheritance given to him by his late father in just 6 years. But the burden of wealth brought him nothing but anxiety. He spent all of his time managing his substantial wealth through the family’s businesses, which meant he had no time to enjoy his money or take care of his body.
He once said of a neighbor who didn’t have as much money, “He isn’t worth a hundredth part as much as I am, but he has more of the real pleasures of life than I have. His house is as comfortable as mine, even if it didn’t cost so much; his team is about as good as mine; his opera box is next to mine; his health is better than mine, and he will probably outlive me. And he can trust his friends.”
William also told his nephew, “What’s the use, Sam, of having all this money if you cannot enjoy it? My wealth is no comfort to me if I have not good health behind it.”
All the money in the world doesn’t matter if you don’t have the time or the health to enjoy it.
50. Remind yourself of your mortality
Citizens of one of the happiest countries in the world, Bhutan, meditate on their mortality five times a day. “It cures you,” the Bhutanese say. Not just the Hindu and Buddhist scriptures, even Stoicism talks about memento mori that is the practice of reflection on mortality, especially as a means of considering the vanity of earthly life and the transient nature of all earthly goods and pursuits.
Now, the thing about meditating on your own mortality is that it doesn’t make life pointless. Instead, knowing that you will die one day creates priority and thinking about it helps you live with a more positive perspective. So you can focus on what’s important.
Like Seneca reminds us to be spendthrifts of time given so little time we have on our hand –
Were all the geniuses of history to focus on this single theme, they could never fully express their bafflement at the darkness of the human mind. No person would give up even an inch of their estate, and the slightest dispute with a neighbor can mean hell to pay; yet we easily let others encroach on our lives — worse, we often pave the way for those who will take it over. No person hands out their money to passersby, but to how many do each of us hand out our lives! We’re tight-fisted with property and money, yet think too little of wasting time, the one thing about which we should all be the toughest misers.
He then advises –
Let us prepare our minds as if we’d come to the very end of life. Let us postpone nothing. Let us balance life’s books each day … The one who puts the finishing touches on their life each day is never short of time.
51. Be humble
You are just a tiny cog in a massive machine. You may want to board the lift to the top floor, but you have no control over someone pressing the wrong button, or the lift crashing down. So, be humble.
Before I close, let me share with you the Serenity Prayer that has helped me a lot in facing my personal, professional, and investing turmoils. I am sure if you keep this prayer close to your mind and heart, it will help you face your own turmoils well, including those related to your investing.
The Serenity Prayer
God, grant me the serenity to accept the things I cannot change,
Courage to change the things I can,
And wisdom to know the difference.
~ Reinhold Niebuhr
I wish you a happy, healthy, and peaceful 2019.
I am lucky to have you as a tribe member.
PS: Best Books I Read in 2018 – Here is a list of the best books I read in 2018. This is apart from the usual supertexts I re-read during the year – stuff like Poor Charlie’s Almanack, and Warren Buffett’s letters.
- Tao Te Ching by Lao Tzu
- Tuesdays with Morrie by Mitch Albom
- Thinking in Bets by Annie Duke
- The Art of Living by Epictetus
- Einstein by Walter Isaacson
- Dialogue with Death by Eknath Easwaran
- 12 Rules for Life by Jordan B. Peterson
- Factfulness by Hans Rosling
- Siddhartha by Hermann Hesse
- Striking Thoughts by Bruce Lee
- The Rational Optimist by Matt Ridley
Disclosure: I participate in the Amazon Associates Program, which simply means that if you purchase a book on Amazon from a link on this page, I receive a small commission. The book does not cost you any extra. I give away 100% of the commission for the betterment of the under-privileged.
Thank you very much for summarizing the year in such a beautiful fashion. Thank you also for being such a calming influence over the year and for always showing us how investing and money making is but a small part in one’s life.
Just reading your articles gives me a sense of peace. May god continue to bless you!
Sagar P Dhanawade says
No need to say anything for your kind contribution toward shaping our life’s !
Just want to say, Thank you very much….
Happy New Year, May god bless You, Anshul and your families.
All the best for 2019 to SAFAL NIVESHAK
YOGESH N says
Thank You Very Much…..Vishal.
Explaining Life through Investment or Investment through Life ……………….Either way, You do it wonderfully well !!!!!!!
Keep ’em coming, ‘cos its enriching .
Wishing you a lovely 2019 …… good health and greater scripts .
Manjunath KB says
Thank you for taking your valuable time out to put these golden nuggets of wisdom together. It really is a reminder of how much more to achieve and learn in 2019.
Wish you and your tribe members a very productive and meaningful 2019.
ravi kumar says
wonderfully explained great sir thank you vishal
Manish Kumar says
Thanks for sharing such profound thought. I am great full that I was able to find your blog and able to follow you on this journey.
Wanted to ask one thing as you have amazon affiliate links, once I click the link and I have added the items to my wish list and buy those items at later stage, will it help you? Just wanted to support you on this journey.
jef marshal says
Very good points in this post. Awesome. Bookmarking it.
A Shah says
Thanks you so much for your valuable mails that are not just beneficial for investing but also for life in general . Wish you a very happy new year . Please do keep sharing your life lessons as well apart from investing .