Anshul Khare

How much weightage would you give to the advice dispensed by an entrepreneur who is known to have successfully built a multi-million dollar business?

If you understand the role of skill and luck in the field of human endeavours, you’d question me back, “First tell me, if that entrepreneur was successful because of his skills or was it just luck?”

Fair enough. So here’s another piece of information for you. That entrepreneur has built multiple successful businesses so the odds are high that his success is the result of his knowledge, skill, and experience than pure luck. So tell me, would you take his advice seriously?

At this point, you might be a little suspicious of the way I am framing my questions. I know you’re suspecting that I want to make you say yes and then reveal the reasons why you’re wrong.
[Read more…] about Behaviouronomics: The Shoe Button Complex

This post is the sixth episode of the multi-part series based on Peter Bevelin’s book — All I Want to Know is Where I’m Going to Die, So I’ll Never Go There.

So why are we talking about ideas on what doesn’t work rather than ideas on what works? Isn’t it a negative approach to talk about what doesn’t work? I’ll let Nassim Taleb explain why this works. In his book Antifragile, Taleb writes —

The greatest — and most robust — contribution to knowledge consists in removing what we think is wrong — subtractive epistemology…we know a lot more what is wrong than what is right…negative knowledge (what is wrong, what does not work) is more robust to error than positive knowledge (what is right, what works). So knowledge grows by subtraction much more than by addition — given that what we know today might turn out to be wrong but what we know to be wrong cannot turn out to be right, at least not easily…disconfirmation is more rigorous than confirmation.

Charlie Munger, while wearing his curmudgeon hat, declared, “All I want to know is where I am going to die, so I’ll never go there.” And that’s his way of driving home Taleb’s point about focusing on the negative knowledge.

Bevelin’s book is dedicated to Charlie Munger’s philosophy. Here are a few more insights from the book on what doesn’t work.
[Read more…] about Special Report: 27 Ideas on What Doesn’t Work — Part Six

An old joke — What’s common between a software engineer and a railway station beggar? When they meet their colleagues, they ask each other, “What platform do you work on?”

I am yet to learn about the begging business but having worked in the IT industry as a software developer for more than a decade, the joke did manage to extract a brief mirth from me.

Just like any other field of work, software engineering too has its own compartments of specialization. So when a software guy enquires about his fellow engineer’s platform, it generally means he’s interested to know about his specialization — Linux or Windows? Which programming language? Application side or system side? Backend or front end? Development or 0perations? Etc.

However, in the past few years, a new specialization has emerged — the full-stack engineer. Paradoxically, this specialization is about being a generalist, i.e, an engineer who can work on multiple platforms, different programming languages, and play various roles.
[Read more…] about The Full-Stack Investor

A few weeks back I surprised myself by doing something I thought I would never do. I sold my position in a stock that had been the largest holding in my portfolio for a long time.

I first started buying this stock almost a decade back and had never sold a single share of this company. I continued to accumulate it through its ups and downs in this period. At one point, this company constituted more than 40% of my entire stock portfolio. I don’t need to tell you that it was my high confidence stock.

So what made me exit it all of a sudden?
[Read more…] about Behaviouronomics: The Concorde Fallacy

It was ten years back when I was first introduced to the field of human behaviour and psychological biases. Having read a couple of dozen books on this topic, it has now become hard to find a volume with information which is not familiar to me. However, what continues to amaze (and entertain) me are the examples and case studies of people (including my own adventures often pointed out by others) that confirm the statement — We are not rational beings. We are rationalizing beings.

This aspect of human irrationality — that it can’t be overcome and keeps us mired in a behaviour similar to a kid with her hand stuck in the cookie jar because she refuses to open the fist — is what makes this subject so much fun. Once you’ve learnt enough about the broad spectrum of cognitive errors, it affords you a lifetime of entertainment content, provided you pause and watch your own actions and the way people around you make decisions.
[Read more…] about Bookworm: You Are Not So Smart

Have you ever noticed that finding an available spot in the multilevel car parking in any mall or shopping complex is an interesting exercise in mental maths? Let me explain.

Whenever I enter the parking area, I often try to optimize, i.e., find a spot near the lift lobby/staircase. Which means the moment I enter the parking area, I have to forego the easily available spots and keep driving towards the lift lobby and then hope that there’s a spot available near it. If there isn’t, then I would have to drive up to the next floor, which is kind of worse than the case where I would have taken the first few available spots near the parking entrance. So how many first available spots should I pass before I decide to stop searching?

It turns out that mathematicians have spent centuries thinking about this class of problems. They call it The Optimal Stopping problem.
[Read more…] about Picking Stocks Like a Mathematician

During World War II, the United States created a classified program called The Statistical Research Group (SRG). Its purpose was to help the US army solve problems using equations and formulae. In other words, SRG was into wartime math.

One interesting problem military gave SRG was about making sense of bullet holes in American planes. When those fighter planes came back from the battle, they were usually covered with bullet holes inflicted by the enemy guns. The military wanted to figure out the most optimum way to put the armor on the plane.

Well, couldn’t they armor the whole plane?
[Read more…] about Behaviouronomics: The Case of Missing Bullet Holes

This is the fourth leaf of the multi-part series based on Peter Bevelin’s excellent book — All I Want to Know Know is Where I’m Going to Die, So I’ll Never Go There. The goal is to cover 27 insights on “what should be avoided” in business, investing, and in life.

The greatest — and most robust — contribution to knowledge consists in removing what we think is wrong — subtractive epistemology, writes Nassim Taleb in his book Antifragile.
[Read more…] about Special Report: 27 Ideas on What Doesn’t Work — Part Four

The problem with Taleb is not that he’s an a**hole. He as an a**hole. The problem with Taleb is that he is right.

Those are not my words. It’s from one of the blurbs for Taleb’s book Skin in The Game. And among many other surprising things about the book, one is that all the blurbs that appear on the jacket aren’t from other famous authors. Taleb took the testimonials from ordinary readers and printed it on the back of the book. Not because other famous authors weren’t willing to offer their testimonials — many of them would be honoured to do that — but it’s because Taleb doesn’t care.

Those who have read his books agree on one thing — Taleb is idiosyncratic and he is a genius.

In out bookworm series we have already reviewed Nassim Taleb’s earlier books — Fooled by Randomness, The Black Swan, The Bed of Procrustes, and Antifragile. Skin in the Game is Taleb’s latest book. It came out last year (2018) and I had been sitting on it for quite a while. Last month I finally managed to finish reading it. Like all Taleb’s books, this one also needs to be read at least twice (perhaps thrice) to be able to absorb all the wisdom in a meaningful way.
[Read more…] about Bookworm: Skin in The Game by Nassim Nicholas Taleb

In 1999 when Warren Buffett bought a 75% stake in MidAmerican Energy Holdings Company, David Sokol was its CEO. He retained his position till 2008. Apart from managing MidAmerican, Sokol played a crucial role in turning around Berkshire’s other investments like NetJets and Johns Manville. Over the years he established a reputation inside Berkshire Hathaway as Mr. Fixit.

In his annual letters, Buffett often referred to Sokol as a terrific manager, a brilliant dealmaker and a huge asset to Berkshire. In his 2008 letter, he wrote —
[Read more…] about It’s Not Supposed to Be Fair