Blog on Value Investing | Safal Niveshak

My Advice to a Young Investor – Part 2

This is in continuation of the previous post on my single biggest advice to a 26-year-old investment analyst on what she should be doing to do well in her career as an analyst and an investor.

My advice to her was this – Play games that you can win.

After reading the post, she came back with a follow-up question – But how do I know which games to play where I can win?

This was another important question. And since I knew this would come, I was better prepared this time.

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My Advice to a Young Investor

I met a 26-year-old investment analyst yesterday, who sought my single biggest advice to, well, a 26-year-old investment analyst, on what she should be doing to do well in her career as an analyst and an investor.

Despite being involved in this work for the past 11 years of offering advice even when I am not asked for, her question led me to think, and so I sought some time to get back to her with my response.

There are, after all, so many things I can advise to a young investor or analyst, based on what I have learned in the past 17 years, that is, since I was 26 myself –

Invest with an inner scorecard – Don’t change who you are to fit in.
Have courage, even in the face of adversity – and there are a lot of adversities you would face in investing.
Accept whatever outcome you attain, for what’s in your control is how you react to the outcome, and never the outcome itself – you can either rue over a bad outcome or take it as a lesson and move on.
Keep learning, for nothing builds an investor’s career better than continuous learning. Learn from your own experiences and mistakes but more importantly from the experiences and mistakes of others.
Avoid predictions, because you are rarely going to make a correct one. Also work with the intellectual humility that you know nothing, even if you are the smartest person around.
Be patient, like a grasshopper, for that is how wealth is created.

All this is very useful advice. But since I have to offer just one advice as requested by that young investment analyst, it would be something that I learned from Charlie Munger and Warren Buffett many years ago –

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[Transcript] The One Percent Show: William Green

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William Green is the author of Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life. Over the last quarter of a century, William has interviewed many of the world’s best investors, exploring in depth the question of what qualities and insights enable them to achieve enduring success. He has written extensively about investing for many publications and has been interviewed about the greatest investors for magazines, newspapers, podcasts, radio, and television. He has also given many talks about the lessons we can learn from the most successful investors, not only about how to invest but about how to improve our thinking.

Born and raised in London, William was educated at Eton College, studied English literature at Oxford University, and received a Masters degree from Columbia University’s Graduate School of Journalism.

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[Transcript] The One Percent Show: Kuntal Shah

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Kuntal Shah is a partner at Oaklane Capital, co-founder at Needle.ai, and a board member at Flame University. An electronics engineer by qualification, Kuntal bhai is a first-generation entrepreneur, a business leader and a prominent value investor with three decades of experience spanning various aspects of the capital market.

I look up to him as a fountain of knowledge and wisdom, especially when it comes to investing, business analysis and the economy. I’ve had the opportunity to learn from him and his experiences, through his various talks and presentations, and I must thank him for all the wisdom he has shared over the years.

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Stock Investing is a Humbling Game

Not losing money is a critical part of the stock investing process. Successful investors say it in different ways, but the point is always the same.

Warren Buffett has often said – “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.”

But he has also said – “If you don’t make mistakes, you can’t make decisions.”

You see, the problem is not in making mistakes. The problem is in not knowing when you have made a mistake and thus not learning from it.

Unfortunately, openness to making mistakes and recognizing them is beyond most of us. Why is that?

Two reasons. The first, our society’s phobia for making mistakes, something that begins at school, where we learn to learn what we are taught rather than to resolve problems. We are fed with facts, and those who make the fewest mistakes are considered to be the smarter ones. So we learn that it is embarrassing to not know and to make mistakes. We feel bad when we find out we have made a mistake or do not know something.

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16 Investing Lessons from a Superinvestor the World Forgot

Mastermind Value Investing Course: Admission Open

I have opened admission to my premium, online course in Value Investing – Mastermind – with a lot of updates and upgrades. The course contains –

7 modules – 50 detailed, downloadable lessons with case studies of listed Indian companies
20 hours of pre-recorded lecture and Q&A videos
2 Live Q&A sessions spread over one-year
Exclusive, members-only forum for questions and exercises (rich archive of 6,000+ postings from past students)
Assignments and exercises at the end of each lesson to help you practice what you learn
7 readymade stock screens to help you identify the best businesses to invest in and worst the avoid
100% online: Start instantly and learn at your own schedule
Detailed stock analysis spreadsheet (otherwise priced at ₹1999)

I am offering ₹5000 discount on the course fee for the first 100 students, or till 15th June, whichever comes early. If you are interested, click here to know more and join now.

What do you call an investor who earned 16% per annum on average over a 47 year period – that’s a 1,070-bagger – and is not called Warren Buffett?

What if I told you that this investor…

Did not care about corporate earnings
Rarely spoke to managements and analysts
Did not watch the stock market during the day
Never owned a computer, and
Did not even go to college

…you would not say anything but just ask me to reveal his name fast, so as to re-confirm whether such a super-investor has ever existed in the investment circles.

Well, before I tell you this man’s name, you must read what Buffett had to say about him…

…He doesn’t worry about whether it it’s January, he doesn’t worry about whether it’s Monday, he doesn’t worry about whether it’s an election year. He simply says, if a business is worth a dollar and I can buy it for 40 cents, something good may happen to me. And he does it over and over and over again. He owns many more stocks than I do — and is far less interested in the underlying nature of the business; I don’t seem to have very much influence on him. That’s one of his strengths; no one has much influence on him.

Now, if you haven’t already read below to find out who I am talking about, let me now disclose the name of this man, whom Buffett termed a Super Investor in his famous essay, The Superinvestors of Graham-And-Doddsville.

The Name is Schloss…Walter Schloss
“Walter who?” you may wonder if you have not read much about the world’s best-ever investors.

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Learn to Pick Great Stocks with My Premium, Online Course in Value Investing – Mastermind

There are no secrets to the art of sensible stock picking that most people don’t know of. The literature has been there since the 1940s, when Ben Graham, the father of value investing, first wrote about it in his landmark book The Intelligent Investor.

Other practitioners of this art, like Warren Buffett, Charlie Munger, Seth Klarman, Walter Schloss, and Howard Marks have been writing about it for years now.

So, you can find hundreds and thousands of resources in print and on the Internet on how you can become a smart, successful investor. However, what I found lacking ever since I started learning this art of sensible stock picking myself, was a structured, step-by-step approach to do it.

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In Investing, Simple Beats Complex

Mastermind Value Investing Course: Admission Open

I have opened admission to my premium, online course in Value Investing – Mastermind – with a lot of updates and upgrades to the course. Plus, I am offering ₹5000 discount on the course fee till 15th June. If you are interested, click here to know more and join now.

In the endnotes of his brilliant book, Winning the Loser’s Game, Charles Ellis wrote about two of his best friends who, at the peak of their distinguished careers in medicine, agreed that the two most important discoveries in medical history were penicillin and washing hands (which stopped the spreading of infection from one mother to another via the midwives who delivered most babies before 1900).

Ellis’s friends also counseled him there was no better advice on how to live longer than to quit smoking and to buckle up when driving.

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[Notes] When Genius Failed by Roger Lowenstein

Success, they say, leaves clues. So does failure. Unfortunately, the world focuses too much on learning only from successes. Success alone leaves the learning equation incomplete.

Identifying patterns is the key to drawing useful lessons from the past. Success patterns are just one part. The patterns left by failure are the remaining part of the puzzle. To succeed, one has to study both. Learning ‘what to do’ from success patterns and learning ‘what to avoid’ from failure patterns.

A person trying to get ahead in the world, with no will to study the failures, is akin to the proverbial one-legged man who is trying to score points in an ass-kicking contest.

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[Transcript] The One Percent Show: Vinod Sethi

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Vinod Sethi served as Managing Director of Morgan Stanley Investment Management, until February 2001 and served as its Chief Investment Officer and Portfolio Manager for 12 years. He is a graduate in Chemical Engineering and holds a degree in B. Tech from the Indian Institute of Technology Mumbai and an MBA in Finance from Stern School of Business, New York University.

Vinod has maintained a low public profile all these years, but he is a veteran in the Indian equity investment space with an experience of more than three decades. The little I have read and known about him, I find a man who has not been just a multidisciplinary thinker but also a true Karmayogi who has combined his inner voice at a number of times with mindful decisions and rightful efforts.

When I was studying about Vinod’s life and experience, I could remember a 1910 speech delivered by the former US President, Theodore Roosevelt and which was titled The Man in the Arena. Roosevelt said and I quote, “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly.”

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