Blog on Value Investing | Safal Niveshak

Happy Diwali: Lighting the Lamp Within

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

Buy your copy of the book Morgan Housel calls “a masterpiece.” It contains 50 timeless ideas – from Lord Krishna to Charlie Munger, Socrates to Warren Buffett, and Steve Jobs to Naval Ravikant – as they apply to our lives today. Click here to buy now at a special discount (available only till 15th Nov. 2023).

I read this beautiful couplet from Sant Kabir this morning –

जब मैं था तब हरी नहीं, अब हरी है मैं नाही,

सब अँधियारा मिट गया, दीपक देखा माही |

Translated, it means that when I was immersed in my ego and arrogance, I could not see God (the supreme power). But when I illuminated the lamp of knowledge within myself, all darkness of ignorance vanished, ego went away, and I found God in the light of knowledge.

On the auspicious occasion of Diwali (the festival of lights in India), if there is anything I wish for you today, this is it.

[Read more…]

The Map is Not the Territory

The puzzles underlying the fine-grained matrix of human behaviour is unfathomable. As you dig deeper, new surprises are waiting for you. I have been a student of behavioural economics for almost a decade but every time I think of myself as an old hand on the subject, I am reminded of my folly.

Cognitive errors are not like other errors which are usually a result of misplaced knowledge. Knowledge doesn’t cure a psychological bias. A cognitive bias is a systematic error in how we think, as opposed to a random error or one that’s merely caused by our ignorance.

This content is reserved for Mastermind Members. To access, please login below with your membership credentials.

If you are not a member, please consider joining the Mastermind Membership to access my most comprehensive value investing course, plus practical, time-tested ideas in investing, human behaviour, business analysis, and decision making, and get onto the path of becoming a better version of yourself.

The Joy of Walking Away

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

You must have heard of Peter Lynch, right?

If not for his stellar fund management career, someone may have recommended you his book One Up on Wall Street as the first investment book you should read.

I assume this because that is how I started my stock market career in 2003, by reading One Up, and starting to believe that not only was investing easy, but also that I could be a master at it.

How wrong was I! But that’s a story for another day.

Coming back to Lynch, in case you didn’t know, he was the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, and averaged a 29% annual return, consistently more than double the S&P 500 stock market index. During his 13-year tenure, Magellan became the best-performing mutual fund in the world, and its assets under management increased from US$18 million to $14 billion. In all, it was a fairytale story for Lynch and his investors.

But then something happened.

Lynch, at what most people would call the “peak” of his career, retired from work, at age 46. He just walked away.

And what was the reason?

As he talked about openly in an interview after his retirement, his workaholism was taking a toll on his family life, and so he decided to walk away.

Lynch found thousands of people supporting him in his decision to quit his career early. But I am sure there would have been an equal number of others questioning him for his ‘unsmart’ decision.

The pursuit of success and recognition is, after all, a universal aspiration. We yearn for the validation of our efforts, the affirmation of our abilities, and the rewards that come with achieving our goals.

However, as Lynch and many like him have shown, there are times when walking away from the ‘brightness’ and into the ‘shadows,’ becomes the most profound choice one can make.

William Green, whom I interviewed for the 21st episode of The One Percent Show, has this passage in his wonderful book Richer, Wiser, Happier –

Early in his career, Bill Miller (another legendary investor) asked Lynch for advice. Lynch told him that the investment business is so rewarding financially and intellectually that it attracts an overabundance of intelligent people. “The only way you can beat them is to outwork them,” said Lynch, “because nobody is just so much smarter than the next person.” Lynch told Miller that he stayed ahead of the pack by reading investment research while he carpooled to the office at 6:30 a.m., working after dinner and on weekends, and taking no vacations for years. When Miller asked if it was possible to slow down as you got older, Lynch replied, “No. In this business, there are only two gears: overdrive and stop.”

In 1990, months before he announced his early retirement, Lynch said this to reporters from Financial World –

I’ve worked every Saturday for seven or eight years – I mean seven in the morning. In the last six months I’ve started working some Sunday mornings at home. … I haven’t gone to a Celtics game in five years. … You think I enjoy coming in here on Saturday mornings? Don’t you think I’d rather be playing with my kids or doing something with my wife?

“I loved what I was doing,” he told Time magazine in 1991, “but I came to a conclusion … What the hell are we doing this for? I don’t know anyone who wished on his deathbed that he had spent more time at the office.”

Now, I am sure a voice from within you must be saying, “Oh, it is easy to walk away from success and recognition once you have already made it, and have enough money to take care of yourself and your family for the rest of life.”

Your observation is indeed valid. It’s true that having financial security can provide the freedom and flexibility to make choices that might not have been possible otherwise.

However, the wisdom of walking away from success and recognition, and most of all you have worked so hard to achieve, is not solely dependent on financial stability. It is also about realizing that material wealth and external validation, while important, do not always equate to a truly fulfilling and well-rounded life.

Even those who have achieved financial success often come to the realization that there are other, equally important aspects of life, such as personal well-being, family, and personal fulfillment, that need attention and nurturing.

Recognizing when to walk away from the constant pursuit of success and recognition, even when you have the means to sustain your lifestyle – like Lynch – is a reflection of a deeper understanding of what truly matters in life.

It is not just about having the means to do so, but also about choosing a life that is in harmony with your authentic self, regardless of your financial status.

And, by the way, ‘walking away’ is not always about a complete exit from the larger game you are playing.

Like, you can walk away from an investment opportunity that you believe may cost you sleepless nights – maybe, an expensive stock, or a questionable business – and still remain in the investing game.

Or you can walk away from a business deal that does not match up to your levels of integrity, and still remain in that business.

It’s all about the choices we make in life, that determine the paths our lives will take. And then, it’s all about standing with those choices if we continue to believe in them, instead of worrying about what the outcomes may be.

Walking away is not a surrender or a resignation but a conscious choice to reevaluate one’s priorities and regain the balance between ambition and the intrinsic values of love, health, and inner peace.

It is an acknowledgment that the pursuit of external markers of success should never eclipse the fundamental facets of our existence – our bonds with family, our physical and mental health, and our overall well-being.

And the best part? When you learn to walk away from things you think may kill you – financially, mentally, otherwise – you also survive to play the long-term game, in investing or in life. And survival, as we understand, is the only path to true success and happiness.

What else are you here for?

I recently announced admission to the January 2024 batch of my most comprehensive classroom course in Value Investing titled – Value Investing Blueprint.

This residential course is scheduled to be held from 11th to 14th January 2024, at the campus of Pune-based FLAME University. The last date to apply is 10th December, 2023.

Click here to read more and apply if you are interested in joining this course.

Since it’s a classroom course, seats are limited.

The course will take you through the entire process of practicing value investing to identify long term wealth creating stocks. This includes helping you:

Create the right value investing mindset and build a behavioural framework to avoid biases and create the right investment thought process.
Assess business quality – separating good from gruesome
Analyze financial statements to find well-performing businesses
Calculate intrinsic valuations using various methods
Identify competitive moats and whether they are sustainable
Build a portfolio of sound, wealth-creating businesses

Click here to read more and apply if you are interested in joining this course.

I have started work on a series of short videos – titled The Inner Game – to share my thoughts around investing, decision making, learning, and just the practice of trying to live a good life. You can watch them on my YouTube channel, including these recent ones –

You can also find these and all past sessions on Apple Podcasts, Spotify, and Amazon.

Hope you like these and find some value. Please let me know your feedback and/or suggestions for improvement. Thank you.

That’s about it from me for today.

If you liked this post, please share with others on WhatsApp, Twitter, LinkedIn. Or just email them the link to this post.

If you are seeing this newsletter for the first time, you may subscribe here.

Stay safe.

Regards, Vishal

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

It’s Never a Market Crash Problem

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

It’s almost always an –

I don’t know who I am problem
I don’t know how much pain I am willing to take problem
I don’t have the patience to give my stocks time to grow problem
I bought on the tip of that popular social media influencer and did not do my homework problem
I did not diversify well problem
I bought the stock just because it dipped problem
I cannot resist my friends getting rich problem
I love to fall in love with my stocks problem
I cannot differentiate between stock price and intrinsic value problem
I suffer from a buy at any price problem
I borrowed to invest problem
I invested the money I needed soon problem
I don’t have time on my hands to see through market cycles problem
I trade too much and too often problem
I keep watching and worrying about stock prices problem
I will watch the market and my portfolio again after reading this post problem

And so, I must remind myself this at all times –

A market crash is ‘never’ the problem. ‘I’ am the problem, and I must sort myself out, because that is only what I control. And if I can control the ‘I’ better, a market crash will never be a problem.

I recently announced admission to the January 2024 batch of my most comprehensive classroom course in Value Investing titled – Value Investing Blueprint.

This residential course is scheduled to be held from 11th to 14th January 2024, at the campus of Pune-based FLAME University. The last date to apply is 10th December, 2023.

Click here to read more and apply if you are interested in joining this course.

Since it’s a classroom course, seats are limited.

The course will take you through the entire process of practicing value investing to identify long term wealth creating stocks. This includes helping you:

Create the right value investing mindset and build a behavioural framework to avoid biases and create the right investment thought process.
Assess business quality – separating good from gruesome
Analyze financial statements to find well-performing businesses
Calculate intrinsic valuations using various methods
Identify competitive moats and whether they are sustainable
Build a portfolio of sound, wealth-creating businesses

Click here to read more and apply if you are interested in joining this course.

Read a newspaper headline – “Blood on street for sixth day in a row.”

My first reaction? Blood? Already?

The headline reminded me of my younger self, utterly scared of injections (still am). I started wailing even before the doctor pulled out the syringe. For people already seeing “blood” on the street, just the syringe is out for now. “Blood” is still some time away. Stop wailing.

I have started work on a series of short videos – titled The Inner Game – to share my thoughts around investing, decision making, learning, and just the practice of trying to live a good life. Have published ten videos so far, which you can watch on my YouTube channel, including these recent ones –

Hope you like these and find some value.

Here’s a nice note from Byron Wien, American investor and vice chairman of Blackstone Advisory Partners, who passed away just two days back. I came across this note recently, and immediately thought of sharing with you. It contains Wien’s lessons that he learned in his “first 80 years” (he died at 90). These are more a set of life principles, one of which is –

Every year try doing something you have never done before that is totally out of your comfort zone. It could be running a marathon, attending a conference that interests you on an off-beat subject that will be populated by people very different from your usual circle of associates and friends or traveling to an obscure destination alone. This will add to the essential process of self-discovery.

Starting a solo podcast – The Inner Game, as mentioned above – is that act I have undertaken to push myself out of my comfort zone. I also see it as part of my process of self-discovery. Let’s see how far I go with it.

Anyways, here’s a second nice lesson from Wien –

When your children are grown or if you have no children, always find someone younger to mentor. It is very satisfying to help someone steer through life’s obstacles, and you’ll be surprised at how much you will learn in the process.

That’s about it from me for today.

If you liked this post, please share with others on WhatsApp, Twitter, LinkedIn. Or just email them the link to this post.

If you are seeing this newsletter for the first time, you may subscribe here.

Stay safe.

Regards, Vishal

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

Announcing – Classroom Course in Value Investing

Happy to announce admission to the January 2024 batch of my most comprehensive classroom course in Value Investing titled – Value Investing Blueprint.

This residential course is scheduled to be held from 11th to 14th January 2024, at the campus of Pune-based FLAME University. The last date to apply is 10th December, 2023.

Click here to read more and apply if you are interested in joining this course.

Since it’s a classroom course, seats are limited.

[Read more…]

[Notes] The 10 Commandments for Business Failure

They say you should never judge a book by its cover. It’s a good rule of thumb about what not to do.

So how do you judge if a book is worth reading or not? I agree, it’s a difficult question to answer but if you find a book, which starts with a foreword from Warren Buffett, there is no question about whether to read it or not. Don Keough’s The 10 Commandments of Business Failure is one such book.

This content is reserved for Mastermind Members. To access, please login below with your membership credentials.

Path Dependence: A Lesson for New Investors

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

I was going through a few of my journal notes and came across this thought from Nassim Taleb who explained the concept of “path dependence,” which is the dependence of outcomes on the path of previous outcomes, rather than simply on current conditions –

Ironing your shirts then putting them in the washing machine produces a different outcome from washing your shirts first, then ironing them. The reader can either trust me on this, or try the experiment with both sequences on the next Sunday afternoon. Now, assume that your capital is around one million dollars and you are involved in speculation. Apply path dependence to the reasoning.Making a million dollars first, then losing it, is markedly different from losing a million dollars first then making it.
[Read more…] about Path Dependence: A Lesson for New Investors

In Praise of Slowness, in Life and Investing

The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life

As part of my exercise regimen, I have been climbing stairs to my 5^th floor apartment 2-3 times every day for the past few months. And most of these are not slow climbs, but sort of high intensity, that leave me with a heart rate of almost 140-150 beats per minute.

Of late, I started keeping track of the time it took me to climb this much at one go. On an average, it took me 30 seconds to run up five floors, two steps at a time. Sometimes a second more, sometimes a second less. But on an average, almost 30 seconds later, I was huffing and puffing for the next 30 seconds as I reached my apartment.

[Read more…]

Investing and the Fallacy of Hard Work

Two police officers were stuck in traffic. They were on a routine patrol, and not much was going on that morning. The older cop was driving. As they waited at the traffic signal for the lights to turn green, the younger officer glanced at the fancy new BMW in front of them. The BMW driver took a long drag on his cigarette and flicked the ashes onto the upholstery.

“What a careless guy!” mumbled the older cop. “Who ashes his new car?”

This content is reserved for Mastermind Members. To access, please login below with your membership credentials.

The Shoe Button Complex: How to Identify Know-It-Alls

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?

This content is reserved for Mastermind Members. To access, please login below with your membership credentials.