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My Interview with Kenneth Jeffrey Marshall

Note: This interview with Kenneth Jeffrey Marshall was originally published in the November 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.

Kenneth Jeffrey Marshall - Value Investing Almanack - Safal NiveshakKenneth Jeffrey Marshall is an American value investor, teacher, and author. He teaches value investing in the masters in finance program at the Stockholm School of Economics in Sweden, and at Stanford University. He also teaches asset management in the MBA program at the Haas School of Business at the University of California, Berkeley. He is the author of the 2017 bestselling book Good Stocks Cheap: Value Investing with Confidence for a Lifetime of Stock Market Outperformance published by McGraw-Hill. He holds a BA in Economics, International Area Studies from the University of California, Los Angeles; and an MBA from Harvard University. He splits his time between California and Sweden.

Safal Niveshak (SN): Thanks for doing this interview, Kenneth! Please tell us a little about your background and journey, and how you got into value investing?

Kenneth Marshall (KM): Well, I was first shown value investing in the late 1980’s. But it wasn’t like some sudden enlightenment. It actually took me a decade to get it. I’d rather not think about the cost of that delay.

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The Art of Asking Good Questions

Two hunters are out in the jungle when suddenly one of them collapses. His pulse is gone and his eyes are glazed. The other guy yanks out his cell phone and calls the emergency services.

He gasps, “My friend is dead! What should I do?”

The operator says “Calm down, sir. I can help. First, let’s make sure if he’s really dead.”

After few moments of silence, the operator hears a loud gunshot. Back on the phone, the guy says “OK, now what?”

The hunter was dumb but given the high adrenalin and panicky situation, the operator’s question wasn’t brilliant either, was it?

There’s some truth to the saying – the quality of your questions determine the quality of solutions. Computer programmers know this very well. They call it GIGO, i.e., garbage in garbage out.

Good question begets good answer. Bad question leads to bad answer.

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The Wisdom of Intelligent Investors (Special E-Book)

The Wisdom of Intelligent Investors (Special E-Book)If the history of stock market is anything to go by, investors often make decisions that can undermine their ability to build long-term wealth. As such, it is often very valuable to look back in history and study closely the principles that have guided the investment decisions of some of the best minds and practitioners in this field through both good and bad markets.

By studying these experienced investors, we can learn many important lessons about the mindset required to build long-term wealth.

With this goal in mind, here is a special e-book that aims to offer the wisdom of some of the best investment minds of current times from India and abroad.

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13 Secrets to Becoming a Better Writer

Note: Obviously this post is not about investing, so you may skip if you don’t want to read anything on Safal Niveshak except investing. Just that writing well – the topic of this post – can also help you think through your investments better. Most great investors write well for a reason. Now that got you interested, isn’t it? Read on.

There was a time when my writing hurt. Even my close friends were not interested to read what I would write.

That made me afraid to write because I feared offending others. I was afraid of the backlash I thought I would receive from what I wrote. I was afraid of people judging me. I was afraid of what people would say when they read what I had to say.

This was sometime in 2003 when I was about to get into a career of, well, writing about stocks. However, things improved over years as I wrote a lot. Apart from that, I read a lot of books on good writing. That helped me move past the fear of judgment and into a place where I could be confident about what I wanted to write about.

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Latticework of Mental Models: Impact Bias

Nobel laureate Albert Einstein formulated his theory of relativity mainly with the help of Gedankenexperiment. It’s a German term for thought experiments. In a thought experiment, one doesn’t conduct an actual test in the lab but uses imagination and logic to explore problems and generate insights.

Imagination is more important than knowledge, said Einstein. So let’s start today’s discussion with a thought experiment.

Imagine there was a sophisticated device which could measure happiness. Taking inspiration from the thermometer, we’ll call our device Happymeter. Once we attach this instrument to someone’s skull, it would show the amount of happiness and content that person is feeling at that time.

We’ll select two volunteers for our Gedankenexperiment. Our Happymeter tells that the present mental state of these individuals is 1000 units each. Now, these volunteers go through (in our imagination) two wildly different events.

1. The first person wins 10 million dollar lottery.
2. The second person gets into a terrible accident and both his legs are amputated.

Can you guess each person’s mental state one year down the line after the above two events have happened? In the first case, would his mental state be less than or more than 1000?

Of course, it would be more than 1000. Isn’t it? After all, he’s a wealthy man now.

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