Blog on Value Investing | Safal Niveshak

Is Your Stock Portfolio A Museum or A Warehouse?

August 28, 2019 | Reading Time: 6 minutes | 25 Comments |

Rework by Jason Fried is one of the best books I have ever read on starting up. Jason has condensed his wisdom in starting and running a business into pithy, one-page, chapters.

One of the interesting chapters from the book is about the idea of being a curator. In this, Jason writes –

You don’t make a great museum by putting all the art in the world into a single room. That’s a warehouse. What makes a museum great is the stuff that’s not on the walls. Someone says no … There is an editing process. There’s a lot more stuff off the walls than on the walls. The best is a sub-sub-subset of all the possibilities.

Re-reading this chapter reminded me of Costco, one of the world’s largest wholesale retailers and among the very few that have shown remarkable resilience in an industry that has been subjected to increasing pressures from online retail.

Investor, Pay Attention

August 21, 2019 | Reading Time: 8 minutes | 9 Comments |

Note: This is an excerpt from the article Where Do Great (Investment) Ideas Come From, which I wrote for the May 2015 issue of our premium newsletter, Value Investing Almanack. To read the complete article and our vast archives spanning 4+ years, please click here to subscribe.

Consider that you are looking to buy a stock and the two that you come across on your screen are, say, Company A and Company B. Here are a few data points about the two companies, which are the only factors you would look at while making your decision. Look at them and think which one you would rather purchase –

Did you make a decision? Before you read on, jot down either Company A or Company B. Now I’m going to give you some more data points on these companies. No information has been changed, but some has been added.

Which stock would you rather purchase now? Again, write down your answer. I’m going to present the options a third time, again adding one new element.

Now, which of the two would you prefer?

Safal Niveshak, Uncopyrighted

August 12, 2019 | Reading Time: 10 minutes | 35 Comments |

January 11 2013 was a sad day for the Internet world. That day, Internet pioneer and open information activist Aaron Swartz committed suicide at a young age of 26.

Swartz’s “crime” – he had logged into JSTOR (Journal Storage), a database of scholarly articles, and rapidly downloaded those articles with the intent to make them public.

He didn’t “hack” the network to secure those downloads. MIT is anyways an open network.

He didn’t crack any special password system to get behind JSTOR’s digital walls. All he did was figure out how JSTOR was filing the articles that he wanted and wrote a simple script to quickly gather those articles and then copy them to his computer.

If Swartz had lived to be convicted of the charges against him, he either had to accept the label of a criminal and go to jail for 50 years or fight a million-dollar lawsuit.

Aaron decided to take a third option. He hanged himself!

Why Most People Will Never Be Good at Investing

August 7, 2019 | Reading Time: 3 minutes | 20 Comments |

…because most people in the stock market, most of the time, don’t do investing, which is…

Thinking how markets work,
Understanding how people behave,
Studying businesses,
Sticking only with what is simple and what they understand, and
Buying stocks at appropriate valuations.

Instead, they are busy…

Envying (others making money fast or losing money slow),
Cloning (others’ stock ideas mindlessly),
Predicting (future of markets, stock prices, and economy),
Fearing (missing out on future gains),
Regretting (past mistakes),
Avoiding (accepting current mistakes),
Denying (reality, especially when it’s harsh), and
Indulging (in useless information and noise)

And if that’s not all, these often lead us to –

Trading (frequently, which adds to our costs),
Averaging down (on bad businesses),
Boasting (about our lucky short-term gains), and sometimes
Trolling (other investors on social media, who have not performed as well as us in the recent past).

With such a busy schedule, where is the time to practice investing? 🙂

A Story of Courage and Hope from the Life of Charlie Munger

August 5, 2019 | Reading Time: 10 minutes | 26 Comments |

Here is a story I shared with my daughter yesterday and thought this deserves to be shared with a wider audience. It’s that good!

This story is from the life of Charlie Munger, from long before he was rich and famous, and before he had such a large and happy family –

Image Source: Poor Charlie’s Almanack; Photograph is of Charlie celebrating his forty-fifth wedding anniversary with his family in 2001
The story dates to 1953 when Charlie, then 29 years old, got divorced from his (first) wife of eight years. Divorce had a huge social stigma attached at that time and it was the first blow for Munger.

His wife also got almost everything in the separation, including the house. Charlie’s friends revealed that he moved into “dreadful” conditions after this divorce.