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Investing and the Art of Cloning

My friend Ravi was home for lunch on weekend. After food, as we went out for a stroll, he told me a story of a famous motivational speaker.

At a huge gathering once, the speaker proclaimed, “The best years of my life were spent in the arms of a woman, who wasn’t my wife.”

The audience was in a state of shock and silence at thus revelation, especially because it was coming from someone they looked up to.

The speaker than added, “She was my mother.”

What followed then was a huge round of applause and laughter.

Ravi then told me the story of a male participant at this event who was his friend from school. This gentleman tried to trick his wife with a similar joke.

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What You Need to Succeed in Investing (Hint: It’s Not Genius Brain)

“Hey Vishal, have you read about how Albert Einstein lost so much money in the stock market?” asked my friend Ravi as we met for dinner over the weekend.

“Yes Ravi,” I said. “In fact, he lost most of his winnings from the 1921 Nobel Prize in the stock market crash of 1929.”

“Wow!” Ravi exclaimed. “And we are talking about one of the genius minds to have ever walked this planet.

“Right Ravi. And I’m sure you’ve also heard about Mr. Newton, who was wiped out while chasing the stock market bubble in 18th century England.”

“Yes Vishal, you only told me about Mr. Newton’s misdoings when we met a few months back.”

“Sometimes I fail to understand,” Ravi continued, “how men with such high levels of intelligence fail at such petty things as the stock market, even when you hear of investment stories about individuals who’ve made fortunes because of exceptional insights or sheer genius!”

“Because, my dear friend, the best rewards in investing don’t generally go to investors with the smartest brains but to those with the strongest stomachs.”

“Stomach? Are you serious?”

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Process, Practice, Perseverance

Have you ever wondered why a doctor’s clients are called ‘patients’? Even a more interesting question, why do doctors call their work as ‘practice’?

Well, one of the reasons is that you can’t become a good doctor without practicing what you learn in textbooks. For that matter, any work done under any profession is nothing but practice. And that doesn’t exclude investing in the stock market.

I recently read a nice post from John Huber on his investment process. Here’s something John wrote that caught my attention –

…stop trying to read everything under the sun and get out there and actually start investing—start valuing companies, make investments, learn, repeat, etc…Whether you’re playing the piano, hitting a sand wedge, shooting a jump shot, riding a bike, or even driving a car—the way you learned was through repetition. The same can be said for valuation. Reading books is fine, doing case studies is better, but actually valuing companies and making investments—practicing—is the best way to learn.

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Charlie Munger on Bitcoins, Banking, AI, and Life

I recently attended the annual shareholder meeting of Daily Journal Corp, a publishing company based in Los Angeles, US. I am not a shareholder in DJCO, but this was a chance to hear the 94-year old Charlie Munger, who is its chairman and director.

Mr. Munger answered questions from the audience for around two hours – on wide-ranging topics like bitcoins, banking, artificial intelligence, and life – including one from me (see below). Here are excerpts from the notes prepared by Adam Blum (see the link to entire notes at the bottom of the post).

On searching for ideas – The two rules of fishing are to fish where the fish are, and don’t forget the first rule. Investing is the same thing. In some places, no matter how good a fisherman you are, you won’t do well. Life is a long game. Take it as comes and do the best you can, and if you live to an old age, you will get your full share of opportunities, which will be two in total, maybe, but seize one of the two, and you will be alright.

On personal success – Approach life like [Thomas] Carlyle, and get up every day doing the best you can. Marry the right person. Everyone here who’s your age will do well. You’re not that mad at the world; instead you’re trying to cope with how to make it a little better. If you were here with placards shouting, you wouldn’t have bright future. Avoid extremely intense ideology, because it ruins your mind. The kids with the placards are pounding the idiocy in instead of shouting it out.

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Dealing with Stock Market’s Moments of Terror

I received this Whatsapp message from a friend recently, where he wanted my opinion on the post-Budget crash in Indian stocks and how to deal with the same…


My friend’s message reminded me of Howard Marks’ Feb. 2016 memo to clients, where he described the situation in the stock market then –

My buddy Sandy was an airline pilot. When asked to describe his job, he always answers, “hours of boredom punctuated by moments of terror.” The same can be true for investment managers, for whom the last few weeks have been an example of the latter. We’ve seen bad news and prices cascading downward. Investors who thought stocks were priced right 20% ago and oil $70 ago now wonder if they aren’t risky at their new reduced prices.

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Lecture Presentation and Notes: Seeking Wisdom in the Age of Information

I recently spoke at a finance and business conclave in Chennai, organized by Naanayam Vikatan, a leading Tamil language finance magazine. The topic was ‘Seeking Wisdom in the Age of Information.’

Click here to download the presentation and notes, or read it in the panel below.

Of Free Brains and Effortless Money

In the hospital, the relatives gathered in the waiting room, where a family member lay gravely ill. The doctor came in looking tired and dull.

“I’m afraid I’m the bearer of bad news,” he said as he surveyed the worried faces. “The only hope left for your loved one at this time is a brain transplant.”

“Oh, how risky is the procedure?” a relative asked.

“It’s an experimental procedure, very risky,” the doctor replied, “but it is the only hope for your loved one. Insurance will cover the procedure, but you will have to pay for the BRAIN.”

The family members sat silently as they absorbed the news. After a time, someone asked, “How much will a brain cost?”

The doctor quickly responded, “Rs 20 lac for a male brain, Rs 5 lac for a female brain.”

The moment turned awkward. Some of the men had to ‘try’ to not smile, avoiding eye contact with the women.

A man unable to control his curiosity, finally blurted out the question everyone wanted to ask, “Why is the male brain so much more than a female brain?”

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Happy Diwali…and My Wish for You

I was recently reading a story on the classical Greek philosopher, Socrates, who was tried and executed in 399 BC. He was tried on two charges – corrupting the youth, and impiety (perceived lack of proper respect for something considered sacred).


Socrates had done no such thing. What he had done was educate the youth, teaching them to challenge arguments from authority and question what they believed to be true.

In the process, he frustrated and embarrassed many powerful people with his constant line of questioning, known today as the Socratic method.

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