Premium Value Investing NewsletterDownload Free Issue

How to Create An Antifragile Life, and A Stock Portfolio (A Personal Experiment)

Life was good when I was working at my job as a stock market analyst around 2005-06. Markets were doing well, and my stock picks were flying high. My company’s clients were happy with our recommendations, and consequently, my salary was coming in.

Talking about salaries of stock market analysts, the less that’s said the better. You get paid undeservingly (salary-to-effort ratio, as compared to most other knowledge workers) for constantly questioning the hard work of entrepreneurs and then not questioning your own analyses while churning out words that lose relevance in a few weeks or months.

Anyways, since I was an analyst then, I did not question what I am questioning now. Life was good. I felt safe and comfortable in my job, loved what I was doing, and thought that I would be happy doing the same thing for the rest of my life.

[Read more…]

Nassim Taleb on True Wealth

Here’s some good stuff I read in recent times that might interest you…

Nassim Taleb on True Wealth
Nassim Taleb is one of my favourite authors, and his Antifragile is one of my favourite books. One of this book’s chapters that interests me particularly is titled Via Negativa. Here, Taleb argues that the solution to many problems in life is by removing things, not adding things.

For example, here is a list of things Taleb counts as constituents of true wealth that are all about subtracting things (via negativa) from life than adding –

  1. Worriless sleeping
  2. Clear conscience
  3. Reciprocal gratitude
  4. Absence of envy
  5. Good appetite
  6. Muscle strength
  7. Physical energy
  8. Frequent laughs
  9. No meals alone
  10. No gym classes
  11. Some physical labor
  12. Good bowel movements
  13. No meeting rooms
  14. Periodic surprises

I could check twelve from this list (let the ones I didn’t check remain a secret). What about you? What in the list remains getting checked for you?

[Read more…]

Before Your Song Is Over

Warren Buffett wrote this in his 2000 letter to shareholders…

The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities—that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future—will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.

Buffett was talking about the irrationality he was seeing around during the heydays of the dotcom boom. What followed next i.e., the bust, is deeply etched in most investors’ memories who participated in that irrationality.

As I was reading this text from Buffett last night – thanks to my habit of reading and re-reading a small super-text each night before I sleep – I could relate this to the irrationality with which most of us live our lives, ignoring the beautiful things that happen around us while we race towards achieving name, fame, and of course, lot of money…

[Read more…]

How Much is Enough, and A Few Other Questions

Note: I gave this talk to a group of friends working in Silicon Valley during my recent trip to the US. Surprisingly, they liked what I spoke and wanted me to share the transcript, which I am doing today in a deeper and more refined form.

Hi Friends,

Thanks for inviting me to speak to you today. I have nothing intelligent to say. You guys score much higher than me on the IQ charts. And it’ll be for the benefit of us all that I speak less and that you keep your expectations from me low. In fact, very low.

So, given that I have been given the freedom to talk whatever I want to today, I have smartly avoided intelligent stuff because I completely believe in what Mark Twain said and I quote, “It is better to keep your mouth shut and be thought a fool than to open your mouth and prove it.”

Instead of talking intelligent stuff around stock market, investing, human behaviour, etc., let me focus on a few important questions I have tried to seek answers to at various stages of my life, and that have helped me tremendously in choosing a path that, when I look back at, I am glad I chose.

[Read more…]

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.

[Read more…]

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.

[Read more…]

The J-Curve Model of Thinking, Living, and Investing

My friend Ravi came home for lunch last weekend. He looked dejected.

“It’s a bull market, Ravi!” I said trying to cheer him up, but he was in no mood to give away his dejection.

“I’m nearing forty, Vishal, and that makes me depressed.”

“Why Ravi? You should be happy that you’ve already left your dumb forty years behind!” I said jokingly.

“Be serious, Vishal! I mean, forty years have passed and it seems I have not achieved much in life. My salary is good but not great, I am travelling long hours every day for my job, my investment portfolio size is still a far cry from what I want to retire with, my stocks are doing well but not as well like what my other friends’ stocks are doing, and my dream of writing a bestseller novel is still a dream.”

“Wow! And you are nearing forty!” I said with a smile.

“You don’t have to remind me that!” Ravi replied with a smirk.

“Ravi, how much would you rate your life so far on a scale of one to ten?”

[Read more…]

Inverting the Money Problem

In the controversial movie, The Social Network, which supposedly portrayed Mark Zuckerberg’s Facebook journey, Sean Parker’s character famously quipped –

“A million dollars isn’t cool. You know what’s cool? A billion dollars.”

It’s probably the most favourite problem that majority of the individuals in the world are trying to figure out i.e., how to get rich?

So let’s investigate this problem by using Charlie Munger’s most cherished mental model i.e., inverting the problems to solve them.

One of the ways to invert the question of “How to Get Rich?” is to ask, “Is getting rich worth it?”

Before you decide to skip this article thinking that it’s another one of those “money can’t buy happiness” rant, just stick with me for few more minutes and I promise that you won’t regret it.

In fact, this is a good opportunity to wear our curiosity hats and look at the hardships that tag along with large sums of money. Now given the fact that the author, yours truly, isn’t super rich (money wise at least) and likely never will be, is it justified for him to comment on the problems of the rich?

In my defence, all I have to say is that I never let my lack of first-hand experience with a topic stop me from speculating on it. 🙂

Maybe, like the proverbial fox and his sour grapes, I am deluding myself with a story that I never wanted what I will never be able to get. Or maybe I belong to the camp of those cash-poor intellectual types who want to prove to the world that rich people secretly live a miserable life.

I am not ruling out any of these possibilities where my subconscious is playing a game.

[Read more…]