Admission Open: Value Investing Courses – Classroom and Online
1. Classroom Course: Value Investing Blueprint – This is a comprehensive course on value investing that I will conduct at FLAME University, Pune. It is a residential course and is scheduled to be held from 1st to 4th December 2022. The deadline for submitting applications is 17th October 2022. Click here to know more and join the course.
2. Online Course: Value Investing Workshop – Admissions are also open for the October 2022 cohort of my online value investing workshop. The workshop involves 22+ hours of pre-recorded, detailed lectures and Q&A sessions, plus a 3-hour live Q&A session scheduled for Sunday, 30th October 2022. I am accepting only 50 students in this cohort, and first 25 students can claim a special discount. Click here to know more and join the workshop.
A Few Ideas I’m Thinking About
Here are a few ideas I have been thinking about over the last few days.
Long Term Investing is Hard
The biggest reasons more people do not practice long term investing are that –
- It flies in the face of anything taught in business schools – that is, short termism – where most influencers/experts come from,
- It requires a painful degree of patience because it is only over long periods of time that the market eventually gravitates toward value,
- Life spans of businesses and their competitive advantage periods, on an average, are shortening,
- Our attention spans and holding periods are shrinking, and
- Noise is magnifying.
Given all of this, long term investing has become an increasingly difficult and contrarian endeavour. And so, not many investors have the ability or the wherewithal to practice it.
In fact, most people participating in the stock market don’t even understand what they are doing. This is especially when making money gets quick and easy, and they are doing great at it.
Like Aesop’s wolf in sheep’s clothing, they play a role contrary to their real character, which often leads them to the slaughterhouse.
However, the lack of patience of such people to invest with a long-term horizon creates the opportunity for the few committed to long-term holding periods.
In the battle between impatience and patience, the latter wins.
With over nineteen years of practicing long term investing with sincerity and with decent success (purely based on personal standards of success), and seeing a lot of my fellow investors drop out due to their disbelief in its continuity and now ruing their decisions, I can vouch for this powerful idea.
Long term investing is certainly hard, but if you know how to deal well with its hardness, it’s totally worth it.
- Also Read: Buy and Hold: Simple, NOT Easy
How to Survive Complexity of Financial Markets
I think the most important qualities that you need to survive the complexity of the financial markets are a combination of –
- Humility, and
- Fine-tuned bullshit detector.
You need humility to prevent yourself from overcomplicating investing more than it needs to be and taking risks greater than you’re able to handle.
And you need a fine-tuned bullshit detector to protect yourself from the swarms of sales pitches and get-rich-quick schemes that plague the industry.
There are other things – a good grasp of basic arithmetic and accounting, delayed gratification, and the ability to live below your means. But those first two are most important.
Before You Seek Investment Advice
When someone on TV says (or a journalist writes), “You should do X with your money,” stop and think: How do you know me? How do you know my goals? How do you know my short-term spending needs? How do you know my risk tolerance?
Of course, they don’t. Which means you shouldn’t pay much attention to it. Personal finance is very personal, which means broad, general, advice can be dangerous.
For media, I’m most interested in historical finance, which helps put investing into proper context, and behavioural finance, which lets you frame investing based around your own goals, flaws, and skills. But taking direct advice from someone who has never met you is asking for trouble (this includes me).
A Note from The One Percent Show
Morgan Housel said this in the fifth episode of The One Percent Show as one of his advices to youngsters on the skills they need to hone to do well in the coming decades –
I think the most undervalued skill is learning how to get along with people that you disagree with. And this is getting more important with technology because it used to be, not even that long ago, 10-20 years ago, that most people lived inside their own bubbles – their own political bubbles, their own religious bubbles. They just interacted with people who were like them, in their home, in their work, their friends.
Your sphere of influence in your social group was really tight in your local community. And now because of social media, your social group might be all over the world. You and I are talking in different continents right now. Like the kind of things that didn’t happen 10 or 20 years ago, but now we do it all the time. And because of that, you’re much more exposed to the views of people you disagree with.
The difference of views has always existed. We’re just aware of them now because of technology. And in that world, there’re basically two options. One, you can get increasingly angrier that other people think differently than you, and you have no ability to change their views. And that makes you angry and cynical. Or two, you can learn how to get along with people who disagree with you. Now, there’s always going to be situations where people you disagree with so fundamentally that it’s just not going to work.
Quotes I am Reflecting On
What creates opportunities is an interesting question. Think of the market as a cauldron of minestrone soup. Occasionally somebody sticks a ladle in and stirs. Mispricings tend to occur much more than when it’s has been at the same level for a long time.
It takes a while before all the vegetables float back to the level that they were at before. Often we do best in turbulent times, especially if we are fortunate enough to be holding cash going in.
– Seth Klarman
We never see the world exactly as it is. We see it as we hope it will be or we fear it might be. And we spend our lives going through a sort of modified stages of grief about that realization. We deny it, and then we argue with it, and we despair over it. But eventually — and this is my belief — we come to see it, not is despairing, but as vitalizing.
– Maria Popova
If the day and the night are such that you greet them with joy, and life emits a fragrance like flowers and sweet-scented herbs, is more elastic, more starry, more immortal- that is your success. All nature is your congratulation, and you have cause momentarily to bless yourself. The greatest gains and values are farthest from being appreciated. We easily come to doubt if they exist. We soon forget them. They are the highest reality. Perhaps the facts most astounding and most real are never communicated by man to man. The true harvest of my daily life is somewhat as intangible and indescribable as the tints of morning or evening. It is a little star-dust caught, a segment of the rainbow which I have clutched.
– Henry David Thoreau, Walden
Photo of the Week
This picture is of the Dal Lake in Srinagar, from May 2016. One of the most beautiful and serene places I have ever visited.
That’s all from me for today.
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