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Safal Niveshak Stream – Advice from Buffett, Munger, and Gates

Some nice stuff I am reading, watching, and observing at the start of this weekend…

Parenting Advice from Buffett & Munger

As parents, we often ask, then ask again, and ask again our kids to do something we desire they do. And if we are lucky, our kids cooperate after the fourth or fifth request or after a loud but otherwise harmless scolding. We complain that our kids never listen to us, and ask other parents how they get their kids to behave, eat healthy food, and go to sleep on time. If that’s not all, we consult the Internet and several books on bringing up well-cultured and disciplined children. Then, even as we apply all those techniques, our kids just don’t listen.

But, amidst all this, there’s something we often fail to notice with our kids. Even when they are not listening to us, they are busy observing us.

I have often noticed this with my kids. They would often not listen to what I have to tell them. But they would always be observing my actions. And that keeps me on my toes, simply because my kids are ‘watching’ me.

I found this thought reiterated in this wonderful book I am reading for the second time – Peter Bevelin’s All I Want to Know is Where I’m Going to Die So I’ll Never Go There. Here is an excerpt from that book where Warren Buffett and Charlie Munger, in conversation with a seeker of wisdom, share with him the best method of training children…

If you haven’t picked up this book, I suggest you do. It’s slightly expensive, but one of the best investments in seeking wisdom you would ever make.

Admitting You are Wrong

Admitting you are wrong is terribly difficult, and here’s why…

Mistakes can be hard to digest, so sometimes we double down rather than face them. Our confirmation bias kicks in, causing us to seek out evidence to prove what we already believe. The car you cut off has a small dent in its bumper, which obviously means that it is the other driver’s fault.

Psychologists call this cognitive dissonance — the stress we experience when we hold two contradictory thoughts, beliefs, opinions or attitudes. For example, you might believe you are a kind and fair person, so when you rudely cut someone off, you experience dissonance. To cope with it, you deny your mistake and insist the other driver should have seen you, or you had the right of way even if you didn’t.

Elon Musk’s Memo

Do you tend to make up acronyms for random things? Well, you might want to stop, unless you want to piss off Elon Musk. In May 2010, Musk sent this memo to all SpaceX employees with the subject line: Acronyms Seriously Suck. Here’s an excerpt from Musk’s biography..

Bill Gates’ Career Advice

If Bill Gates was passing college today and was looking for an opportunity to make a big impact in the world, he would consider three fields…

One is artificial intelligence. We have only begun to tap into all the ways it will make people’s lives more productive and creative. The second is energy, because making it clean, affordable, and reliable will be essential for fighting poverty and climate change. The third is the biosciences, which are ripe with opportunities to help people live longer, healthier lives.

Among others, Gates also advises students to surround themselves with good people…

…I encourage you to surround yourself with people who challenge you, teach you, and push you to be your best self. Melinda does that for me, and I am a better person for it. Like our good friend Warren Buffett, I measure my happiness by whether people close to me are happy and love me, and by the difference I make in other people’s lives.

He advices to read Steven Pinker’s The Better Angels of Our Nature, terming it as the most inspiring book he has ever read. Add this to Gates’ five good summer reads.

Ray Dalio’s Decision Making Process

Ray Dalio is an American investor, hedge fund manager and philanthropist, and is the founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds. He runs Bridgewater according to 210 principles that he’s collected in a manual for his employees, which you can download from here.

In his recent post, Tren Griffin of 25iq captures the essence of Dalio’s decision making process, and also draws similarity with the process used by Charlie Munger…

Dalio starts with a rational analysis of the information he has and from that he forms a hypothesis. He then exposes that hypothesis to thoughtful people with alternative points of view and methods of analysis who may disagree with him and then he wants a radically transparent “back and forth” discussion. As part of that process he wants to deeply understand the reasoning of any thoughtful opposing views. Only after he has understood these alternative points of view does Dalio believe he is in a position to reject or accept the alternative ideas and make a decision. Dalio’s approach is quite similar to Charlie Munger’s approach: “I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do. Rapid destruction of your ideas when the time is right is one of the most valuable qualities you can acquire. You must force yourself to consider arguments on the other side.”

When Experience Backfires

We are but a product of our experiences. Morgan Housel captures this thought brilliantly in his latest post, and especially how some of our experiences backfire and hurt us in making good decisions today, including decisions we take with respect to our investments…

We think of experience as uniquely good, because it teaches you something new. But experience backfires when it locks your thinking in a rut. Seeing the world through the lens of your own background can be dangerous when other people who also write the world’s script have totally different backgrounds.

Here I also remember this thought from Garrett Hardin that I read in Peter Bevelin’s book I mentioned above. Here, Hardin isn’t talking about the role of past experiences in current decisions, but how our deep-ingrained biases affect us (and our biases are often a result of our experiences)…

It would be an enormous error to assume that our picture of the world is built only on logic. No matter how hard-headed one tries to be, one’s thinking is shaped by the biases of the all-encompassing worldviews derived from assumptions of which one is barely (if at all) conscious.

Life is Short

It’s ironical that it often takes us a lifetime to learn to live in the moment.

We seem to think that we’ll live forever. We spend time and money as though we’ll always be here. We buy stuff as though it matters and is worth the debt and stress of attachment. We put off “living happily ever after” for another year, because we assume we have another year. We don’t tell the ones we love how much we love them often enough because we assume there’s always tomorrow.

But as Paul Graham writes in his beautiful article, life is short, and thus…

…we should expect its shortness to take us by surprise. And that is just what tends to happen. You take things for granted, and then they’re gone. You think you can always write that book, or climb that mountain, or whatever, and then you realize the window has closed. The saddest windows close when other people die. Their lives are short too. After my mother died, I wished I’d spent more time with her. I lived as if she’d always be there. And in her typical quiet way she encouraged that illusion. But an illusion it was. I think a lot of people make the same mistake I did.

The usual way to avoid being taken by surprise by something is to be consciously aware of it. Back when life was more precarious, people used to be aware of death to a degree that would now seem a bit morbid. I’m not sure why, but it doesn’t seem the right answer to be constantly reminding oneself of the grim reaper hovering at everyone’s shoulder. Perhaps a better solution is to look at the problem from the other end. Cultivate a habit of impatience about the things you most want to do. Don’t wait before climbing that mountain or writing that book or visiting your mother. You don’t need to be constantly reminding yourself why you shouldn’t wait. Just don’t wait.

Comparison is a Trap

Let’s face it. Not a day goes by that you’re not tempted to glance to the left and to the right to see how you measure up to the people around you. But it doesn’t stop there, does it?

You’re tempted to compare your children to other children, your spouse to other spouses, your salary to others’ salaries, your car to others’ cars…and your stocks to others’ stocks.

It’s frustrating. It’s exhausting. It’s a trap!

I wrote about the comparison trap in a post four years back. Now, Ian Cassell takes up this point in his latest post on why investors must not compare themselves with others

…it’s important NOT to compare yourself to other investors and their performance. If you are a contrarian investor, which many of us claim to be, you also can’t worry about other people’s opinion of you. If you worry about what people think of you it’s because you have more confidence in other people’s opinion of you than you.

Silicon Valley vs. Wall Street

All in one paragraph…

…the pitch for data scientists from Silicon Valley is: “Come work here, you can build advertising models and pretend that you’re saving the world,” while the pitch for data scientists from Wall Street is: “Come work here, you can build trading models and not have to pretend that you’re saving the world.”

Read the entire brilliant piece here.

Waiting for Market Crash

It’s always been my advice to young investors and I stand by it even today – If you cannot withstand losing a bit of your money in a stock market crash – where things easily go from bad to worse to brutal – please stay away from stocks.

Most investors like to believe they can enjoy stock market gains without losses. And that denial is what causes them stress and conflict. They feel disappointed when the harsh reality doesn’t align with their rosy expectations. And then, there are other investors who are perennially waiting for a crash to happen so that they could deploy their cash at “attractive” levels, which rarely comes to pass.

In fact, waiting for the market to crash is a terrible strategy.

A crash, and when it would come, is never in your control. Thus, you should never worry about it, except for being prepared for it by way of making better decisions when times are good.

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.


  1. Super stuff Vishal. So much of insightful reading all at one place. Quite a task. Thank you so much for the invaluable service you are doing. Cheers!

  2. A weekend well spent, thanks to you Vishal. 🙂

  3. K U Rao says:

    Excellent insights …..just do more

    Thank you

  4. Kulbir Lamba says:

    Thanks Vishal,
    Specially the part “When Experience Backfires”.

    The charm of reading post on Safal Niveshak is not limited to the specific post, but the references/ source you people refer. Further follow up of these gives immense knowledge.

    Warm Regards
    Kulbir Lamba

  5. Syed Faizul Islam says:

    Thanks Vishal.

    Your insights are great not only from financial perspective but from an overall life perspective.

    You are helping me in gaining clarity of thoughts in and around my financial life.

    Syed Faizul Islam


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