Some nice stuff we are reading, watching, and observing during the middle of this week…
- The long run is just a collection of short runs, writes Morgan Housel…
…value is ultimately created in the long run. That’s where scale takes off and compounding works its magic – over years and decades, not months and weeks.
The key is recognizing that the long run is just a collection of short runs, and capturing long-term growth means managing the short run effectively enough to ensure you can stick around for a long time.
- In 2011, Seth Klarman explained the psychology necessary to be a good value investor, in an interview that he did with Charlie Rose. In this interview, Klarman says, “Investing is the intersection of Economics and Psychology.” He added…
The economics, the valuation of a business is not that hard. The psychology, how much do you buy, do you buy at this price, do you wait for a lower price, what do you do when it looks like the world might end. Those things are harder.
It’s a must watch for all value investors.
- “You will have some painful lessons as you mature as an investor, but it’s all part of the journey,” writes Ian Cassel of MicroCapClub in his latest post. “Almost all successful people went through incredible hardship, obstacles, and challenges. The power to endure is the winner’s quality.”
The market loves to destroy egos because only through humility can it prepare your mind to accept truth. Just like military training, the market needs to tear you down and destroy all your selfish beliefs and tendencies before it can build you back up. It is no accident that the greatest lessons occur when we are the most confident.
- Picking stocks is at heart an arrogant act. It requires in the stock picker a confidence that most others are dunces, and that riches await those with better information and sharper instincts. Entire cities—notably New York and London—have been erected in service of this belief. And the image of the clever, dauntless stock maestro is embedded in the American ideal. Yet there is a simple, destructive idea taking over Wall Street: that stock pickers can’t pick stocks well—or at least well enough for the fees they charge. And even those who do can’t sustain it year after year. Welcome to Wall Street’s “do-nothing” investing revolution!
- Harvard Business School professor Clayton Christensen is best known for his 1997 book The Innovator’s Dilemma, which introduced the concept of “disruptive innovation.” He explained how cheaper, simpler or unexpected products and services can bring down big companies like U.S. Steel, Xerox and Digital Equipment. In his latest interview, he describes his new theory and explains what was missing from his ideas about disruptive innovation…
I realized that historically, innovation seemed to have been unpredictable, almost like a role of the dice. It didn’t seem right that innovation should be a crapshoot. Then I realized that what causes innovation to appear unpredictable is that at business schools, we have taught people that understanding the consumer is the right unit of analysis. What you need to understand is rather that every day things happen to us. Jobs arise that have to be done. Understanding the job is the right unit of analysis.
- One of the most interesting topics in modern times is the “robots eat all the jobs” thesis. It boils down to this: Computers can increasingly substitute for human labor, thus displacing jobs and creating unemployment. Your job, and every job, goes to a machine. Amidst this, it’s refreshing to read Marc Andreessen who believes why now is probably a good time to say that robots will NOT eat all the jobs…
We have no idea what the fields, industries, businesses, and jobs of the future will be. We just know we will create an enormous number of them. Because if robots and AI replace people for many of the things we do today, the new fields we create will be built on the huge number of people those robots and AI systems made available. To argue that huge numbers of people will be available but we will find nothing for them (us) to do is to dramatically short human creativity.
And I am way long human creativity.
Well, it’s difficult to go short on what Mr. Andreessen believes.
- Nexus between pharma companies and hospitals in India is pushing up treatment costs while exposing patients to huge, unknown risks. Studies confirm how in the conflicting demands of drugs for profit and drugs for curing diseases, there can be only one winner and it is certainly not the patient.
Atorvastatin, the generic formulation of Pfizer’s cholesterol-lowering statin Lipitor, is extensively recommended for use in India. Ranbaxy, the original generic pharmaceutical manufacturer of atorvastatin since 2011, ran into enough problems with the US Food and Drug Administration (FDA), to suggest that the future well-being of consumers of its products was the last thing on its mind.
Indeed, in India, where branded generics dominate the pharma market, constituting nearly 80% of the market share (in terms of revenues), there is little oversight, particularly since generics are not required to replicate the extensive clinical trials that have already been used in the development of the original, brand-name drug. Over the last decade, drug withdrawals from the Indian market have been mainly due to safety issues involving cardiovascular events.
- One of the best books on thinking and behaviour I’ve come across is Peter Bevelin’s Seeking Wisdom: From Darwin to Munger. I have had the opportunity to interact with Mr. Bevelin, and it was he who was instrumental in Charlie Munger sending me his autographed Poor Charlie’s Almanack. So it was a great pleasure reading his interview with Farnam Street on seeking wisdom, mental models, and learning…
The best thing I have done is marrying my wife. As Buffett says and it is so so true, “Choosing a spouse is the most important decision in your life…You need everything to be stable, and if that decision isn’t good, it may affect every other decision in life, including your business decisions…If you are lucky on health and…on your spouse, you are a long way home.”
A good “investment” is taking the time to continuously improve. It just takes curiosity and a desire to know and understand – real interest. And for me this is fun.
- Journaling or free writing is a tool which is known to almost every successful writer but remains a hidden secret for outsiders. It’s a form of meditation and perhaps even better than meditation for those who think meditation is overrated…
The act of typing serves as a hand rail on our thoughts, and occupies a certain part of the brain that generally gets restless and looks for something to do, because it’s already doing something: typing. Disabling that restless squirrel in your brain is the reason why activities like walking, showering, doing the dishes, gardening, etc are all such great activities for stirring up creative thoughts. Free writing has the added benefit of providing a tangible trail of thoughts as they rise up. You’re essentially hitching your subconscious directly to your typing fingers.
- Behavioral economist Dan Ariely, the author of Predictably Irrational, uses classic visual illusions and his own counterintuitive (and sometimes shocking) research findings to show how we’re not as rational as we think when we make decisions…
We understand our limitations, and we build around them. But for some reason, when it comes to the mental world, when we design things like healthcare and retirement and stock markets, we somehow forget the idea that we are limited.
I think that if we understood our cognitive limitations in the same way we understand our physical limitations, even though they don’t stare us in the face the same way, we could design a better world, and that, I think, is the hope of this thing.
- The importance of the non-conscious in decision making is by far the most significant discovery about human behaviour..
Mounting evidence from medical sciences proves that there is a world in our brains beyond the conscious. The famous neuroscientist V.S. Ramachandran’s explanation of the unusual medical cases of an amputee suddenly feeling intense pain in his phantom limb, and of a blind patient who cannot see a pen that is held before her but manages to reach out and grab it, is rooted in the intricacies of non-conscious brain processes.
The famous experiment by Benjamin Libet in the 1980s proved that the non-conscious brain decides about 0.3 seconds before a person is conscious of his own decision/action
- “The purpose of life is not to be happy, said Ralph Waldo Emerson. “It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.” This post captures the why and how of this thought…
Being useful is a mindset. And like with any mindset, it starts with a decision. One day I woke up and thought to myself: What am I doing for this world? The answer was nothing. And that same day I started writing. For you it can be painting, creating a product, helping elderly, or anything you feel like doing. Don’t take it too seriously. Don’t overthink it. Just DO something that’s useful. Anything.
- An old, beautiful post on the moral bucket list I go back to again and again…
…there were two sets of virtues, the résumé virtues and the eulogy virtues. The résumé virtues are the skills you bring to the marketplace. The eulogy virtues are the ones that are talked about at your funeral — whether you were kind, brave, honest or faithful. Were you capable of deep love?
We all know that the eulogy virtues are more important than the résumé ones. But our culture and our educational systems spend more time teaching the skills and strategies you need for career success than the qualities you need to radiate that sort of inner light. Many of us are clearer on how to build an external career than on how to build inner character.
- In May of 2013, the Stanford University neurosurgical resident Paul Kalanithi was diagnosed with Stage IV metastatic lung cancer. He was thirty-six years old. In his two remaining years – he died in March of 2015 – he continued his medical training, became the father to a baby girl, and wrote beautifully about his experience facing mortality as a doctor and a patient. In an excerpt from his posthumously published memoir, When Breath Becomes Air, Kalanithi wrote about his last day practicing medicine.
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Started reading your website first thing in morning, good way to start the date.
Also, i have printed investor manifesto and kept at my study.
Please keep up the good works.
Vishal Khandelwal says
Just have another way to look at Happiness. Happiness is not the purpose of life. It is our basic way of life, even we can say it is a necessity of life. Many people are making happiness as a goal, but goal is something which you can achieve or not. If we enjoy process, then regardless of outcome we will be happy. If i am not happy, then how can I be helpful to others? If I am happy I will do things wholeheartedly and that will make a difference.
Finally, Great thanks to Vishal for this website. I have learned a lot from it.
Vishal Khandelwal says
Thanks for sharing your thoughts, Swapnil…and for your kind words. Regards.