Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week. If you like this collection, consider forwarding it to someone who you think will appreciate it.
A fascinating account of the first Big Bull of India
Premchand Roychand was one of the most influential businessmen in 19th-century Bombay. A man who made a fortune in the stockbroking business and came to be known as the Cotton King, the Bullion King or just the Big Bull. He was also the founder of the Native Share and Stock Brokers Association, an institution that is now known as the BSE.
Premchand began his “successful career as a broker under the shade of a stately, spreading banyan tree at the western end of the beautiful Horniman Circle garden in South Bombay where wayfarers, cotton and opium brokers, clerks and strangers came to quench their thirst". Around 22 such brokers began trading under the banyan tree and formed the Native Share and Stock Brokers Association, each contributing Re1.
“Of all the ‘Share Kings’, the most fabled figure was Premchand… whose exploits would help create another stereotype: he would be the first of many famous Bombayites who believed that profit held primacy over principle. The ingenious merchant was a promoter and shareholder in the Commercial Bank and Mercantile Bank, and associated with about seventy mushroom companies. He also took control of the Bank of Bombay. He had a sharp eye for the loophole and regulatory grey area."
Great thinkers aren't afraid to be wrong
High-ability individuals tend to underrate their relative competence, and at the same time assume that tasks that are easy for them are just as easy for other people. The smarter you are, the less you think you know -- because you realize just how much there is to actually know.
Because wisdom isn't found in certainty. Wisdom is knowing that while you might know a lot, there's also a lot you don't know.
Wisdom is trying to find out what is right rather than trying to be right.
Wisdom is realizing when you're wrong, and backing down graciously.
Great thinkers aren't afraid to be wrong. Great thinkers aren't afraid to admit they don't have all the answers. Great thinkers aren't afraid to say "I think" instead of "I know."
Doctors move to a subscription model
Helping someone become healthier doesn’t always require a billable treatment. Sometimes, it just requires expert planning and recommendations.
That’s why doctors increasingly want to practice a different kind of care, known as value-based care. The idea of value-based care is that patients or payers pay doctors to make patients healthy rather than treating them for individual ailments. This often means charging a monthly or annual flat fee in exchange for comprehensive care. Essentially, doctors use those dollars to care for a patient however they see fit. In some models of VBC, doctors can suffer penalties when patients don’t get better.
Will the future car come from an auto or an electronics manufacturer?
The stakes in manufacturing vehicles are higher than what technology companies are accustomed to. “The automobile is very different from a lot of electronics gear,” said MacDuffie. “It’s a heavy, fast-moving object that operates in public space and is dangerous. It can kill people. It can injure people. It can damage property.”
In that setting, the automotive industry clearly faces complexities and responsibilities with which technology companies are not familiar.
“We’ve heard Elon Musk talking many times about ‘manufacturing hell’ and saying there’s nothing harder than mass-producing at scale.” In a recent interview with auto manufacturing expert Sandy Munro, Musk said: “Prototypes are easy and fun, and then reaching volume production with a reliable product at an affordable price is excruciatingly difficult. Our production is hell.”
Even as some tech companies have ambitions of becoming automakers, not all of them are prepared to put in “all the hard work” that Tesla has invested in that endeavor, MacDuffie said. If the tech firms don’t take similar steps, they will be forced to work with existing automakers that bring that expertise.
Things to remember in a crazy market
FOMO brings about a lot of emotions — greed, envy, regret — that make it difficult to make level-headed decisions with your money.
You wouldn’t be human if you didn’t have these feelings right now.
Investing in risk assets means occasionally seeing your gains evaporate before your eyes. I don’t know why and I don’t know when but at some point a large portion of my portfolio will fall in value. That’s how this works.
The current cycle won’t last forever just like the last one or the next one.
Being contrarian will always make you feel like you’re smarter than everyone else, but the crowd is right more often than it’s wrong when it comes to the markets.
No one is able to consistently get in at the bottoms and out at the tops. Hindsight makes it look easy but it never is in the moment.
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