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.
UPFRONT
My first interview in Hindi on ET Swadesh regarding the LIC IPO - https://youtu.be/UdNbPULYyNs
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Being wealthy, not rich
I’m always interested in the difference between getting rich and staying rich. They are completely different things, and many of those skilled at the former fail at the latter.
Part of this topic is knowing the difference between rich and wealthy.
Rich means you have cash to buy stuff. Wealth means you have unspent savings and investments that provide some level of intangible and lasting pleasure – independence, autonomy, controlling your time, and doing what you want to do, when you want to do it, with whom you want to do it with, for as long as you want to do it for.
I want to be rich, because I like nice stuff. But what I value far more is to be wealthy, because I think independence is one of the only ways money can make you happier. The trick is realizing that the only way to maintain independence is if your appetite for stuff – including status – can be satiated. The goalpost has to stop moving; the expectations have to remain in check. Otherwise money has a tendency to be a liability masquerading as an asset, controlling you more than you use it to live a better life.
https://www.collaborativefund.com/blog/the-rich-and-the-wealthy/
The wealthy mindset
All the energy you put into things you can’t control comes at the expense of things you can control. And because they focus on what they can control, the second mindset is far more resilient and adaptable than the first. And that makes all the difference.
When I talk to people about this, they often bring up the wealth gap. I hear things like, “It’s easy for the rich to hire tutors and teachers and childcare and keep their kids working hard.” Yes … and that misses the point.
It is easy to overestimate the role of money and underestimate the role of mindset. Often, we convince ourselves that if only we had the resources, we would apply the second mindset. But the second mindset isn’t a luxury of the rich, it is a necessity to build wealth in the first place.
When you focus on the money you miss the leverage of mindset hiding in plain sight.
https://fs.blog/brain-food/may-1-2022/
Extreme Air Pollution Hampering India’s Solar Electricity Generation
India will struggle to meet a target of generating 100 gigawatts of solar power this year as high levels of atmospheric pollution are hindering the country’s ability to generate energy, a study has found.
Atmospheric pollution reduces solar power generation because it both absorbs and scatters the Sun’s rays, as well as leaving deposits on solar panels that reduce their efficiency.
A study carried out by IIT Delhi calculates that between 2001 and 2018 India lost 29 per cent of its solar energy potential as a result of atmospheric pollution - equivalent to an annual loss of £635m.
“Put simply, aerosols - which include fine particulate matter, dust, mist and fumes suspended in the air - significantly reduce incoming solar radiation in what we call the ‘atmospheric attenuation effect’,” said study author Sagnik Dey. “This needs to be factored in when undertaking large solar energy projects.”
Acid rain can also corrode solar power equipment and support structures which increases maintenance costs. Acid rain is caused by pollutants like sulphur dioxide and nitrogen oxides, released mainly through industrial and vehicular emissions, rising high into the atmosphere and mixing with water, oxygen and other chemicals to form corrosive acid droplets before falling back as rain.
The Library of Mistakes
The best investors learn from their mistakes. Even the most successful are wrong nearly half the time, which gives them plenty of material to dwell upon. A willingness to admit to errors, says Napier, indicates an open mind. Richard Oldfield, an experienced British fund manager, opens his witty and wise book on investment, “Simple But Not Easy”, with a chapter on his personal howlers. The investment advice imparted by Oldfield’s former employer, the merchant banker Siegmund Warburg, was to “always cry over spilt milk.” Every mistake makes one a fractionally better investor, says Oldfield.
George Soros places mistakes at the heart of his investment process. The Hungarian-born billionaire claims to have an acute sense of his own fallibility. “To others, being wrong is a source of shame,” Soros wrote. “To me recognising my mistakes is a source of pride. Once we realise that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes.” Soros’s approach as a hedge fund manager was to first establish a position and then consider how he might be wrong. In his view, the recognition and rectification of mistakes constitute the hard job of investing. The rest is a cinch.
https://www.reuters.com/breakingviews/global-markets-breakingviews-2022-05-05/
Learning is a series of sprints, not a marathon
People often complain that there just aren’t enough hours in the day. That they have too many things to do, and not enough time to complete all of the work. The proposed solution is better time management: organize the hours in your day better and you’ll get more done.
Time isn’t what’s limited in the day (otherwise you wouldn’t waste so much of it) but your energy is. Energy runs out faster than time, which is why it’s easy to procrastinate, even when you have a lot of work to do.
This theory explains personal productivity much better than time management. If time were the limited resource, procrastination wouldn’t be an issue, only scheduling would be. It also explains why many new productivity systems work for a couple weeks and then fail. You can burn your energy reserves intensely for some time before they get used up and you slide back to a lower operating efficiency.
This also explains why focusing is so difficult. Focus requires a lot of energy to be used in a short burst. Learning is tough mental work, just as sprinting is tough physical work. Just as you can only sprint so long before needing to stop, or slow to a light jog, you can only learn intensely for a short period before you start getting distracted.
If you’re studying full-time, I recommend establishing a policy of not doing any studying on one weekend day and on evenings, after a certain hour. If you’re juggling a job and learning, I recommend picking specific hours to learn, in advance, and don’t study outside of them. Many people I’ve spoken with have found early morning most efficient, since they’re not exhausted from the day’s work yet.
Learning, when done well, is like a series of sprints, not a marathon. That means you have bursts of focus, followed by periods of rest. Both are essential.
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