Weekend Reading

 

Upfront

Important stats for the Long Term Research Services

The Long Term Research Service provides a well-chosen portfolio of stocks with superior characteristics. It is a mix of high quality and growth. For subscribing to any of our research services, visit https://www.intelsense.in/#!/Subscription

And now on to the weekend reading...

Peter Lynch's sell mantra

What I try and do is I try and sell stocks because something else is more attractive. Stock A is simply more attractive than Stock B. I don’t try and find out the last quarter, the last eighth, the last 10 points.   And my second rule – this is the hardest one to follow – if I make a mistake, I try and sell it. If I’m looking for something to happen – some product to work, the business to get better – and it’s clear that I’m wrong – this is the key thing – you really have to sell it. It’s difficult to do. But you just want to just hope and pray because you can wait for years to go on.   And the third thing, I think, is what I call bottom fishing. A stock, Avon Products, goes from 150 to 90. On that basis alone, they buy the stock. And then, you know, it can go to 18 as far as we know. A stock that’s down combined with a good fundamental story is good but just buying on that basis alone is very dangerous. https://novelinvestor.com/peter-lynchs-rule-for-dealing-with-mistakes/

Wining. Losing. Learning.

“There’s a phrase out there that says, ‘Sometimes you win. Sometimes you learn.’ I can’t stand that phrase. And the reason I can’t stand that phrase is because it implies two things. It implies that you can’t learn from winning. Like you win or you learn? No, you can learn a lot from winning. Success leaves clues.   What it also implies, losing is some word that no one says of, ‘Oh, I didn’t lose. I learned.’ No, you lost. Own it. You lost, you got beat today, and that’s life you’re going to lose sometimes. And instead of flowering it up and saying, “No, no, I didn’t lose. I just ran out of time. I didn’t lose.” No, you lost.” https://fs.blog/brain-food/may-22-2022/

Pivoting by startups was there even hundred years back

The Wrigley Co. didn’t start out making chewing gum. In 1891 at age 30, William Wrigley Jr. opened a branch of his father’s Philadelphia-based soap company in Chicago. To each purchaser of Wrigley’s Scouring Soap the young salesman gave a free sample of baking powder. The promotion was so successful Wrigley soon switched to selling baking powder, including two free packs of chewing gum with each order. The gum was so popular that by 1893 Juicy Fruit and Wrigley’s Spearmint chewing gum became the company’s chief product.   The old business saying “innovate or die” doesn’t always hold true. Yet many great American companies that took sharp detours to survive ended up flourishing in unforeseen and spectacular new ways. Whether the result of relentless innovation or a happy accident, the detour turned out to be the best part of the journey. Side roads always offer the prettiest scenery. https://www.wsj.com/articles/when-product-lines-take-a-sharp-turn-innovation-pivot-companies-horse-clippers-11652906403

Expertise can be a hindrance for learning

Investor Dean Williams once said, “Expertise is great, but it has a bad side effect. It tends to create an inability to accept new ideas.”   Marc Andreessen explained how this has worked in tech: “All of the ideas that people had in the 1990s were basically all correct. They were just early.” The infrastructure necessary to make most tech businesses work didn’t exist in the 1990s. But it does exist today. So almost every business plan that was mocked for being a ridiculous idea that failed is now, 20 years later, a viable industry. Pets.com was ridiculed – how could that ever work? – but Chewy is now worth more than $10 billion.   Experiencing what didn’t work in 1995 may have left you incapable of realizing what could work in 2015. The experts of one era were disadvantaged over the new crop of thinkers who weren’t burdened with old wisdom.   There is one set of skills that comes from being an expert, and another that comes from being a novice, unburdened by the weight of experience or incentives. The former is obvious, the latter too easy to ignore. https://www.collaborativefund.com/blog/trying-too-hard/

Avoid thinking about money and disputes

I’ve found there are two types of thoughts especially worth avoiding in the way they push out more interesting ideas. One I’ve already mentioned: thoughts about money. Getting money is almost by definition an attention sink. The other is disputes. These too are engaging in the wrong way: they have the same velcro-like shape as genuinely interesting ideas, but without the substance. So avoid disputes if you want to get real work done.   Even Newton fell into this trap. After publishing his theory of colors in 1672 he found himself distracted by disputes for years, finally concluding that the only solution was to stop publishing: I see I have made myself a slave to Philosophy, but if I get free of Mr Linus’s business I will resolutely bid adew to it eternally, excepting what I do for my privat satisfaction or leave to come out after me. For I see a man must either resolve to put out nothing new or become a slave to defend it. http://www.paulgraham.com/top.html