Curiosity@Intelsense

 

Multidisciplinary learning is one of the best ways to improve our investment acumen. Here is a summary of some of the best learnings of the week.

It has been a while since I have been critical of “value investing”. I have friends who keep harping on value, value all the time and yet the main thing that they are looking at is PE. So, most “value investors” are closet cheap PE investors. Anand Sridharan has written about this extremely well in his article “Business owner, not value investor”.   The term has become an oversimplified label for formulaic buying and selling of cheap crap with little regard for the nature of the underlying business. While this isn’t illegal, it is a misnomer. This activity is better represented by replacing “value” with “cheapness” in all media references. Cheapness investing, cheapness factor, cheapness index, cheapness style-box and cheapness screens. What is called value investing is often neither value nor investing. This confusion is especially severe since the greatest proponent of the term – Warren Buffett – hasn’t practiced cheapness investing in five decades. “Value investing” ends up leading a double life, one referring to Buffett and his disciples and another to the mechanical application of cheapness filters.   The focus is entirely on business, not stock price. Before owning, we spend all our time understanding the nature of the business, the context it operates in, what makes it sustainably good and what risks can spoil the party. Many businesses will drop off our list, either because they’re clearly not worth owning or it’s simply too hard to reliably establish these traits. Likewise, after owning, our focus is entirely on whether the business continues to be worth owning.   Another subject which intrigues me is decision-making. It is an extremely difficult subject simply because you make a decision usually based on incomplete facts and assumptions about the future. The future may or may not turn out as you expected. The decision may or may not turn out to have been a good one but it will only be known in hindsight. One way of looking at decision-making is the one made famous by Jeff Bezos - that of reversible and irreversible decisions.   Once you learn to see decisions through the lens of reversible and irreversible, everything changes. It also changes how you make decisions.   Make reversible decisions as soon as possible and make irreversible decisions as late as possible.   When decisions are reversible, make them fast. Your biggest risk is dragging your feet and not making a decision. The cost to acquire additional information isn’t worth the effort.   When decisions are irreversible, slow them down. The biggest risk is making the wrong decision. The cost to get the information we need to reduce uncertainty is worth the time and effort.

Thought of the Week:

“There will come a time when you believe everything is finished. That will be the beginning.” ​— Louis L'Amour   Every bear market hides the side of a bull market in it. And vice versa.

Audio/Video of the Week:

Complete story of Israel & Palestine conflict | Jews vs Arabs | Jerusalem | Dr. Vikas Divyakirti

This is in hindi. But by far the best and most comprehensive summary of the Israel-Palestine conflict. Dr Divyakirti is a fantastic teacher and explains things in a calm, composed manner starting from the biblical roots and traces down a couple of thousand years to the current events. This is a wonderful watch if you wish to understand the genesis of the longest-standing conflicts of human history.