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Thursday 27 January 2022

Weekend Reading: 28-Jan-22

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.

You can sign up to https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.

Thursday 20 January 2022

Weekend Reading - 21-Jan-22

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.


You can sign up to https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.

1. Investing wisdom from Terry Smith's 2021 annual letter

In investment, as in life, you cannot have your cake and eat it, so it is difficult if not impossible to find companies which are resilient in a downturn but which also benefit fully from the subsequent recovery. Of course, you could try to trade out of the former and into the latter at an appropriate time but it is not what we seek to do as the vast majority of the returns which our Fund generates come from the ability of the companies we own to invest their retained earnings at a high rate of return because they own businesses with good returns and growth opportunities.


In our view it would be a mistake to sell some of these good businesses in order to invest temporarily in companies which are much worse but which have greater recovery potential.


Consistently high returns on capital are one sign we look for when seeking companies to invest in. Another is a source of growth — high returns are not much use if the business is not able to grow and deploy more capital at these high rates.


Our portfolio consists of companies that are fundamentally a lot better than the average of those in either index and are valued higher than the average S&P 500 company and much higher than the average FTSE 100 company. However, it is wise to bear in mind that despite the rather sloppy shorthand used by many commentators, highly rated does not equate to expensive any more than lowly rated equates to cheap.


2. Winds of Change

The years since then have seen a massive shift in our environment. Today, unlike in the 1950s and ’60s, everything seems to change every day. It’s particularly hard to think of a company or industry that won’t either be a disrupter or be disrupted (or both) in the years ahead. Anyone who believes all the firms on today’s list of leading growth companies will still be there in five or ten years has a good chance of being proved wrong.


For investors, this means there’s a new world order. Words like “stable,” “defensive” and “moat” will be less relevant in the future. Much of investing will require more technological expertise than it did in the past. And investments made on the assumptions that tomorrow will look like yesterday must be subject to vastly increased scrutiny.




3. Efficiency is the Enemy

There’s a good chance most of the problems in your life and work come down to insufficient slack.


If you ever find yourself stressed, overwhelmed, sinking into stasis despite wanting to change, or frustrated when you can’t respond to new opportunities, you need more slack in your life.


Many organisations are obsessed with efficiency. They want to be sure every resource is utilised to its fullest capacity and everyone is sprinting around every minute of the day doing something. They hire expert consultants to sniff out the faintest whiff of waste. Personally, we view sleep, sickness, and burnout as unwelcome weaknesses and idolise those who never seem to succumb to them. This view, however, fails to recognize that efficiency and effectiveness are not the same thing.


Slack consists of excess resources. It might be time, money, people on a job, or even expectations. Slack is vital because it prevents us from getting locked into our current state, unable to respond or adapt because we just don’t have the capacity.


Too much slack is bad because resources get wasted and people get bored. But, on the whole, an absence of slack is a problem far more often than an excess of it




4. Why Your Brain Never Runs Out Of Problems To Find

Why do many problems in life seem to stubbornly stick around, no matter how hard people work to fix them? It turns out that a quirk in the way human brains process information means that when something becomes rare, we sometimes see it in more places than ever.


You can probably think of many similar situations in which problems never seem to go away, because people keep changing how they define them. This is sometimes called “concept creep,” or “moving the goalposts,” and it can be a frustrating experience. How can you know if you’re making progress solving a problem, when you keep redefining what it means to solve it?


It turns out that for your brain, relative comparisons often use less energy than absolute measurements. Human brains have likely evolved to use relative comparisons in many situations, because these comparisons often provide enough information to safely navigate our environments and make decisions, all while expending as little effort as possible.




5. Sleeping well at night is not always the best investment advice

Selecting the right asset allocation is all about trade-offs and one variable is your appetite for risk. But figuring out what helps you sleep at night can be terrible advice for many investors.


I had numerous conversations with people who would have slept better at night if they could have sold out of their entire portfolio and went to cash during the depths of the market crash earlier this year. Had they done so they definitely wouldn’t be sleeping better now that stocks have recovered their losses.


The problem is your preference for risk often changes more than your tolerance for risk based on what’s happening in the markets.


You could hold your entire portfolio in cash and sleep like a baby for years only to realise later in life you’ve lost money to inflation over time. Or you could throw all of your money into only the best-performing fad companies at the moment and feel better about your positioning until those investments blow up in your face.


Most good investing should be at least a little uncomfortable at times.



Friday 14 January 2022

Weekend Reading - 14-Jan-22


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.


You can sign up to https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.

1. Insecurity and envy drives markets

The Fear I see these days is a fear of becoming a relic of the past. A fear of seeing your peers catapult themselves ahead of you. A fear of missing out, which has been well documented and has become the spirit of the times we live in.


The type of fear that now drives most market activity (because it drives most market participants) is something different than the fear we’ve been accustomed to from reading about history. I would label this type of fear Insecurity. The fear of being left behind and looking like a fool. It’s no surprise that Have Fun Staying Poor or #HFSP has become one of the most enduring memes of the moment we’re in now. It’s the anti-Keep Calm and Carry On. Whenever you see people doing inexplicable things with their capital in the markets these days (public or private), the explanation is not as far from your grasp as you might think. Insecurity is probably the answer.


The other driving force in the markets, traditionally, has been Greed. I think we’re witnessing a variation on Greed that I would label Envy.


Envy will make you take wild risks with a portfolio. Especially when all you see around you are so many people you have such little regard for profiting off of things you know they themselves barely understand. The more exposure we have to the way others are investing, the more we begin to look at their returns as though that’s the appropriate benchmark. All sense of reason and perspective is left behind. If that asshole is doing it, I can do it better.




2. There's More to Investing Than Just Risk and Return

Investment researchers have created scores of metrics to help depict how well an investment has balanced risk and return: the Sharpe ratio, the Treynor ratio, the Sortino ratio, to name just a few. We also talk about how investments fit on the efficient frontier--how well they've compensated investors for the volatility they've assumed.


Meanwhile, attributes like whether an investment imparts peace of mind or requires minimal oversight can't be quantified because they're inherently subjective. You might derive peace of mind from knowing that your portfolio is positioned for long-term growth, whereas another investor's definition of peace of mind is more conventional. You might be OK with spending five hours a week researching investments; another investor might say that five hours a year is more time than he cares to give.


creating the right portfolio for you should involve some self-reflection on these softer issues, because optimizing your investment choices isn't just about risk and return. It's about creating a portfolio that can get you to your goals without interfering with the rest of your life. It's also likely that your views on these issues have evolved over time, so you may need to course-correct to ensure that your portfolio reflects your current thinking. The individual-stock-heavy portfolio that engaged you when you were younger may seem too complicated and labor-intensive--not to mention too risky--as retirement approaches.




3. Price matters

This surely will sound quaint and stale to a few readers, but – and I’m sorry – the future value of a thing is ultimately based on the dividends the thing will eventually pay you, or someone to whom you are prepared to sell your shares. Whether the proxies for those dividends are cash flows, earnings, margins, sales, or the dividends themselves, alpha happens when expectations of those future dividends change.


That’s it. That’s the stock-picking game. Stocks are not pieces of art. They are not fiat money.  Cults of personality do not last forever in the stock market. Narratives break. Eventually, everyone figured out that Galileo was right. Eventually, everyone will figure out that Cathie Wood isn’t. And it won’t take as long either.


But for those making money on big investments in these particular securities as they go from unreasonably overpriced to preposterously overpriced, this is not investing. This is greater-fool speculation. Sure, this is fun (for the longs); but calling it anything else is pulling the wool over the eyes of clients, or perhaps over your own. 


What may even have started as a reasonable and strong fundamental reason for ownership must be tempered if the share price of the thing is 10x higher than it was when you first established your thesis. Price matters. There is a difference between a company and its share price. This gravity of this logic has not dropped on many market participants. But it will. It always does.



4. The nothingness of money

Everyone knows that your bank account doesn’t go with you upon death. But for most of life, that knowledge is theoretical, meaning that it’s not real enough to influence your day-to-day behavior. The mere awareness of your mortality isn’t enough to cease your pursuit of wealth.


For most people, the Nothingness of Money strikes when the finish line is a few yards away. In this moment, a pursuit that once seemed all-consuming fades into the background. All that matters are the memories you have, the people you love, and the memories you can still make with them. The use of your finite time to squeeze out an extra dollar is laughable, as no one with a sound mind would expect that of you.


And finally, in this brief section of life, something profound happens. The Nothingness of Money is truly understood.


The core idea of retirement is this: You frontload your attention spent on money to generate wealth. You then offload your wealth to spend your attention on leisure, purpose, or love.


Retirement is our clever way of extending the Nothingness of Money out while we are healthy enough to appreciate it.



5. Automate basic financial actions to avoid the "Ostrich Effect"

In behavioral economics, the "Ostrich Effect" refers to the tendency to avoid negative financial information. From a psychological standpoint, the Ostrich Effect is the result of the conflict between what our rational mind knows to be important and what our emotional mind anticipates will be painful.


The ostrich’s method for solving financial problems is to ignore them for as long as possible, and then to respond in utter panic and agonizing stress when they are finally forced to act. Not only does avoiding uncomfortable truth keep them from solving those problems: It compounds them.


Habits are hard to change. Give yourself grace and start small. Automate just one account. Pay just one bill. You know which baby step is the right one for you. Just do it. Take five minutes and do it now.



Thursday 6 January 2022

Weekend Reading - 7th Jan 2022


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.

You can sign up to https://www.getrevue.co/profile/intelsense to receive all blogs from me directly into your inbox.

1. The world is irrational

The first step to accepting that some things don’t compute is realizing that the reason we have innovation and advancement is because we are fortunate to have people in this world whose minds work differently from yours. People like Elon Musk and Steve Jobs, whose personalities are equal parts brilliant and absurd, and the absurd can’t be separated from the brilliant – you have to accept the full package. We’d never get anywhere if everyone viewed the world as a clean set of rational rules to follow.


The next is accepting that what’s rational to one person can be crazy to another. Everything would compute if everyone had the same time horizon, goals, ambitions, and risk tolerances. But they don’t. Panic selling stocks after they’ve declined 5% is a terrible idea if you’re a long-term investor and a career imperative if you’re a professional trader. There is no world in which every business or investing decision you see should align with your own view of the world.


Third is understanding the power of incentives. Bubbles are technically irrational, but the people who work in bubbles make so much money from them that there’s a powerful incentive to keep the music playing. They delude not only their customers, but themselves. Nothing gets people to look the other way like easy money.


Last is the power of stories over statistics. If you look, I think you’ll find that wherever information is exchanged – wherever there are products, companies, careers, politics, knowledge, education, and culture – you will find that the best story wins. Great ideas explained poorly can go nowhere while old or wrong ideas told compellingly can ignite a revolution.



2. The rule of awkward silence

Tim Cook and Jeff Bezos run two of the most valuable companies in the world. From the outside, they seem to exhibit very different personalities. But within their companies, both men are known for a fascinating practice: They each embrace the rule of awkward silence.


When faced with a challenging question, instead of answering, you pause and think deeply about how you want to answer. This is no short pause; rather, it involves taking several seconds (10, 20, or longer) to think things through before responding.


We live in a world that demands instant gratification. But there's a major problem with all of this instantaneous communication:  It doesn't leave time to think. Critical thinking calls for deep and careful consideration of a subject. It requires introspection and retrospection. It involves weighing and analyzing facts, and careful reasoning. And it results in making insightful connections. None of this is possible without time.


But when you embrace the rule of awkward silence, you steal back time. Time that used to be wasted on nonsense answers. Time that used to be wasted on telling another person what you think they want to hear, as opposed to what you truly believe.



3. Sea ice and how it impacts the climate

One way that scientists monitor climate change is through the measure of sea ice extent. Sea ice extent is the area of ice that covers the Arctic Ocean at a given time. Sea ice plays an important role in reflecting sunlight back into space, regulating ocean and air temperature, circulating ocean water, and maintaining animal habitats.


Arctic sea ice minimum extent is now declining at a rate of 13% per decade. The pace is likely to accelerate because of climate change-induced warming and the ice-albedo feedback cycle. The albedo effect describes the white ice surface’s ability to reflect Earth-bound sunlight back to space.


Sea ice acts as a “blanket,” separating the ocean from the atmosphere. Every year, some ice survives the summer melt. Once winter hits, more water freezes and it becomes thicker and stronger “multiyear ice.”


Melting sea ice in the Arctic does not dramatically change sea level. Melting land ice, for example from the Greenland or Antarctic ice sheets, does contribute to sea level rise. That’s because when land ice melts, it releases water that was previously trapped on land and adds to the water in the oceans.




4. How Driverless Cars Will Change Our World

Self-driving vehicles are steadily becoming a reality despite the many hurdles still to be overcome – and they could change our world in some unexpected ways.


The promise of driverless technology has long been enticing. It has the potential to transform our experience of commuting and long journeys, take people out of high-risk working environments and streamline our industries. It's key to helping us build the cities of the future, where our reliance and relationship with cars are redefined – lowering carbon emissions and paving the way for more sustainable ways of living. And it could make our travel safer.


There will be challenges to tackle like regulations, rethinking the highway code, public perception, improving the infrastructure of our streets, towns, cities, insurance and the big question of ultimate liability for road accidents.


One new space we can expect to see driverless technology deployed in is high-risk environments, from nuclear plants to military settings, to limit the dangers to human life.


Much in the same way that electric charging stations have slowly entered car parks, side streets, and service stations, so too will autonomous vehicles eventually make their way into our everyday worlds. Years from now, we may well be wondering how we ever lived without them.




5. Influencer marketing: The new wave in marketing

Influencer Marketing has changed the entire course of how marketing is perceived now. Today, any campaign starts from setting an appropriate tone for the brand to getting the right influencers on board to maximize reach.


From celebrity endorsements to micro-influencers across multiple platforms, brands have worked their way up to rationalize every expenditure by reaching out to the right target audience. Earlier, influencer marketing was aimed to reach the masses via television ads or radio or newspaper ads, without giving a second thought to who the buyers are, but now even the trend has changed drastically. Brands have changed drastically.


Social media platforms like – Instagram, YouTube, and others, are among the chief platforms where an Influencer marketing campaign begins. And, it has been found out that 74% or more people discover new products or make a purchasing decision while using social media.


The Indian influencer marketing industry is estimated at $75-150 million a year, according to a digital marketing agency. Today, the Indian audiences are consuming more online content (images, videos, or blogs) than ever before, which explains the increase in reach and engagement of several brands, who are frequently creating content to allow their potential consumers to discover and interact with them on a daily basis.



Monday 3 January 2022

Welcome 2022

2021 started with hope. Hope that the pandemic would be behind us and we would be able to get on with our lives. That bubble burst midway through the year. May-June this year was one of the most difficult times that we as Indians have seen in a long time.

Economic growth inches back

In terms of the economy, India inched back to growth relative to the previous year. PLI schemes were announced which are likely to have a long-term impact on manufacturing in India. On the negative side, income inequality has continued and probably gone up with new reports of increased uptake of MNREGA jobs in total and also by people of a lower age than before. The SME sector has seen a lot of hardship in the last two years, especially large job-generating ones such as hospitality, entertainment, aviation and transportation. The other big event which dominated the political and the economic landscape in India was the three agriculture reform bills, the prolonged farmer protest and the eventual repeal of the laws. This also is likely to have longer-term repercussions as politically difficult reforms will become more challenging to pass.

Geopolitics plays a critical role

Some of the biggest global news was about the US presidential elections and the return to power of the Taliban in Afghanistan. Renewed focus on climate change with the 2021 United Nations Climate Change Conference, more commonly referred to as COP26, being held in Glasgow, will shape large parts of business in the coming years.

China has now emerged as the foremost adversary of the ‘western world’. With the second largest economy in nominal GDP terms and already the largest in PPP terms, although like India it lags a lot in per capita terms simply because of its huge population. And this year China has been at the forefront of economic and political news right from its real estate crisis starting with the Evergrande group, its crackdown on its education sector, restricting foreign listing of its domestic companies and the back-to-socialistic values has impacted both global business and investment sentiment. There are a number of articles in respected global newspapers on businesses that are quietly reducing their China operations and expats leaving China.

I have written about the four megatrends before and it is interesting to observe the changes in narratives across those areas.

IPO market continues to sizzle

The primary market in India and globally has been red hot in 2021. Globally companies raised $1.44 trillion in equities alone which was 24% more than 2020, which in itself was a record year. In India we saw for the first time loss-making entities as well as some new-age businesses starting their market journey. Zomato, CarTrade, Nykaa, Paytm, Policybazaar and Fino Payments were notable among them. The depth of the market increases with every new IPO as investors get an opportunity to invest in something new. Valuations for new IPOs have been steep, sometimes ridiculous, but over time they tend to fall in line with the company’s performance.

NSE and LIC are the two big IPOs expected in 2022. Other notable ones expected are SBI Mutual Fund, Delhivery, Byju’s, PharmEasy, Oyo and Ola. All of this will happen provided the secondary market holds up as investor sentiment in IPOs is directly proportional to gains being made in direct equities.

Even though valuations are stretched in public listed markets, there seems like a bubble in the private markets.

2021 saw a total of 65 IPOs (incl REIT, INVIT) and raised 131,437crs. The record IPO collections were driven by Zomato, Paytm, Nykaa and Policybazaar collecting nearly 39,000cr.

An equal-weighted IPO portfolio would have given a 24% return, which is the same as Nifty in 2021. So, the IPO investors did not do much better than the good-old index in generating returns.

The future, as always, us uncertain

The “Covid” rally that we have seen over the last two years was fueled largely by large doses of liquidity. Now, with persistent inflation across the world, central banks are slowly and reluctantly pulling the plug on the liquidity flow. This can definitely temper down the rally in risk-assets like equities and commodities.

The ever-changing virus keeps us guessing. At times, to me it seems to behave like the market!! The moment you think you have it under control, something new crops up and you are back again where you started. I just hope that 2022 sees the last of the virus.

I believe that 2022 could be a difficult year to make money from equities. Not that any other year is particularly easy, but once in a while, you get a few years where it becomes slightly less daunting. Like cricket, once in a while, you get a full toss on the leg stump 😉

On the bright side, Indian companies have deleveraged extensively over the last 5 years. Corporate balance sheets are now looking better after a long time. Credit growth is picking up, investments are also picking up. The government has managed to garner up revenues and reduce expenditure such that the fiscal deficit at 6.6% is lower than planned. This is likely to lead to some expenditure from the government side on infrastructure and other social sectors. Traditional “value” sectors are likely to revive after many years of sub-par performance.

My job as an investor remains the same. Trying to find good quality businesses for the long term, keeping an eye out for medium term opportunistic bets and try out new quant-based strategies. All this while trying to learn new things like NFTs, DeFi, CBDC and such things. All while trying to ensure that we don’t lose money.

Thank you all for being part of my journey. Wishing you a very Happy New year.



Friday 31 December 2021

Weekend Reading - Best of 2021


Today is the last day of the year 2021, a year that will forever be etched in our minds as the one where the pandemic took its biggest toll on human lives. Every weekend, I share with you five of the best articles I read during the week. Today I bring to you twelve articles from the collection of the year which I think are worth re-reading and re-thinking.

Reading across disciplines is one of the best ways to improve our investment acumen that I know of. At times, while reading we may not be able to understand the value of a particular piece, but it comes back in the future to help connect the dots.

I hope you enjoy the rather long weekend reading for this week.

Wishing you Season's Greetings and a very Happy New Year to you and your family.

1. 2021 - The year of the Stockdale Paradox

The Stockdale Paradox is a concept that author Jim Collins found a perfect example of in James Stockdale, former vice-presidential candidate, who, during the Vietnam War, was held captive as a prisoner of war for over seven years. He was one of the highest-ranking naval officers at the time.

During this horrific period, Stockdale was repeatedly tortured and had no reason to believe he'd make it out alive. Held in the clutches of the grim reality of his hell world, he found a way to stay alive by embracing both the harshness of his situation with a balance of healthy optimism.


Stockdale explained this idea as the following: "You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be."

In the most simplest explanation of this paradox, it's the idea of hoping for the best, but acknowledging and preparing for the worst.



2. How to make decisions - By Barack Obama

I think you should read the whole article and not just the below snippet.


In just a few short weeks on the job, I had already realized that because every tough decision came down to a probability, then certainty was an impossibility — which could leave me encumbered by the sense that I could never get it quite right. So rather than let myself get paralyzed in the quest for a perfect solution, or succumb to the temptation to just go with my gut every time, I created a sound decision-making process — one where I really listened to the experts, followed the facts, considered my goals and weighed all of that against my principles. Then, no matter how things turned out, I would at least know I had done my level best with the information in front of me.


Even in situations where you have to act relatively quickly, as was frequently the case during the financial crisis, it helps to build in time to let your thoughts marinate.

It’s not always clean and straightforward. But as my mother would say to me, “The world is complicated, Bar. That’s why it’s interesting.”



3. The power of negative thinking

We should all spend more time thinking about the prospect of failure and what we might do about it. It is a useful mental habit but it is neither easy nor enjoyable. We humans thrive on optimism. We must be careful, then, when we allow ourselves to stare steadily at the prospect of failure. Stare too long, or with eyes too wide, and we will be so paralysed with anxiety that success, too, becomes impossible. Care is also needed in the steps we take to prevent disaster. Some precautions cause more trouble than they prevent.


But just because it is hard to think productively about the risk of failure does not mean we should give up. One gain is that of contingency planning: if you anticipate possible problems, you have the opportunity to prevent them or to prepare the ideal response.


A second advantage is the possibility of rapid learning. The third advantage of thinking seriously about failure is that we may turn away from projects that are doomed from the outset.

All around us are failures — of business models, of pandemic planning, even of our democratic institutions. It is fanciful to imagine designing slip bases for everything. Still: most things fail, sooner or later. Some fail gracefully, some disgracefully. It is worth giving that some thought.



4. You should not be very rich - for the sake of your children

Growing up in a family where your father’s pretty wealthy is much more complicated than growing up in a family where your father is not wealthy. When your family is not wealthy, you’ve got to really achieve something or you’re not going to get anywhere. You’re on your own.


Whereas my own children, and the children of families like mine, I think have a bit of a disadvantage. As a general rule of thumb, the people running the world are people from blue-collar families who are lower middle class. It’s rarely the case that somebody whose father was a billionaire turns out to be better than his father, becoming a multibillionaire or running the world.



5. Remove "society's soundtrack" from your ears to be successful

By the age 45, Beethoven was completely deaf. He considered suicide, one friend reported, but was held back only by the force of “moral rectitude.” It’s here that Beethoven’s story veers toward legend. Cut off from the world of sound around him, working only with musical structures dancing through his imagination, at times holding a pencil in his mouth against his piano’s soundboard to feel the consonance of his chords, Beethoven produced the best music of his career, culminating in his incomparable Ninth Symphony, a composition so daringly new that it reinvented classical musical altogether.


Beethoven’s diminished hearing limited the influence of “prevailing compositional fashions.” Whereas his earlier work was “pleasantly reminiscent” of his instructor, Josef Haydn, his later work was spectacularly innovative. “Deafness freed Beethoven as a composer because he no longer had society’s soundtrack in his ears.”



6. And maybe, just maybe, interest rates don’t matter as much as we all think

It may come as a shock to investors in the day-and-age of low and even negative interest rates that this growth stock orgy of Nifty Fifty blue-chip stocks in the early-1970s took place in an environment of high and rising interest rates. The 10-year yield was moving higher for much of the Go-Go Years in the 1960s and averaged more than 5% from 1962-1972. And it’s worth noting, inflation was moving ever-higher during this period as well. Interest rates were even higher during the dot-com bubble of the mid-to-late 1990s.


There are so many other factors at play that determine why investors do what they do with their money — demographics, demand, risk appetite, past experiences and a whole host of psychological and market-related dynamics.


Sure, it’s certainly possible investors could freak out because interest rates have been so low for so long.


Just because stocks have done fine when rates have risen in the past doesn’t mean it will happen in the future. But interest rate levels, in and of themselves, aren’t the sole cause of every market movement. They are just one factor among many that impact how people allocate their assets.



7. How to think?

Thinking means concentrating on one thing long enough to develop an idea about it. Not learning other people’s ideas, or memorizing a body of information, however much those may sometimes be useful. Developing your own ideas. In short, thinking for yourself. You simply cannot do that in bursts of 20 seconds at a time, constantly interrupted by Facebook messages or Twitter tweets, or fiddling with your iPod, or watching something on YouTube.


I find for myself that my first thought is never my best thought. My first thought is always someone else’s; it’s always what I’ve already heard about the subject, always the conventional wisdom. It’s only by concentrating, sticking to the question, being patient, letting all the parts of my mind come into play, that I arrive at an original idea. By giving my brain a chance to make associations, draw connections, take me by surprise. And often even that idea doesn’t turn out to be very good. I need time to think about it, too, to make mistakes and recognize them, to make false starts and correct them, to outlast my impulses, to defeat my desire to declare the job done and move on to the next thing.



8. Busy-ness is an excuse for lack of direction

Sometimes we say, “I just don’t have time! I’m so busy!” But that’s not true. We can always make time for important things. The problem isn’t time, it’s something else. “Lack of direction, not lack of time, is the problem. We all have twenty-four hour days.”


If you want to change your life and make progress, you have to embrace uncertainty. You can’t know everything about tomorrow. And that makes a lot of people uncomfortable. But here’s the thing. You have to get comfortable with being uncomfortable.


One of the best things you can do for yourself is to recognize when you’re making excuses. The only way to have a good life is to stay active. Work out. Enjoy your job. Find pleasure in small things. Make yourself useful. That’s how we function as human beings, and that’s what gives us joy.



9. Control your attention instead of controlling your time

Despite the fact that we all have 24 hours a day, we realized that the way we spent those hours resulted in dramatic differences in outcomes. Person A and Person B both experience the same duration of day, but Person A may be much healthier, much wealthier, and much happier at the end of that day than Person B.


With this realization, we figured out how to hack time. How to temporarily cheat the expiration date that we all have. And it can summed up this way: Control your attention instead of controlling your time.


Time follows laws that we have no say over. An hour will be an hour, no matter what. Attention, on the other hand, can be stretched and contracted upon will. We have agency over how we use it, and it gives us a godlike ability to shift our perception of time. An hour may feel like a minute, or it may feel like a day. It all depends on how we use the hour in question.


By using our attention in innovative ways, we learned how to extract incredible value out of preset blocks of time. We used concentration as a tool to power technological progress.



10. Mistakes while managing risk (an old but relevant article by NN Taleb)

Instead of trying to anticipate low-probability, high-impact events, we should reduce our vulnerability to them. Risk management, we believe, should be about lessening the impact of what we don’t understand—not a futile attempt to develop sophisticated techniques and stories that perpetuate our illusions of being able to understand and predict the social and economic environment.


To change the way we think about risk, we must avoid making six mistakes:

1. We think we can manage risk by predicting extreme events.

2. We are convinced that studying the past will help us manage risk.

3. We don’t listen to advice about what we shouldn’t do.

4. We assume that risk can be measured by standard deviation.

5. We don’t appreciate that what’s mathematically equivalent isn’t psychologically so.

6. We are taught that efficiency and maximizing shareholder value don’t tolerate redundancy.


No one should have a piece of the upside without a share of the downside.



11. The art of not selling

“Of our most costly mistakes over the years, almost all have been sell decisions. The mistake, in virtually every instance, has been selling too soon. Reflecting on these mistakes gave rise to this letter, and its title, “The Art of (Not) Selling.”


Taking a step back, our investment philosophy involves concentrating our capital in a small number of what we believe to be growing and competitively advantaged businesses. These kinds of businesses are rare and are only periodically available for purchase at attractive valuations. With that in mind, we do our best to hold on for the long term, so that our capital may compound as the businesses grow.


Holding on means resisting the temptations to sell — and there are many. We tune out politics and macroeconomics. To the surprise of many, neither valuation nor price targets play a role in our sell decisions.


To be clear, there may be times when we believe it is appropriate to sell. In these instances, it is typically because of an adverse change in the business itself.




12. Perspective on life

If you had twenty-five years left to live, how much time would you spend worrying about the daily ups and downs of the stock market?

If you had fifteen years left to live, how much time would you spend trying to buy or sell a specific stock at the perfect price?

If you had five years left to live, how much of it would you spend obsessing over financial news and its unforeseeable impact on your portfolio?

If you had one month left to live, with whom would you spend those final days? What activities would you pursue?

If you had 24 hours to live, what would you want the people who knew you to remember most?

How much time do you think you have left?

Take a guess….

Okay, let’s assume you’ve guessed right. Now what?

What do you want to do today?




Thursday 30 December 2021