[The Weekend Bulletin] #105: Reflections, Resolutions, and 3 Indian Investors.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Hello, and Happy New Year!!
Each new year brings with it new hopes and aspirations. It also brings along an opportunity to glance back over the shoulders of time and reflect upon the year gone by. In trying to make these reflections, I found six useful questions that make the process easy. I list these questions along with some of my responses in this thread, and invite you to do so too. Simply copy the contents in to a comment and replace my answers with yours. Of course, you can do this privately in your journal or otherwise, but it's more fun when we share. And if you think that six questions do not adequately capture the year gone by, you can check this document for a more detailed reflection. Lastly, in the spirit of reflection, here are 35 ideas (or lessons) from 2021. A quote from the article that is worth keeping on your desk:
"People have this natural urge that if I have spent 100 hours doing something, then I must act. Whereas my view is that act when prices are going to go up or down, not when you have completed your homework. The market is not waiting for you to complete your homework for the prices to go up or down. I would always urge a lot of my analysts, including myself, to delink analysis from decision-making. Because you have spent a hundred hours on something, you don’t need to act.
The key to being a good money manager is to not act, or not link your hard work to your action. Delink the two. Keep working, because the point of conviction and intuition comes when it comes. But at that time, your homework should be complete. That time you shouldn’t be running around doing homework, because that intuition point will happen when it happens. It is all sitting in your brain. But you act when your intuition wakes up. In a way, the market whispers in your ear."
Let's now turn our glance from backwards to forwards. A change of year somehow always seems like a good nudge for a fresh start. While I prefer reflections over resolutions (I was never good at goal setting, but always happy to review), if you prefer otherwise (or both), here is an interesting framework to think about goals as objectives rather than outcomes, along with a few other things (even if you don't like making new year resolutions, this is an interesting framework to think about nonetheless).
Having reflected on the year gone by, and planned for the year ahead, let's turn our attention to learning. This week three well-known Indian investors narrate their investing journeys, in turn providing some valuable insights for us knowledge seekers. All three conversations are keepers for the long term.
Ramesh Damani discusses his investment journey, hits, misses, as well as regrets with Vishal Khandelwal on the One Percent Show. Mr. Damani has interviewed many a stalwarts in his Wizards of Wallstreet show, and he is no less a stalwart than his guests (he is one of the subjects of the book Masterclass with Superinvestors). There are many insights in this one, but one that I loved most was how his father got him interested in to investing.
Vijay Kedia reminisces how he started as a trader, why he became an investor, and how his gut played an important role in making investment decisions. In the process, he doles out some valuable insights for investors as well as raises caution for newbies. (This interview is in Hindi, although it has english subtitles for those not well-versed with the language.)
Rajiv Khanna (of the Dolly Khanna fame) was an entrepreneur and did not start investing until the age of 50. His late start however, did not stop him from converting ‘6 to 2000’ in nearly two decades (a CAGR of ~34%). This is a rare interview of a usually media-shy investor, and an equally interesting story.
I hope you noticed the difference in each of these investor's paths and their styles. Yet, each of them is successful in their own right (something I also talk about in the reflections thread mentioned at the beginning of the post).
I am sure all of the above will take up most of your weekend. Therefore, I have curtailed the other sections. I leave you with some quotes and an interesting passage:
"There are more things … likely to frighten us than there are to crush us; we suffer more often in imagination than in reality."
- Seneca (Letters from a Stoic)
"In the short term, you are as good as your intensity. In the long term, you are only as good as your consistency."
Financial manias can be thought of as a tragedy like Hamlet or Macbeth, with sharply defined characters, a familiar narrative arc, and well-rehearsed lines. Four dramatis personae control the narrative: the talented yet unscrupulous promoters of schemes; the gullible public who buys into them; the press that breathlessly fans the excitement; and last, the politicians who simultaneously thrust their hands into the till and avert their eyes from the flaming pyre of corruption.
The promoters follow a classical Shakespearean tragic path and are consequently the most fascinating of the actors. Most begin as brilliant, hardworking visionaries who intuit before others the riches that a new technology will bestow upon society. In the process of bringing their visions to fruition, they grow rich and powerful and, in a capitalist society that judges men by their wealth, become their nation’s lions. When the speculation runs its course and bursts, they wind up disgraced and bankrupt and usually, but not always, narrowly escape the jailer.
The public proves easy pickings for the blandishments of the heroic, charismatic promoters. Competent investing requires a rare combination of mathematical ability, technological expertise, and, most critically, a working knowledge of economic history. Alas, people greatly prefer stories to data and facts; when faced with such a daunting task, humans default into narrative mode, and perhaps the most pleasing story of all is one that involves the effortless wealth to be had from buying into a new technology.
The press falls prey to the promoters in the same way as the public. Few things corrode journalistic excellence as the ease of writing about the revolutionary ventures of brilliant businessmen, who with alarming frequency grace magazine covers, first as heroes, then as accused felons.
Finally, financial manias sweep into their ambit politicians, whose reputations and popularity are enhanced by the economic prosperity that temporarily results from speculative excess, and who not infrequently get caught raiding the cookie jar.
- From the book The Delusions Of Crowds by William J. Bernstein (h/t to Joe Koster for sharing this)
Before we go, thank you to everyone who shared their thoughts to the questions raised in #103. For the time being, it is status quo - the newsletter will reach you on Saturday mornings (Indian time) and Section 5 also survives (as you can see above)
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That's it for this weekend folks.
Have a wonderful week ahead!!
- Tejas Gutka
[Jan 08, 2021]