[The Weekend Bulletin] #170: A Business of Play, 3 Q's around Moats,...
...Amor Fati and Memento Mori, Six Ingredients of Better Learning, Developing an Edge, and more.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Investing Wisdom
Here's a fantastic business journey: It started in the 1930's, mostly by accident. The current product was developed around the 1950's, and hasn't changed form since 1958!! The product was initially patented, but lost that protection many years back. Despite that, the business was a great international success. However, it witnessed multiple years of losses in the 90's, and was on the verge of bankruptcy. It then went through a turnaround, largely by looking inward rather than outward. Over the years, the business is not just a great turnaround story but amongst the most valuable companies in its category. Physical product, global distribution, digital presence, social media app, crowdsourcing ideas, association with franchises like star wars, batman etc, appeal to customers across age-groups - any consumer metric you name, this brand has mastered it. This is the story of the iconic Lego blocks.
The author of this post argues that the term is moat is misunderstood, and used loosely. He discusses the concept of moat, and outlines three questions that need to be answered when talking about moats. He also emphasises on the importance of identifying the key metrics the measure a moat, as it is direction, rather than the moat itself, that defines future returns.
Mental Models & Behavioral Biases
This short post looks at two important principles from the Stoic Philosophy - Amor Fati and Memento Mori. These seemingly simple principles safeguard us from a number of biases like hubris, negativity, envy, wishful thinking etc.
For a more deeper understanding of these principles, including their origins, read here:
Personal Development
This short ted talk provides a neuroscience backed strategy to enhance you cognitive abilities. The speakers outlines 6 key ingredients that can help you improve your learning as well as retention. You'd have read about most of these six ingredients individually; this talk puts them all together.
The following is a nifty list of abilities that you can seek in order to develop an edge:
1. Raw talent/intelligence - Some people are just naturally better and smarter.
2. Hard work - Some people work harder.
3. Different - Seeing the world differently. Doing something different. Reading different books. Interpreting the same information differently.
4. Process / Discipline / Rules - Creating a process and following it. Working out every day is a great example.
5. Talent Collector - The ability to find/hire/retain the best people AND get the most out of them.
6. Patience - A lack of patience changes the outcome. Can add endurance to this (and 7).
7. Ability to take pain - Are you willing to look like an idiot to get better? How much risk are you willing to take, AND, importantly, can you handle the losses?
8. Temperament - Keeping your head when everyone else is losing theirs.
9. Luck
10. Having the right partner - not only in business but, more importantly, in LIFE. The right partner will 10x your life. The wrong one will hold you back.
11. Energy
12. Curiosity
Source: Shane Parish and Paul Graham
Blast From The Past
Revisiting articles from a past issue for the benefits of refreshing memory and spaced repetition, as well as for a fresh perspective. Below are articles from #94:
Most of us, me included, often look at prices as signals. We think that the prices tell us something, and frequently assert that it can’t go up or down any further. This collection of charts is a reminder that such assertions are far from true. The market doesn’t have to do anything, least of all what you think it should do. The market does what it wants, when it wants to do it.Having a few extreme charts on your wall can serve as a helpful reminder that there is no such thing as “can’t,” “won’t,” or “has to” in markets.
There are two opposing factors in investing - mean reversion and momentum. As the name suggests, mean reversion means that things tend to go back to a normal/average. Momentum, on the other hand, suggests that recent performance can continue further in the future. Both can be true over different time horizons. That's good as far as prices are concerned. However, when it comes to forecasts, momentum (extending the trend) can be a dangerous tool, as this article explains. Investors should be cautious in believing the forecasts of companies that have either done too well or too bad in the recent past.
This fascination conversation titled 'paint outside the lines' with a film-maker, a travel entrepreneur, a venture capitalist, and the producer of an award winning documentary (all of which is the same person) makes for a very interesting listen. A common theme across this conversation is the importance of betting on people over anything else. Contrast this with the thread by Ho Nam shared last week for a contrasting view. The conversation also reminds that sometimes the best perspectives come from someone outside the industry, rather than within.
Quotable Quotes
"The greatest ingredient for success is not your ability to predict the future, that's nearly impossible.
It's your ability to prepare and put yourself in a position to take advantage of whatever happens."
- Mark Randolph
"One version of confidence is: I've got this figured out.
Another version is: I can figure this out.
The first is arrogant and close-minded. The second is humble and open-minded.
Be humble about what you know, but confident about what you can learn."
- James Clear
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That's it for this weekend folks.
Have a wonderful week ahead!!
- Tejas Gutka
[Sep 02, 2023]