[The Weekend Bulletin] #182: Active Patience, Passive Learnings, Seeking Balance, R.E.S.T., ...
... Differing Returns in Same Stock, Shortfalls of Willpower, Learning to Let Go, and more.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Investing Wisdom
By analysing the returns of various holders (Steve Jobs, Sequoia, Rockefeller, Henry Singleton, Saudi Prince, Carl Icahn, Berkshire Hathaway to name a few) of the same stock, this article explains how investments in the same stock can yield wildly different returns (including for the co-founders). These differences in returns are the result of factors such as personal circumstances, risk tolerance, and investment horizons. This is a good reminder of how personal investing is, and why comparing only returns is a futile exercise.
Veteran investor E A Sundaram (O3 Capital) emphasises the need for balance in investing in a this recent talk. He explains this by walking though his own investment process, outlining the various check and balances that he has built using his more than three decades of investing experience. He also discusses the four criteria he considers important in building a portfolio.
This article discusses the concept of "active patience" in investing. The author argues that active patience is not an inborn ability but a skill that everyone can learn. He outlines three steps using which we can develop active patience. By fully understanding active patience, investors become like art collectors who see their portfolio as a collection of prized assets.
On a related note, the following is an extract from Farnam Street Blog's brain food newsletter:
“The least effective form of patience is passive: –
A person who is passively patient waits for the universe to give them what they think they deserve. Five years from now, they’ll still be waiting. Passive patience violates Newton’s third law, which states, ‘For every action, there is an equal and opposite reaction.’
No action. No result.
The world isn’t indebted to you, and no one is destined to come your way, tap your shoulder, and present you with the golden opportunity you’ve been waiting for. It doesn’t work that way.
The most effective form of patience is active patience.
Active patience implies taking significant steps today to set yourself up for future success. It’s about strategically preparing for what lies ahead—saving more than you spend and investing wisely, developing the necessary skills for future job prospects, choosing kindness over cleverness, and so on.
Here is the key lesson: Active patience puts the world on your side. If you go positive and go first, and you do so consistently, the world does a lot of the heavy lifting for you.”
Mental Models & Behavioral Biases
This article draws a distinction between active and passive learning. Active learning is when you someone tells you what to learn, while passive learning is when you seek to figure things out. Each has its place in life. Unfortunately though, active learning gets a lot of focus while passive does not. The author advocates the importance of passive learning, and provides a two-step framework in which we can foster passive learning.
One of the two steps in the above framework involves inactivity - actively choosing to do nothing and letting your thoughts wander. This short emailer lists some examples of how this random, episodic, silent thinking (REST) has benefited a number of creators.
Personal Development
Looking back at the famous marshmallow experiment, the author of this article draws an interesting insight. He asserts that rather than simply looking at the kids that delayed gratification, there is more value in understanding how they did so. He argues that when we only look at the outcome, we give an undue benefit to willpower. On the other hand, when we look at the process, we understand that using strategic distraction is the real game changer. He explains how these lessons apply to most discomforts that we try to overcome in our lives. Usually people set big goals at the beginning of a new year. Most of these goals rely on willpower more than anything else. If you have also done so, this may be a timely read.
As you think about new goals and activities in the new year, think also about the things that you can let go off. Remember that productivity, efficiency, and focus come from doing less, not more. This post explains the science benhind learning to let go, and provides five simple exercises that can help let go off some weight of the past.
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 #105:
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 on 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.
Rajiv Khanna (of 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.
Quotable Quotes
"Resilience or grit gives us the capacity to treat setbacks as part of the forward journey, much like the way the pain of hard exercise helps us become fitter. Hardship is inevitable; it is how we deal with it that ultimately defines us. M. Scott Peck opens his classic book The Road Less Travelled with the line: “Life is difficult.” It takes discipline and persistence to grow in this world. Flexibility is an important component of resilience. Again we can look to nature for our analogies. The bamboo bends in the wind. It doesn’t break."
- Lawrence Enderson
[Pebbles of Perception]
"Champions do extra - there are no crowds lining the extra mile. On the extra mile, we are on our own: just us and the road, just us and the blank sheet of paper, just us and the challenge we’ve set ourself. It’s the work we do behind closed doors that makes the difference."
- James Kerr
[Legacy]
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That's it for this weekend folks.
Have a wonderful week ahead!!
- Tejas Gutka
[Jan 06, 2024]