[The Weekend Bulletin] #187: Multibagger First Principles, Four Principles of Market-Beating Returns, No How-To Advice - Only A Painful Reckoning, ...
... Financial Red-Flags, Margin of Safety - A Billion Dollar Lesson, Joy and Burden of Possessions, and more.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Investing Wisdom
Famed microcap investor and fund manager Ian Cassel recently shared his learnings as an investor on a podcast: Multibagger First Principles. The wide ranging interview covers a few interesting topics like how the world brings you ideas once you figure who you are and what you want, the importance of journaling and reflecting in discovering who you are, why small businesses make for interesting investments, how an investor matures and why s/he shouldn't over-attribute success to any one factor, when to average down, and more.
BIll Smead has managed to outperform the S&P 500 in the last three years despite not owning the 'magnificent 7' tech names. In this short article he lays down the four principles that have helped him achieve this.
Long standing market wisdom suggests that mistakes are committed in bull markets only to be revealed in a bear market. The fast pace of price rises in a bull market, allowing little to no time to analyse investment opportunities, can lead you to drop your guard on your research principles. However, it is usually at such times that one needs extra caution. This article lists some financial red flags that you can quickly look for when time of the essence.
Mental Models & Behavioral Biases
This author has a knack for drawing investing lessons from a diverse range of stories. In his latest, he narrates how Amgen chanced upon a super-successful drug to emphasize the importance of building a margin of safety in investing. He also explains how any business understanding and attribution to factors of success can be shallow over a very long time horizon. A very interesting read indeed.
Personal Development
We all aspire to live a meaningful life. Somewhere along the way, however, we lose a sense of what provides meaning to life. Many of us start looking for meaning in worldly possessions. However, possessions can go from sparking a joy to becoming a burden, claims this article. It is therefore important that we realise this and let go off such burden.
Why is it that we constantly read about productivity, health, well-being etc and yet most of us are never able to achieve any of these things? That's because we are really bad at following advice, claims this article. The author - narrating a story of a known associate - argues that we don't need more how-to advice, we just need a beautiful and painful reckoning, that tipping point when stop looking for advice and start acting instead.
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 110:
Three investors get together to discuss Selling - too soon, and too late (overstaying your welcome). Everyone that has managed a portfolio - personally or professionally - will find this conversation very relatable. They also also further discuss reading for purpose and the importance of journalism.
Quality investors love to quote Charlie Munger on how the return on a stock will mimic the return that the underlying business generates on its own capital. They use this to justify Buy At Any Price investing. Debunking this myth, Jigar Mistry (a very gifted writer) claims that A good business and a good investment are two different things.
This tweet has two important lessons:
You can never research enough before buying - don't wait to tick all the boxes.
You cannot afford to stop researching after buying - don't buy and forget. Maintenance research is as important as the research done before purchase. This thread explains further.
Quotable Quotes
Sharing a series of quotes on social media on the topic of Focus across a couple of weeks. While I will keep sharing them here each week, you can follow the whole thread here.
"The amateur does not know what to do. The master knows what not to do."
- James Clear
"The difference between successful people and really successful people is that really successful people say *no* to almost everything.”
— Warren Buffett
"Concentrate all your thoughts on the work at hand. The sun’s rays do not burn until brought to a focus.”
— Alexander Graham Bell
"Do not many of us who fail to achieve big things fail because we lack concentration, the art of concentrating the mind on the thing to be done at the proper time and to the exclusion of everything else?”
— John D Rockefeller
"The only trouble is that they do it about a great many things and I do it about one. If they took the time in question and applied it in one direction, to one object, they would succeed.”
— Thomas Edison
* * *
That's it for this weekend folks.
Have a wonderful week ahead!!
- Tejas Gutka
[Feb 24, 2024]