[The Weekend Bulletin] #197: Lessons From: World's Best Investor, World's Largest Investor, Darwin; ...
... Diversification - Revisited, Serious Words Of Advice from a Professional Comedian, and more.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Investing Wisdom
Shelby Cullom Davis is regarded as among the world's most successful investors. He turned $50,000 into $900 million over 47 years - a 23% annual growth rate (one of the few investors to have compounded capital at a high rate for an extended period of time). This article draws a number of investing lessons from the book 'The Davis Dynasty' which traces his investment journey.
This article traces the origin and journey of one of the world's largest investor. While presenting a fascinating history that owes its origin to perseverance, the article also explains how such a quality may not be an investor's best friend.
The following two articles on diversification reiterate the third lesson from last week's article on the same topic (reproduced below):
Third, and most important, is that you have to choose of one of two pains: The pain of severe underperformance of the entire portfolio for an extended period (for instance 60:40 would have underperformed a more diversified portfolio over the last two years) or the pain of always having some portion of your portfolio underperforming (like investors who held Gold/Commodities in their portfolios in the pervious decade)
This article discusses the Law of Cosmic Duality in investing. Using some interesting examples from sports and history, it highlights the value of non-correlated returns in diversification.
Reiterating the above point is this article which looks at performance of various equity markets across long time horizons.
Mental Models & Behavioral Biases
This post reiterates the lesson we learnt in #181 from an investing book about lessons from Darwin. It explains why having built a knack for identifying good businesses, an investor would be better off by improving her rejection accuracy. In other words, a great investor is a great rejector.
Personal Development
Famed comedian Jerry Seinfeld emphasises the importance of maintaining a sense of humor throughout life, especially during challenging times in this recent commencement speech. He advices graduating students against chasing 'passion' or finding 'the one great thing to work on'. He also lays out his three real keys to life: 'bust your ass', 'pay attention', and 'fall in love'.
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 120:
Robert Wilson falls under the title of “the greatest investor you’ve never heard of.” He turned $15,000 into $230 million from 1958 to 1986 - a stunning 41% CAGR. Wilson was a long/short investor who wasn’t afraid to use leverage. His is an interesting journey that culminates in to an important lessons for all investors - never let success go to your head. This articlediscusses one of his biggest losses, and also reproduces an interview that he gave towards the end of his career. (Interestingly, the interview also featured John Templeton and Warren Buffett. It's interesting how each of them had a different investment philosophy and yet found success - an important lesson for younger investors. You can watch the whole interview here).
Investing in high quality - wide moat - businesses has become a very popular strategy. This is especially true in a country like India where an entire decade of low growth and low inflation pushed everyone towards high quality consumer businesses (as that was the only segment that grew at a reasonable rate). Today, investing in quality businesses is being touted as the only investment strategy by some. While it is indeed a good investment strategy, it remains misunderstood. As this article explains: high quality businesses can generate high returns under the right conditions, but their best feature is safety.
We seem to be the most focused on exercise compared to history. And rightfully so - the importance of exercise cannot be overstated. However, maybe we have the concept of exercise wrong in our head, claims this article. It quotes the example of Japan - a country with low obesity rates and a leader in longevity - that has not much of a workout culture. Does this mean that exercising has no impact on life span or weight loss? Read on to find out.
Quotable Quotes
“We are all long term investors until your company does something that is best for the long term.”
- Barry Schwartz
"Morita explained the idea of letting go of negative feelings with the following fable: A donkey that is tied to a post by a rope will keep walking around the post in an attempt to free itself, only to become more immobilized and attached to the post. The same thing applies to people with obsessive thinking who become more trapped in their own suffering when they try to escape from their fears and discomfort.”
- Héctor García and Francesc Miralles
[Ikigai]
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That's it for this weekend folks.
Have a wonderful week ahead!!
- Tejas Gutka
[May 18, 2024]