[The Weekend Bulletin] #91: Tom Gayner, Arnold Van Den Berg, Munger, Shane Parish (Farnam Street),..
...Beating Distraction, Opening Up, Forgiveness, and more.
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Before we get to our usual reading, a quick deliberation based on what Shane Parish of Farnam Street shared recently:
Sounds intuitive, doesn't it. We've all had a similar experience of buying the cheaper alternative only to regret and over-spend later.
How does this relate to our portfolios? I can think of two ways:
Going down the quality curve: selling the expensive leader and buying the third, fourth, or fifth player due to relative valuations,
Growth vs Value: not buying a good quality business because the near term valuations are expensive.
Are there same lessons to be learnt in both the above cases as with buying a cheap mouse in 1990s? Or does this not apply to investing? What do you think? (hit reply on email, or leave a comment on browser)
Section 1: Investing Wisdom
Two great interviews that you should consume over anything else this weekend (IMHO):
"Arnold Van Den Berg on Five Decades of Investing and Life Lessons" by MOI Global & William Green: An extra-ordinary life story of AVDB, from having to escape to a foster home where he almost died, to his parents being taken to Auschwitz where they were the only people out of 39 family members to survive, to being beaten up and dealing with depression, to not making enough money, to being a successful investor. This is one topsy-turvy story of sheer resistance and a strong mental framework. It is also unlike any other investor story that you would have read. You can also listen to it here:
[h/t to Sean Delaney for sharing this. John, if you are reading this, thank you so much for publishing this 🙏🏼. I really hope you'll consider opening up subscription to MOI soon - the true value of knowledge is in sharing it widely.]
30 Years of Investing as a Family with Tom Gayner, Co-CEO of Markel Corporation on the Compounders podcast: Tom is a well known figure in the investing industry, and has been with Markel for over 30 years. His thoughts on investing are very insightful (his annual letters and his talk at Google are very good resources), and so is this conversation that ranges from discussing compounders, culture, long term, and the benefits of investing like a grandmother, among other things.
Section 2: Mental Models & Behavioral Biases
Charlie Munger's Psychology of Human Misjudgement is amongst the top speeches ever. A compilation of a number of speeches, it is one of the best materials to understand the various behavioural biases that we can fall victim to. This is the type of material that should be part of a pile to be re-read frequently. Making this task easy is this brief breakdown of the 25 tendencies covered in the speech.
Section 3: Personal Development
We often look at relations as one way street - to give or to take. However, like most things in life, relationships require a fine balance. Opening up about his life, Shane Parish explains that being a good friend requires one not just to be there for others, but also to let others be there for you.
The importance of focus and the perils of distraction have never mattered as much as they do today. Every minute a ping and ding of notification is waiting to grab your attention. On the other hand, as work has transcended from physical to mental, there is an increasingly higher return on the ability to focus. So how does one tilt the scale from distraction towards focus? This segment from a conversation of Nir Eyal with Shane Parish of Farnam Street provides some answer. Nir suggests that the triggers to distraction are more internal than external. He therefore proposes that we look within with curiosity rather than contempt to understand what triggers the urge. He also suggests that rather than denying these urges, we should simply delay them.
Section 4: 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 the nineteenth issue of TWB:
We know very well that market movements are driven by greed and fear. The grips of these sentiments are so strong that no contrarian advise is paid heed to. For instance, we all know that the best time to buy is when there is a bloodbath on the streets. However most investors are unable to buy during panics - for if they did, the prices wouldn't sustain so low. How is it that we cant rationalise ourselves in to buying during bear markets? This article by James Montier of GMO provides a good explanation of FEAR AND THE PSYCHOLOGY OF BEAR MARKETS.
Amidst the gloom spread by the virus, accentuated by the lockdown and the sharp fall in share markets, here is a dated newspaper column reminding us of the importance the small, beautiful things in our lives. A much needed happy read.
Section 5: Readworthy Passage
Starting this weekend, let's read together a random, but read-worthy, passage from a randomly picked book.
What I began to understand is that the greatest investors are intellectual mavericks. They’re not afraid to question and defy conventional wisdom. They profit from the misperceptions and mistakes of people who think less rationally, rigorously, and objectively. In fact, one of the best reasons to study the investors spotlighted in this book is that they can teach us not only how to become rich, but how to improve the way we think and reach decisions.
The rewards for investing intelligently are so extravagant that the business attracts many brilliant minds. But there can also be a devastating price to pay for being wrong, which is rarely the case for professors, politicians, and pundits. The stakes involved may explain why the best investors tend to be open-minded pragmatists who search relentlessly for ways to improve their thinking.
This mindset is embodied by Buffett’s frighteningly clever partner, Charlie Munger, who once remarked, “I observe what works and what doesn’t and why.” Munger, who is one of the central figures in this book, has roamed far and wide in his quest for better ways to think, borrowing analytical tools from disciplines as diverse as mathematics, biology, and behavioral psychology. His role models include Charles Darwin, Albert Einstein, Benjamin Franklin, and a nineteenth-century algebraist named Carl Gustav Jacobi. “I learned a lot from a lot of dead people,” Munger told me. “I always realized that there were a lot of dead people I ought to get to know.”
I’ve come to think of the best investors as an idiosyncratic breed of practical philosophers. They aren’t trying to solve those abstruse puzzles that mesmerize many real philosophers, such as “Does this chair exist?” Rather, they are seekers of what the economist John Maynard Keynes called “worldly wisdom,” which they deploy to attack more pressing problems, such as “How can I make smart decisions about the future if the future is unknowable?” They look for advantages wherever they can and them: economic history, neuroscience, literature, Stoicism, Buddhism, sports, the science of habit formation, meditation, or anything else that can help. Their unconstrained willingness to explore “what works” makes them powerful role models to study in our own pursuit of success, not only in markets but in every area of life.
Another way to think about the most skillful investors is as consummate game players. It’s no coincidence that many top-notch money managers play cards for pleasure and profit.
- From the Introduction of RICHER, WISER, HAPPIER by William Green.
Quotable Quote
“Our performance doesn’t come from what we buy or sell. It comes from what we hold. So the main activity is holding, not buying and selling. I’ve always wondered if it wouldn’t enhance an organization to say, ‘We only trade on Thursdays.’ And the other four days of the week, all you can do is sit and think.”
- Howard Marks
Lastly, before signing off, 🙏🏼 Michchhāmi Dukkaḍaṃ 🙏🏼.
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That's it for this weekend folks.
Have a wonderful week ahead!!
- Tejas Gutka
[Sep 11, 2021]
Hey Tejas! Kudos for a great newsletter as ever.
AVDB is a super man. I came across him first in Richer, Wiser, Happier and have idolised him ever since. His greatness is beyond the narrow confines of investing world. I would request you to also listen to his talk to Bill Brewster in the Business Brew Podcast. In it, Arnold has opened up his soul for you and me.
Also, your new section on Readworthy Passage is a magnificent addition to an already magnificent stuff. You never fail to care more for your readers.
Respect. 🙏🏽