The Weekend Bulletin (Vol. 1 | Iss. 26)
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Volume 1 | Issue 26 | May 16, 2020
Section 1: Investing Wisdom
There is so much of investing that has not changed for decades, and there is so much that has evolved in such a short period. This 2001 interview of the legendary investor, Parag Parikh, is a window in to the evolution of the investment landscape (in India) and into the mind of a great thought-leader. Read it to find out how asset allocation, and stock/sectoral limits came into existence, how early did Parag Parikh realize the importance of behavioral finance, and how little has changed about macro-economic factors and Government policy response. A journey in to the early days of investment management.
Following up on last week's list of investing rules, here is another one from the great Martin Zweig, author of the book Winning on Wall Street (also known for devising the Put/Call Ratio and the famous quote 'Don't fight the Fed').
This investor letter is a breezy read about the three fundamental frameworks that the investment manager uses to maintain semblance in the current uncertain times. A good framework to adopt in uncertain times and otherwise.
We invest in the hope of a better future (foregoing today’s consumption for consumption in the future). It is for this reason that losses are painful - they set us back a few years. But is there a way that we can avoid losses? Can market timing be helpful? This article has some answers.
Section 2: Mental Models & Behavioral Biases
Two mental models from science that will give you a different perspective with which you can look at current times:
This mental model from Physics called 'Ground State' is the best personal development motivation that you'll need. Its a 2 min read, don't skip it.
This brilliant piece uses the mental model of compounding to explain why the real pandemic will start the day the lockdown ends. Scary but true.
Section 3: Personal Development
Jeff Bezos says, “People who write a lot, also listen a lot. They also change their mind a lot. Not necessarily with new data, but sometimes re-analyzing the same data. They also work hard to disconfirm fundamental biases.” Most great thinkers are also writers. The benefits of writing to clear your thinking have long been known. But the internet takes it to an altogether new form. As David Perell says, "Until now, the internet has connected us with people in our past. But writing online connects you with the people in your future."Writing online not only connects you to interesting people, but also helps you land your next job, or even makes you a millionaire. Can't believe it? Read this article.
Section 4: Trivia
Remember the issue on 'Investing is simple, but not easy'? Well here are some facts to support that argument. In 2016, a Norwegian TV programme pitted some professional stock-pickers against an astrologist, some beauty bloggers and - i kid you not - cows shitting on stock tickers. It goes without saying that the professionals had an upper hand in the competition. So how did they do over the three-month time horizon?
The astrologist did the worst, slightly underperforming the Norwegian stock market over the period.
The pros did manage to beat the index, but basically did as well as the defecating cows!
But the beauty bloggers smashed it, beating cows, pros, astrologer and the index with a 10% return over the period. This despite not knowing any of the companies!!
However, the presenters did a twist towards the end, showing that their own portfolio thumped everyone else with a 24% return. How? Read here to find out.
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Have a safe & secluded weekend!!
- Tejas Gutka.