How to Get Lucky

It isn’t enough just to be good. You’ve got to be lucky, too. This is the central premise of Max Gunther’s book “How to get lucky”. I first came across this author when reading “The Zurich Axioms“, a set of investing rules followed by Swiss Bankers to manage risk and reward. It starts with this comforting idea that we fall short of our goals largely because of a lack of luck. That we deny the role of luck when successful only speaks to our susceptibility to survivorship bias. And yet, according to Max, luck, in gambling, career, love, friendships and even

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Learning to invest vs Investing to learn

Learning to Drive You’re on a fairly empty side-street, your cousin, an experienced driver next to you, in the passenger seat. It is her 8-year-old Fiat Punto, but the make or model doesn’t matter to you, just that it’s a functioning car. You don’t know if you will enjoy driving, but you want to be able to. You don’t know if your cousin is the “best” driver around, but you know she’s been driving for a few years and you trust her. She instructs you step-by-step to first push the brake, turn the key in the ignition, press down on

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Investing and Life, Balance Sheets matter over Income Statements

How do you follow your investments? If you’re like a lot of people, you keenly await quarterly earnings announcements to track projected versus actual growth in Sales, EBITDA, Net Profit, EPS (Earnings per Share). Positive surprises mean high fives for the minor bump up in stock price. Negative surprises are explained with a range of reasons including “delayed project approval”, “rural distress”, “rising raw material prices” and so on. If the reason for the miss makes sense i.e. they seem significant enough that the company couldn’t have done much, you shrug and move on. The problem with Salient-Recency We use a

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12 Axioms of Risk Reward followed by generations of Swiss Bankers

How is it that Switzerland, a tiny country, poor in natural resources and arable land, has one of the highest per capita incomes and standards of living in the world? This is the enticing premise with which Max Gunther opens his book The Zurich Axioms: The rules of risk and reward used by generations of Swiss bankers “The Swiss did not become the world’s bankers by sitting in dark rooms chewing their fingernails. They did it by facing risk head-on and figuring out how to manage it.” And therefore, the author says, there is a lot to learn about how

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The power of compounding and how it applies to a better life

“What if you didn’t define wealth by money, success or satisfaction, but simply by the number of great people in your life?” A question put forth by Peter Attia, M.D. in his podcast “How to live a longer, higher quality life” on the excellent investment blog “The Investor’s field guide” by Patrick O’Shaughnessy. The conversation goes on to link the simple yet powerful investing concept of compounding with living a better quality of life. Read on for the highlights of a wide-ranging conversation. So you want to live a long life? “Never try to solve a complicated problem without explicitly stating your objective, your

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10 insights from HBO’s 2017 ‘Becoming Warren Buffett’ we hadn’t heard before

HBO released a documentary ‘Becoming Warren Buffett’, on the legendary investor earlier this year. It’s an almost intimate portrait of the most-quoted investor in the world. Worth the 1h 28mins. And summarized below, some of the more insightful  (and less often heard) nuggets providing insight into the man, and not just the investor. 10. On learning from the past: Decorated his office with framed old newspapers from the local library of days of massive market crashes. He calls it “instructive art” that reminds him and everyone in the building that “in the markets, anything can happen” 9. On the circle of competence: “Investing

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Deep Work: Rules for focussed success in a distracted world

Three quick questions: How many times do you think you checked your phone today? If you’re reading this on a laptop or PC, how many browser tabs do you currently have open or have had open in the last hour? How many work emails did you receive and send today? What do the answers to these questions have anything to do with anything? Plenty, it turns out, according to Cal Newport’s book Deep Work. Cal is an Associate Professor of Computer Science at Georgetown University with a Phd from MIT. His focus has been on understanding  how to perform productive, valuable

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Everybody’s doing it

In one of his memos at Oaktree Capital, Howard Marks refers to the market as a pendulum swinging between greed and fear. That at any given time, the pendulum i.e. the general consensus tends to be either too greedy or too fearful, and it is when the pendulum is at its fearful extreme that the value investor comes into her own to make intelligent buys. This will sound familiar to most investors. “Mimicking the herd invites regression to the mean” – Charlie Munger “Be fearful when others are greedy and greedy when others are fearful” – Warren Buffett The point of this post is

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