While doing my MBA during 2001-03, I was a very energetic guy…like most MBAs usually are.
So whether it was completing my assignments on time, making clean presentations, participating in extra-curricular activities, and spending time studying for the exams…I was full of energy and drive to do something in life…
…something that earns me a good name and money, and that can make my parents proud.
This is usually the dream that a small town boy harbours while working hard to achieve his goals of a good education, and then a good career. In that way, I was no different.
So I was energetic, and also thought that I possessed a reasonable amount of intelligence to achieve whatever I wanted to achieve in life.
It was here that I came across this snippet from a lecture that Warren Buffett gave at the University of Florida School of Business in 1998.
I had no idea about Warren Buffett then, except that he was one of the richest men in the world. And in following my dreams of a nice career with a nice starting salary, I was excited to read something that a ‘rich man’ said.
Before I started to read this piece, I had no clue on how it would change my life. Now, as I look back in hindsight, I am thankful that I came across this early on in my life, and before I started out in my career.
Here is what Buffett spoke when asked about his advice to students…
I would like to talk for just one minute to the students about your future when you leave here. Because you will learn a tremendous amount about investments, you all have the ability to do well; you all have the IQ to do well. You all have the energy and initiative to do well or you wouldn’t be here.
Most of you will succeed in meeting your aspirations. But in determining whether you succeed there is more to it than intellect and energy.
I would like to talk just a second about that. In fact, there was a guy, Pete Kiewit in Omaha (where Buffett lives), who used to say, he looked for three things in hiring people: integrity, intelligence and energy.
He said if the person did not have the first two, the latter two would kill him, because if they don’t have integrity, you want them dumb and lazy.
We want to talk about the first two because we know you have the last two. You are all second-year MBA students, so you have gotten to know your classmates.
Think for a moment that I granted you the right–you can buy 10% of one of your classmate’s earnings for the rest of their lifetime. You can’t pick someone with a rich father; you have to pick someone who is going to do it on his or her own merit. And I gave you an hour to think about it.
Will you give them an IQ test and pick the one with the highest IQ? I doubt it. Will you pick the one with the best grades? The most energetic?
You will start looking for qualitative factors, in addition to (the quantitative) because everyone has enough brains and energy.
You would probably pick the one you responded the best to, the one who has the leadership qualities, the one who is able to get other people to carry out their interests.
That would be the person who is generous, honest and who gave credit to other people for their own ideas. All types of qualities. Whomever you admire the most in the class.
Then I would throw in a hooker. In addition to this person you had to go short one of your classmates.
That is more fun. Who do I want to go short? You wouldn’t pick the person with the lowest IQ, you would think about the person who turned you off, the person who is egotistical, who is greedy, who cuts corners, who is slightly dishonest.
As you look at those qualities on the left and right hand side, there is one interesting thing about them, it is not the ability to throw a football 60 yards, it is not the ability the run the 100 yard dash in 9.3 seconds, it is not being the best looking person in the class, they are all qualities that if you really want to have the ones on the left hand side, you can have them.
They are qualities of behavior, temperament, character that are achievable, they are not forbidden to anybody in this group. And if you look at the qualities on the right hand side the ones that turn you off in other people, there is not a quality there that you have to have.
You can get rid of it. You can get rid of it a lot easier at your age than at my age, because most behaviors are habitual. The chains of habit are too light to be felt until they are too heavy to be broken. There is no question about it.
I see people with these self-destructive behavior patterns at my age or even twenty years younger and they really are entrapped by them.
They go around and do things that turn off other people right and left. They don’t need to be that way but by a certain point they get so they can hardly change it.
But at your age you can have any habits, any patterns of behavior that you wish. It is simply a question of which you decide.
If you did this…Ben Graham looked around at the people he admired and Ben Franklin did this before him.
Ben Graham did this in his low teens and he looked around at the people he admired and he said, “I want to be admired, so why don’t I behave like them?” And he found out that there was nothing impossible about behaving like them.
Similarly he did the same thing on the reverse side in terms of getting rid of those qualities. I would suggest is that if you write those qualities down and think about them a while and make them habitual, you will be the one you want to buy 10% of when you are all through.
And the beauty of it is that you already own 100% of yourself and you are stuck with it. So you might as well be that person, that somebody else.
Amazing advice isn’t it?
I receive a lot of queries from students who read my blog posts, or whom I meet during lectures. They all want to know how to achieve their goals in life.
Since I have not reached a stage where I can count my advice as really worthwhile, I direct them to this piece that I read of Buffett 10 years back.
I have never found a better advice for students. I was lucky to get this when I was young. Most students out there never get it, and that’s why you see a world full of young crooks (and most of them end up in the financial services industry) who practice bad behavior…
…just because they have the intelligence and energy, and just because they have never known of this animal called “integrity”.
What really is “integrity”?
Wikipedia defines integrity as…
…a concept of consistency of actions, values, methods, measures, principles, expectations, and outcomes. In ethics, integrity is regarded as the honesty and truthfulness or accuracy of one’s actions.
One man I’ve known to have a great amount of integrity is Dean Karnazes, whom Time magazine has named as one of the “Top 100 Most Influential People in the World.” He is supposedly one of the fittest men on the planet.
As his website would tell you, Dean has pushed his body and mind to inconceivable limits. Among his many accomplishments, he has run 350 continuous miles, foregoing sleep for three nights. He’s run across Death Valley in 120 degree temperatures, and he’s run a marathon to the South Pole in negative 40 degrees.
On ten different occasions, he’s run a 200-mile relay race solo, racing alongside teams of twelve.
What Dean has effectively done over the years is preach and live a message of eating right and exercising (remember, this is the process which is more important than the outcome, which is running the marathon).
Of whatever number of years I’ve read and known him, I never saw him stray from that lifestyle. And as a result of his consistency, millions of people who follow him are living healthier and with more vitality.
Just imagine the number of people who would have followed Dean’s example if it was only hypocrisy (the opposite of integrity)?
What if a follower came across a video of him promoting a cigarette or alcohol brand…like many so-called celebrities do?
His message would have lost all of its integrity. Thankfully though, this has not been the case and Dean continues to inspire millions of people from his message and example.
Though I still can’t run a couple of kilometers without ambling in short breaks, I started running and cycling more than I’d ever done after reading about Dean’s pursuits!
Integrity in investing
“How can integrity be brought into the subject of investing?” you might wonder.
Unfortunately, most investors I’ve met over the years have never had the opportunity to fully understand what it means to invest with integrity.
This isn’t to say that the majority of investors are hypocrites or bad people. Instead, what it means is that most investors do not invest consistently with how they believe the world of investing works.
As a result, there is a deep disconnect between how people believe sensible investing works and how they actually invest their money.
So whatever people read and like of what Warren Buffett says and what Prof. Sanjay Bakshi suggests are the sensible ways to invest, the idea is lost when it comes to actually putting things into practice.
I’m sure some readers of Prof. Bakshi’s recent interview with Safal Niveshak would have gone ahead and bought the stock of IL&FS Investment Managers, which he had talked about as a good business but not available at the right price then.
This is what he said, “…there is a price at which the stock of this company becomes terribly attractive. And you can work it out.”
I’m sure some readers would have taken serious note of the first part – “there is a price at which the stock of this company becomes terribly attractive” – but failed to take note of the second part – “and you can work it out.”
How can I say this? I can say this because I have seen investors react like this in the past!
“If Prof. Bakshi has talked about this stock, it must be a buy at any price!” must have been the thinking of people who’ve bought that stock after reading about it in the interview.
Some others would have said, “At Rs 26 a share, I won’t lose much money anyways! So let me take a chance and buy it. Who will do the hard work of working out the intrinsic value?”
What is more, these readers would have loved the lessons Prof. Bakshi shared in the interview but would have given in to the laziness that a thought of “hard work” brings in!
That’s what “investing without integrity” is all about!
Why is integrity so important in investing?
Imagine the stress and the lack of peace in having your life’s savings invested in or with someone who you don’t fully believe?
What if that person – whom you don’t fully believe – is you…yourself?
If you are an investor who is suffering, the cause is most likely a breakdown between your core beliefs and your practice of investing money.
So what is the solution?
Simply put integrity back into your investing. It’s not hard to do!
This does not mean that you will not make any mistakes in the future. It simply means that you will make fewer mistakes, and you will get over them very quickly.
What do you say?
That was a good article Vishal…:) The way you talked about buffet’s teaching and then connecting it to the current scenario is just wonderful…:)
Hi Vishal,
Thank you for sharing this. This seems to be the best ever advice I have got not just in investing world but in all aspects of life.
Thank You!
Dear Vishal and Fellow Tribesmen
Good Morning to All of you.
Dean Karnazes, is an inspiration to all the runners around the world,he is also known as the Ultra Marathon Man.There is one more person in india who is the same Rahul Varghese of Running And Living who inspired me the most.Some 6 to 7 years before i could not run even for 50 Mts.
In 1998 i had a near-fatal accident,i was hit by a truck on the highway,when i was wheeled to the hospital,literally my soul was living my body,but somehow i held onto it.The Doctor’s who saw my condition,told my father that you should call all the nearby realtives,as my body getting swollen and they were not able to track the veins.But i knew,it was in me,The grit,The determination,i held on and after three days my body started responding to medicines and slowly i started the path on the recovery.After six months of Bed ridden condition i had my first morsel of food,a Soft bread.I had multiple fractures in my mouth,i had lost around ten teeth and the the pieces of teeth had peirced my interior of mouth at various places,my upper lip was cut which needed a plastic surgery,the doctors initially did not let me see my face in the mirror thinking that i might not be able to handle it.After seeing the face in the mirror after twenty days,i told the doctor jokingly,Hey doc its still not that much bad as i thought so.The doctor laughed at my saying.After six months when i again went to see the doctor,he told me one thing that i still remember,”Son you have a great determination,there is lot of integrity in your soul,never let it die,you may face many problems like this in life,but hold onto to those values”The doctor has become a friend for me. My Left hand,still now has a long rod to support my broken bones,i have disc in my left wrist.I was advised not to even lift a bucket,thinking that my left hand would not able to handle the weight .But the heavy dose of medicines and bad eating habits took a toll on my body for next six to seven years.One day i told myself,i can’t go on these path, i have to be healthy.
At that time i met Rahul Varghese, an IIM Ahemdabad Product who left his job with an MNC in us to come to india and start a club on running which was his passion.Slowly i started running and having body workouts…..slowly and steadily i increased my strides,first 2 Km, then 5 Km,then 10 km and then my dream of competing in Half Marathons 21 Kms.Right now iam physically and mentally much more stronger,my body from being bulky has become athletic.Right now i advise runners in Baroda who would like to run, on diet and other parameters.
Well what is the reason that iam telling my story here,nothing just to tell that these are the same qualities that are needed in our financial independence.Perseverance,Grit,Determination and Integrity as Vishal has pointed out.Its the hard work that we have to put down in the way of learning various paras of investing. We have to embed it in our mind and body.
When we ourselves start doing research on stocks,it will give a great sense of joy,slowly and steadily you will understand the nuances, and one day you will run the marathon of investment style.Nothing is impossible its the mind that makes you body work,you can achieve the most arduous task,let the mind train the body and then see the magnificent things that your body does. Train your mind to see through the financial juggler.There has been a vast difference between Reni George on 2008 and Reni George of 2012,i have let the knowledge around flow into my body and my mind.
Thanks vishal for sharing such a wonderful post,keep you integrity at play continuously and let all the gems of knowledge flow onto us.
Thanks and Regards
Happy Investing
Reni George
//Let the mind train the body and then see the magnificent things that your body does//
What an amazing thought, Reni!
It is because of inspirational comments like these that, even in my case, there has been a vast difference between what I was in 2011 and what I am now. I would like to thank you for sharing your heart-rending and highly inspirational story with us tribesmen.
“Let the mind train the body…” would probably go down as the second best advice I ever got. I truly mean it!
Regards,
Vishal
This is wonderful. Thank you for sharing.
Thanks for sharing Reni..As Vishal pointed out “Let the mind train the body” is really great !!
Awsome Reni.. Its the only word I can say….
Hi Reni, my partner-in-arms… 🙂 (dear fellow tribesmen, this is a private joke between me, Reni and Vishal, so please permit me this liberty at the cost of appearing to be mannerless :P).
It really is eerie we have so much in common. That’s the reason I am replying to your post separately. I too had an accident, again with a truck, while just standing outside near my home when I was in class Xth. Multiple fractures on left leg, shoulder dislocation, bladder rupture and so many other things happened. Fortunately, nothing happened to my face (some people are destined to remain handsome, you see 🙂 . To top it all, there was nobody at home at that time and it was my neighbors who took me to hospital. When may parents arrived shortly, doctors told them that I will not survive the night. I could see my death, in front of me on faces of my parents. In about 8 hours, 16 bottles of blood were given to me. The whole locality people had gathered there and till date my parents don’t know who donated blood that day. When they wheeled me into operation theater, I could see gloom over my parents face. I guess, they were trying to reconcile with the fact they might not see me alive again. Due to multiple fractures in my left leg, they had to put up a rod for traction and put bones back in place. When I was wheeled inside, I asked the doctor, ” Doctor, I have never seen an operation. I want to see my operation how it is done”. Maybe because he thought of it as my last wish, he asked an intern to support my back. I sat down and saw my own bones being drilled, rod put in, pieces set and what not. But I survived. When I was taken out, I explained the whole procedure to my Dad. The doctor told my father, ” I have never seen such a tremendous will power in any one till date in my whole career”. After I survived the night, another issue cropped up; there was little chance of my leg surviving due to more than half of the muscle tissue being torn away. My mother told me that they might have to amputate my leg. I still remember what I told her that day, ” Ask them to kill me, I will not live such a life”. I started moving the ankle of my left leg continuously, left and right, and miracle of miracles, my leg survived too. Now I think of it, it might be: “Let the mind train the body”.
I don’t know what I should call it, after all, what can you expect from a boy of 17-18 years, and that too in the year 1981? But I had never any doubt, or I didnot let it come, that I will not survive or that I will live with my left leg amputated.
After spending more than one year in various hospitals between Ludhiana & Chandigarh, due to one complication or the other and dropping one year, I was back on my feet again. Everybody was expecting me to remain weak throughout and in fact my father asked me to not go for engineering which demands more from the body and go for medical instead. But I was adamant, did my engineering, with honours too, topping my college. Meanwhile, started playing whatever I could, to once again regain my earlier self. Here is where it differs from your case. And that is why your effort is all the more commendable. Making conscious effort to come up AFTER going down needs much more effort and determination. So hats off to you, my friend.
One thing I can now relate is that once you are so close to death & you have been so close to losing it all, you tend to value your life all the more. In fact one of the best compliments which I cherish till date was from a chat friend, an english teacher in some prestigious school of Mumbai, she said, “Sanjeev, I really appreciate the ZING you have for life”. We see so many successful persons around, we automatically make some sort of picture in our mind as if they had all this all their life, without knowing what might they have gone through. Just take the case of Prof. Bakshi. That is what their success all the more worthwhile and commendable, that of maintaining their values, humility and integrity come what may,
The incident changed my life in much more ways. The doctor who let me see my own operation became a close family friend, he ultimately rose to become principal of one of the top medical colleges of Ludhiana. Later on we came on to know that he had just joined the hospital when my accident occurred. But I still owed something to some people, those who selflessly, incognito donated blood that night. After all, today I am, simply because they were.
From that date, I have donated more than 30 times, platelets more than 7 times and am now on 2-3 lists who call me whenever A positive blood is required. Earlier, I started donating blood every six months, but then a rotarian asked me to refrain doing it because it so happened at times that when an emergency rose due to some accident or dengue outbreak etc, I couldn’t donate simply because I would have donated just a month or two ago. Believe me, I am simply amazed at how even now, people resist donating blood, even for their close relatives. And the feeling and respect you get from the kith and kin of people who need blood in an emergency is simply awesome. At time like these, I just thank God for letting me be in a position to help such people.
I started with partnership sentence, and it would be fitting if I end on the same note. Reni, dear, it has been truly inspiring knowing your values and it will indeed be a great Honor and Privilege for anyone to be associated with you.
My Best Wishes.
Sanjeev Bhatia
Hats off to you Bhatia ji…!! I felt like I am reading the story of some great personality…:) It’s so great to know people like you… And thank you very much for Vishal, who provided such a platform..
I really admire your determination, love and great values towards life…:)
Such a great inspiration for me…:)
Thank you very much…:)
We all can vouch for this and I surely can.
It (integrity) should be (apart from intelligence and energy which normally for the self motivated are a given) the sole deciding factor when entrusting anyone with responsibility and authority. In fact all these scams over the last few years have happened either due to lack of it or come to light due to the integrity of a few well meaning individuals / institutions.
Excellent Post. Will be honest, i was tempted to buy the ILFS and have not done so only due to the fact that i had little balance in my account. But Now, I promise you and more importantly myself, that i shall invest all my investments honestly and with integrity.
Hi Vishal, Boy that was an eye opener. I’ve spent a whole hour reading and re-reading this one to let it sink into my head.
Enlightening, I must say. Keep it up!
//”I’m sure some readers of Prof. Bakshi’s recent interview with Safal Niveshak would have gone ahead and bought the stock of IL&FS Investment Managers, which he had talked about as a good business but not available at the right price then.//
U Hit the bulls Eye Vishal….True it came up to my mind.. But my thoughts then stopped it .. Seems it is bakshi bias… thanks vishal for the post…
If you are interested in listening to the full talk given by Warren Buffett to MBA students check this out.
Note Part 1 has 7 lakh views while the last part (9) has 1 lakh views.
This behavior also explains why very few people are interested in value investing. Majority dont like to work hard they want easy money.
Hi Vishal,
A nice post and a very valuable lesson for life, and not just for investing. Along the way Reni’s post and his own experience has made this post truly inspirational to me. Reni, hats off to you 🙂
//”The chains of habit are too light to be felt until they are too heavy to be broken. There is no question about it.”//
There is no doubt that this is truly a wonderful thought. On past several occassion i have been guilty of not sticking to some promises i made to myself, while I would go an extra mile to fulfill those that I made to others. And this post has inspired me to work on this weaknesses. Although, i am feeling the burden of chain, but nevertheless make ana ttempt to turn things around.
I guess everyone was tempted with IL&FS Investment Managers. Even I was but you definitely have made me self reliable Vishal.. I will not touch this or any other stocks until I come up with my own analysis and intrinsic values…
Hi Vishal,
Excellent Post.As you pointed out “the process which is more important than the outcome….. If you are an investor who is suffering, the cause is most likely a breakdown between your core beliefs and your practice of investing money.” I liked this points very much
Thanks for your Good advice which is free but not cheap.
Regards,
Anil Jain Shastri
Vishal – an important one for investors. I feel the book ‘The Honest truth about Dishonesty’ by Dan Ariely talks about this at length. I’ve not read this book, but ‘ve read his previous books, ‘Predictably Irrational’ is a very interesting book.
Its reallty an excellent article touching many attributes required to be successful.
A very important point that you’ve brought out Vishal. Integrity, by itself as a word is oft heard, but the example of Dean Karnazes was very apt & drives home the point about consistency & discipline. One may know what to do, but you still got to do it. So in essence, investing is simple, but not easy. It could become easy if one has integrity. Hope to push myself in that direction…..
And hats off Reni; we have a Yuvraj in our midst.
A truly profound article.
First of all, Vishal, I really and sincerely appreciate the direction you are taking this blog to. We are covering not only the Investment part but so many other things, accessories which are so, so important for a journey called life. At times, I think your values play a much more vital role in shaping up how you live rather than what bank balance you have. And by live, I mean really live, not simply exist.
A lot of Points to Ponder in this post, deserving long hard look. the beauty of people like WB, SB etc is that despite being geniuses in their field, they have the humility and grace to offer the distilled wisdom of their enormous experience and in very simple way.
” The chains of habit are too light to be felt until they are too heavy to be broken. ”
Dean Karnazes example is again awesome. We too have had people like Prakash Padukone who never advertised Cold Drinks or tobacco products, thus forgoing a lucrative career option.
“As a result, there is a deep disconnect between how people believe sensible investing works and how they actually invest their money.”.
This is very close to my heart and in fact, you might have noticed in my comments in jam session or otherwise, that I always say its better to read just 3 books and tune your process rather than reading 30 and acting on none. In short, walk the talk. I come across many people who confess to be an Investor at 9.30 am and become trader at 12.30 if they get Rs.10 appreciation. If you can’t be true to yourself, than to whom can you be expected to be true to…?
I came across a beautiful line recently, and I think I have mentioned it in some comment too, but still would like to repeat here:-
“Life is not about Knowing, its about doing”.
Great article, something to chew on for quite some time.
really best advice for any investor.
Keep doing it. You are truly building an army of value investor.