Safal Niveshak

Wit. Wisdom. Value Investing.

Zebras Don’t Get Ulcers, Investors Do

Most of us invest in the first place is to attain financial freedom so that we do not have to worry about money. But most of us become slaves of the short term stock price movements. And that creates stress. And stress is bad, very bad.

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[Notes] Big Mistakes by Michael Batnick

In most fields, studying the patterns of success is a standard way to learn. So when people come to financial markets they try the same approach. All new investors get busy investigating how the wealthy investors made their money in the stock market. They want to know the secret behind the winning strategies. But investing is a world of counterintuitive ways.

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Philip Fisher on Four Dimensions of Investing – Part 2

This is the second part of our “Philip Fisher’s Four Dimensions of Investing” series. I strongly recommend that you read the first part before reading this. If you have already read the first part, it would still help a lot if you could refresh it before moving further with this post.

Fisher is best known as the author of Common Stocks and Uncommon Profits, that has remained in print ever since it was first published in 1958. That’s a proof of timelessness of the book and the lessons it contains.

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Stocks for the Long Run

One of Warren Buffett’s all-time great investments is Coca-Cola, and it just happens to be the stock Berkshire Hathaway has held the longest. There is no other holding that better exemplifies his investing skill, patience, and temperament than this one.

Buffett first started buying shares of Coca-Cola in 1988, and seemingly paid around $2.5 per share (adjusted) for his purchase. In 2019, the company paid a dividend of $1.6 per share, thus taking Buffett’s dividend yield from the stock to 64%!

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Philip Fisher on Four Dimensions of Investing – Part 1

For every value investor in this world, his or her investment philosophy has invariably been shaped by few giants in this field. Warren Buffett and Benjamin Graham are the obvious names. Philip Fisher is probably the next name that appears in every value investor’s list.

Fisher is relatively less known to the general public and was rarely interviewed. Still, he is widely respected and admired in the value investing circles all over the world. Fisher is also known for his scuttlebutt approach, which simply means seeking information from competitors, customers, and suppliers, all of whom have a vested interest in the company. He wasn’t among those who made decisions just by reading annual reports.

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The Curse of Knowledge

“See, when you want to reverse the car to left, you have to turn the steering wheel to the left,” I told my wife while I was trying to teach her reverse parking.

“But when I turn left, the car is going towards right!” she exclaimed.

“No! The car is going towards left. See, the left tail lamp is going left,” I showed her in the side view mirror.

“Yeah but the right headlamp is going towards the right,” she pointed towards the right headlamp which appeared to be moving towards right from driving seat. Of course, it had to. If you are focusing on the front, the nose of the car will seem to go towards the right.

“But why are you focusing on the front head lamp? When you’re reversing your point of reference should be the tail lamp,” I explained.

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“Then why didn’t you explicitly tell me that before?” she asked almost in complete frustration.

“I thought you would…” I started mumbling but before I could complete that sentence, a light bulb went off in my head. Eureka!

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16 Investing Lessons from a Superinvestor the World Forgot

Admission Open: Value Investing Workshops – Offline (Bangalore & Chennai) and Online

1. Offline Workshop (Bangalore and Chennai): The Bangalore session is planned on Sunday, 12th March. Chennai is on Sunday, 19th March. I am accepting only 50 students for each of these sessions, and first 25 can claim an early bird discount. Click here to know more and join the workshop.

2. Online Workshop – Admissions are also open for the March 2023 cohort of my online value investing workshop. The workshop involves 26+ hours of pre-recorded, detailed lectures and Q&A sessions, plus a 3-hour live online Q&A session scheduled on Sunday, 5th March 2023. I am accepting only 50 students in this cohort, and now less than 20 seats remain. Click here to know more and join the workshop.

What do you call an investor who earned 16% per annum on average over a 47 year period – that’s a 1,070-bagger – and is not called Warren Buffett?

What if I told you that this investor…

  • Did not care about corporate earnings
  • Rarely spoke to managements and analysts
  • Did not watch the stock market during the day
  • Never owned a computer, and
  • Did not even go to college

…you would not say anything but just ask me to reveal his name fast, so as to re-confirm whether such a super-investor has ever existed in the investment circles.

Well, before I tell you this man’s name, you must read what Buffett had to say about him…

…He doesn’t worry about whether it it’s January, he doesn’t worry about whether it’s Monday, he doesn’t worry about whether it’s an election year. He simply says, if a business is worth a dollar and I can buy it for 40 cents, something good may happen to me. And he does it over and over and over again. He owns many more stocks than I do — and is far less interested in the underlying nature of the business; I don’t seem to have very much influence on him. That’s one of his strengths; no one has much influence on him.

Now, if you haven’t already read below to find out who I am talking about, let me now disclose the name of this man, whom Buffett termed a Super Investor in his famous essay, The Superinvestors of Graham-And-Doddsville.

The Name is Schloss…Walter Schloss
“Walter who?” you may wonder if you have not read much about the world’s best-ever investors.

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The Risk of Being Out of the Game

In 2014, JPMorgan Asset Management did a study and discovered that the 40 best days accounted for more than the entire S&P 500 return from 1993–2013. In other words, if someone traded only on these specific 40 days, i.e., invested his money in S&P 500 in the morning and sold in the evening then he would have the same returns as someone who stayed invested for 20 years.

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10 Qualities of Great Investors

Admission Open: Value Investing Workshops – Offline (Mumbai) and Online

1. Offline Workshop: Mumbai – After a gap of 2 years, I am back with my live, offline Value Investing workshop. The first session is planned in Mumbai on Sunday, 22nd January 2023. I am accepting only 50 students for this session, and less than 10 seats remain now. Click here to know more and join the Mumbai workshop.

2. Online Workshop – Admissions are also open for the January 2023 cohort of my online value investing workshop. The workshop involves 22+ hours of pre-recorded, detailed lectures and Q&A sessions, plus a 3-hour live online Q&A session scheduled on Sunday, 15th January 2023 (tomorrow). I am accepting 50 students in this cohort, and less than 5 seats remain now. Click here to know more and join the online workshop.

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One of the first lessons I learned from my yoga teacher was that “yoga is not about rapid movements but long pauses. Slow down, calm down, don’t hurry, and trust the process.”

The thing about yoga — or any exercise — is that there isn’t a comfort zone. But if you have a sound process, and practice it diligently, over time it starts to work for you.

The act of investing your money, as I realize, isn’t much different from practicing yoga. A superior process and greatness often go hand in hand in yoga, and also in investing. For serious investors, thus, it’s wise to learn to trust the process that generates winning investment results.

I came across one such time-tested process framework while reading Michael Mauboussin’s “Reflections on the Ten Attributes of Great Investors.” Mauboussin is Head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management, and author of some amazing books like The Success Equation and More Than You Know. He is a highly successful value investor, and thus the process he has laid out in his note is a great help for any serious investor seeking a winning investment process.

Here are my reviews of the ten attributes Mauboussin has laid out in his note.

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Investing’s Few Eternal Truths

Investing is simple, but not easy. Still there are a few eternal rules that, if you can tie them well with your investment process, should make the journey profitable.

The Wizard: Do not arouse the wrath of the great and powerful Oz! I said come back tomorrow!

Dorothy: If you were really Great and Powerful, you’d keep your promises!

The Wizard: [As Toto reveals him behind a curtain] You presume to criticize the Great Oz? You ungrateful creatures! You’re lucky that I’m only holding this till tomorrow, instead of the next twenty years from now!

Dorothy: [Pulling aside the curtain] Who are you?

The Wizard: I am the great and powerful…Wizard…of Oz.

Dorothy: You are? I don’t believe you.

The Wizard: I’m afraid it’s true. There’s no other Wizard except me.

Dorothy: Oh, you’re a very bad man!

The Wizard: Oh, no, my dear, I… I’m a very good man – I’m just a very bad Wizard.

In the noted 1939 American musical comedy-drama fantasy film The Wizard of Oz, one of the lead characters Dorothy, along with her dog Toto, is swept away by a tornado to the Land of Oz. It is ruled by a tyrant in whom people had vested extraordinary powers, but who was later exposed as vulnerable as the spell surrounding Oz is broken.

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