Safal Niveshak

Wit. Wisdom. Value Investing.

[Transcript] The One Percent Show: Morgan Housel

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Morgan Housel is a partner at Collaborative Fund and a former columnist at The Motley Fool and The Wall Street Journal. He is a BA in Economics from the University of Southern California and has won multiple prestigious awards in the field of business and financial journalism.

Morgan is the author of the amazing book The Psychology of Money that contains 19 short stories exploring the strange ways we think about money and teaches us how to make better sense of one of life’s most important matters. He has spent a large part of his life being a storyteller to help us explore how we as investors deal with risk and how we can think about risk in a more productive way.

The noted author Stephen King wrote this in his autobiography On Writing, and I quote – “Writing is not about making money, getting famous, getting dates, getting laid, or making friends. In the end, it’s about enriching the lives of those who will read your work, and enriching your own life, as well. It’s about getting happy.”

And I can sense that happiness that Morgan must be enjoying while writing all that brilliant stuff that he publishes week after week. And I must thank him for the happiness he gives to millions of his readers to be able to read such simple yet wonderful stuff. So, thank you Morgan for that.

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[Transcript] The One Percent Show: Arnold Van Den Berg

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Arnold Van Den Berg is the CEO and chairman of Century Management Financial Advisors that he founded in 1974 and has been featured among the best investors in the world. Arnold has no formal college education instead his rigorous self study, tremendous dedication and years of industrial experience are the foundation of his extensive knowledge on the markets.

He began in the industry working for several financial services companies, however he quickly found that he did not always agree with leadership and he wanted to be in a business that he loved at a place that he believed in. Wanting to make his own decisions Arnold formed Century Management in 1974. The noted Austrian neurologist, philosopher and author and holocaust survivor Viktor Frankl wrote in his wonderful book Man’s Search For Meaning, “Everything can be taken from a man but one thing the last of the human freedoms to choose one’s attitude in any given set of circumstances to choose one’s own way.”

Arnold as you will learn in today’s discussion is a perfect testimony to this thought. He’s an extraordinary example of how to win a losing hand and how to construct a wonderful life. He’s a great investor but his life and experiences serve as illuminating guideposts way beyond the world of investing and finance.

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[Notes] The 10 Commandments for Business Failure

They say you should never judge a book by its cover. It’s a good rule of thumb about what not to do.

So how do you judge if a book is worth reading or not? I agree, it’s a difficult question to answer but if you find a book, which starts with a foreword from Warren Buffett, there is no question about whether to read it or not. Don Keough’s The 10 Commandments of Business Failure is one such book. This is what Buffett says about the author –

It has been an article of faith for me that I should always try to hang out with people who are better than I. When I am with Don Keough, I can feel myself on the up escalator…He’s an incredible business leader…Don talks such sense and offers such inspiration…he is one of the very few guys I feel I can hand the keys over to.

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[Transcript] The One Percent Show: Manish Chokhani

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Manish Chokhani is one of India’s most respected financial market experts. Manish is a Director at Enam Holdings and a Governing Board Member at Flame University. A qualified Chartered Accountant, Manish was one of the youngest MBAs to have graduated from the London Business School.

When he is not making decisions about where to invest, or even when he is doing that, you may find him singing, reading, painting, travelling, meditating, or at a Vipassana course, practicing the Buddhist meditation technique.

Manish is one of the wisest people I know of, and the kindest. I experienced his kindness when he offered to help me with his advice while I was working on my book The Sketchbook of Wisdom, and then readily agreed to write a foreword for the same, which I will be grateful for the rest of my life.

His insights and advice are the result of a life of critical thinking, reading, curiosity, and humility. Studying his ideas and thoughts over the years are a proof of how great things are accomplished through small, persistent steps.

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A Lazy Marwari’s Guide to Stock Market Investing

Value Investing Workshop: June 2022 Batch

I recently opened admission to the May 2022 cohort of my online Value Investing Workshop. Seats got sold off within a few hours. And so, I have opened admission for the June 2022 cohort, and accepting only 50 students, out of which 15 seats remain. If you are interested to join, click here to register now.

Coming from a Marwari business family, I have grown up on the idea of ‘opportunity costs,’ which is simply the value of the lost opportunity, or the benefit of the thing you could have done instead of what you are doing now.

For a Marwari businessman, opportunity cost is at its most expensive when he misses opportunities. Standing by as something important is happening without him, or not moving funds to where they are most productive, are like wasted opportunities. Most Marwari business houses act like venture capitalists and keep scouting for opportunities to grow and for their heirs to run.

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Think in Market Caps, Not Stock Prices

Consider these stock prices –

  • NTPC – Rs 144 per share
  • Bajaj Auto – Rs 3600 per share

Do these prices tell you something if you were to decide which of these stocks to buy?

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Should You Sell in May and Go Away?

I keep receiving questions from readers about what they should be doing with their investments, and more so when the markets are falling. Here is my attempt to answers a few such questions I have received over the past few days.

You won’t find perfect answers below, but this is just my attempt to help you get over your fears, which may otherwise lead you to act in haste, which can cause some damage to your process of long term wealth creation.

Let’s start right here.

1. Why is the market crashing?
It hasn’t crashed…so far! The BSE-Sensex is down just 11% from its peak one-month ago. And so are the BSE-Smallcap and BSE-Midcap indices. 11% down isn not a crash!

If you think it is, you maybe be suffering from ‘denominator blindness’, which is the tendency to focus on the absolute number than the percentage decline. Or you just seem to have been spoilt by rising markets over the past few years, that a 11% fall seems like a crash.

I still see rampant speculation and short-termism around. Like Warren Buffett said at the recent Berkshire meeting –

My general assumption — there’s no way to prove it — but essentially, people are now behaving somewhat more tribal than they have for a long time. It’s fun to participate in, but it can get very dangerous when people say two plus two is five and the other says two plus two is three, you know, and they’re gonna give you those answers.

I also see companies with extremely poor financials and track record are quoting at market capitalisations and valuations more than much established, profitable, dividend paying companies. So, we are still not on a slippery slope as of now.

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The Five Most Irrelevant Facts of Stock Investing

Look at this. This is a stock price chart. Not from today, given the market’s crash. But just a random stock price chart.

Now look at it another way. This is not just a stock’s price. It is, borrowing from the legendary John Bogle, a “giant distraction to the business of investing.”

Long term investment returns are created by how businesses perform, but most investors make their investment decisions based on where stock prices have come from and where they may be going.

Anyways, now look at the following chart. This is a stock’s price plus four other “irrelevant” facts that drain most investors when they consider their investments.

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The Biggest Danger of Investing in Bad Businesses

Focusing on what can go wrong has long been a mantra of sound investing.

The legendary investor Seth Klarman put it the best in an investor letter –

We are big fans of fear, and in investing it is clearly better to be scared than sorry.

But chances are that even the biggest pessimists among us can have their focus on risk muted by extended periods of generally favourable market conditions.

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