Blog on Value Investing | Safal Niveshak

My Interview with Jason Zweig

Note: This interview was originally published in the December 2016 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.

“I wish I could talk to this guy,” I told my wife when I read Ben Graham’s The Intelligent Investor first time sometime in 2005.

“But he is dead, right?” she said.

“Oh, not Graham,” I exclaimed, “But Jason Zweig who has edited this version of Graham’s book.”

“I am sure you would one day,” she said with an air of confidence. But I junked her thoughts saying, “Why would he even want to talk to me?”

Well, I had this discussion in mind when I wrote to Mr. Zweig in mid-October last year to request him for an interview for our Value Investing Almanack newsletter. I knew it was a shot in the dark, something I had not done for a long-long time after missing a few such shots in the dark on stocks I lost money owning.

But this shot worked, and worked well for me. Not only did Mr. Zweig agree immediately for the interview, he also made me comfortable by asking me to address him as, well, Jason. 🙂

Safal Niveshak Stream – February 4, 2017

Note to Readers: In Stream, we suggest worthwhile reading material on a variety of topics, not all of which are directly related to investing. Some of the articles require you to be paid subscriber of those sites. However, it is often possible to read such articles by going to Google News and searching for the article’s title.

Some nice stuff we are reading, watching, and observing at the start of this weekend…

Life/Learning

HBO documentary “Becoming Warren Buffett”…is a documentary about the world’s most famous investor. It was made with the cooperation of Buffett and his family, deals with Buffett the businessman and investor, but it’s Buffett the man and his complicated, and often difficult, relationships with the people he loved most that are the film’s real subject.

…what makes “Becoming Warren Buffett” far more interesting than a simple hagiography is the exploration of Buffett’s personal life, and, in particular, his relationship with his first wife, Susan, who died in 2004. Personal relationships were not something that Buffett navigated naturally. At one point in the movie, he says, “I don’t have a mind that relates to the physical universe very well,” and the same seems to have been true of the emotional universe. Buffett, by his own description, was socially awkward as a kid (he attributes much of his later success to taking a Dale Carnegie public-speaking course as a young man), and the film is a portrait of a person for whom financial questions “are easy,” as Buffett says. “It’s the human problems that are the tough ones.”
Life is rife with risks. Misperceiving and underestimating these risks can lead to vital mistakes. Therefore, to make well-informed decisions, we need to become comfortable with uncertainty.

The world is complex, and uncertainty is guaranteed. However, multiple factors can make things seem more certain than they actually are. We need to identify and fight against these false markers, even when it makes us uncomfortable.

…Our experience teaches us how to live with the uncertainties of frequently occurring events such as daily variations in the weather or the stock market. But we get anxious about uncertainties when the events are rare and the stakes are high: That’s why most of us panic in the face of a medical mystery, environmental disaster, financial crisis, or a presidential election. It’s also why we prefer leaders and authority figures who pretend to know exactly what to do all the time instead of acknowledging ambiguity.

The Big Budget Challenge: Are You Up for It?

In Fooled by Randomness, Nassim Taleb wrote that “news makes idiots of us because it gives us confidence, not insight.” Like a PhD in macroeconomic theory. Today is one such day in India, when after the Union Budget is announced, a lot of us will feel like PhDs in macroeconomic theory.

After all, media (television, newspapers, radio) and social media are all already filled with updates and “expert” comments on the Budget.

My wife has already prepared her questions to be asked after the Budget is announced – “What got expensive and what got cheaper? What can I shop more for?”

But I am not answering anything of it this time. Why? Because I am taking up this challenge of avoiding everything related to Budget for the next three days i.e., till the noise dies down.

Though I don’t watch and analyze much of Budget every year, and I don’t read much of news, as a ‘test’ of my ability to avoid all kinds of noise and especially such a loud noise like Budget’s that will surely hit me from all sides, I am going on a three-day diet of consciously seeking news related to what the FM would be announcing today (and the Budget won’t matter after three days anyways).

Are you up for it too?

You see, a Budget anyways won’t make any difference to your life. If you are already a spendthrift, you will continue to spend a lot even if things got cheaper or taxes are lowered. And if you are already frugal, you will continue to spend within your limits even if things get expensive or they don’t touch the taxes a bit. So how would this Budget really impact your life? Why give it such a big shelf space in your brain’s attic? Why waste precious time amidst noise?

By the way, if you are worried that by avoiding all news for the next three days, you may miss an opportunity if one of the stocks you own or are looking to own falls or rises due to Budget’s impact, don’t be. A 5-10% rise or fall in stock prices won’t make a difference to your decisions anyways. And if prices rise or fall even more, I am sure you will somehow come to know about it. 🙂

So are you up for the challenge? Let me know in the Comments section of this post if you are, and also let me know if you aren’t and why.

I’m asking you to take up this challenge as a test, but you have a choice to dump it.

Safal Niveshak Stream – January 28, 2017

Some nice stuff we are reading, watching, and observing at the start of this weekend…

Life/Learning

Marcus Aurelius on how to motivate yourself to get out of bed in the morning and go to work…

At dawn, when you have trouble getting out of bed, tell yourself: “I have to go to work — as a human being. What do I have to complain of, if I’m going to do what I was born for — the things I was brought into the world to do? Or is this what I was created for? To huddle under the blankets and stay warm?”
One blogger who never fails to inspire me is Leo Babauta of Zen Habits. I have been reading him for the past seven years, and have also found mental stimulation in most of what he has written. Like this post that Leo wrote on what he has learned in 10 years of Zen Habits…

It’s been a decade filled with learning for me … too many things to put into one post. But as I’ve been reflecting on it all, I have a dozen or so notes I’d like to share with you.

Some of the things I’ve learned, starting with personal lessons and ending with lessons about my business:

Focus on intentions rather than goals. As you might know, I experimented with giving up goals after being very focused on goals for years. It was liberating, and it turns out, you don’t just do nothing if you don’t have a goal. You get up and focus on what you care about. Read more here. Instead, I’ve found it useful to focus less on the destination (goal) and instead focus on what your intention for each activity is. If you’re going to write something … instead of worrying about what the book will be like when you’re done, focus on why you want to write in the first place. If you are doing something out of love or to help others, for example, then you are freed from it needing to turn out a certain way (a goal) and instead can let it turn out however it turns out. I’ve found this way of working and living to be freeing and less prone to anxiety or procrastination.

Women and Investing: A Conversation With My Wife

I conducted my Value Investing Workshop in Mumbai on Sunday, and it was one of the biggest gatherings I’ve ever had in this city so far. Thanks to all who attended the same, and especially to those who flew in from Goa, Delhi, and Vadodara.

Safal Niveshak's Mumbai Value Investing Workshop - Jan 2017

As I shared the photo of tribe members who attended the workshop, my friend on Twitter, Yamini Sood asked, “I wonder where are all the women?”

@safalniveshak I wonder where are all the women??? Had a similar group pic in Behav Fin workshop I attended last yr @ Flames

— Yamini Sood (@Yaminintweet) January 22, 2017

I have always congratulated the few women who attend my workshops, but never took this question more seriously – “Where are all the women when it comes to learning how to invest their money in the stock market, and also to take control of their financial lives?”

So, I posed this question to my wife – “What do you think could be the reason more women are not learning to invest well, which I indirectly understand as the lack of inclination on their part to look at the stock market as a way to invest their savings and to take control of their financial lives?”

Safal Niveshak Stream – January 21, 2017

Some nice stuff we are reading, watching, and observing at the start of this weekend…

Life/Learning

The American chess player and martial arts champion Josh Waitzkin’s The Art of Learning is one of the best books I have read on, well, the art of learning and the entire process of going about doing it. This book reveals Waitzkin’s unique systems of thematic learning, idea generation, building resilience, and mastering the art of performance psychology. Here is one of the many passages from the book that have inspired me…

If I have learned anything over my first twenty-nine years, it is that we cannot calculate our important contests, adventures, and great loves to the end. The only thing we can really count on is getting surprised. No matter how much preparation we do, in the real tests of our lives, we’ll be in unfamiliar terrain. Conditions might not be calm or reasonable. It may feel as though the whole world is stacked against us. This is when we have to perform better than we ever conceived of performing. I believe the key is to have prepared in a manner that allows for inspiration, to have laid the foundation for us to create under the wildest pressures we ever imagined.
It’s understandable that we respond to the ratcheting demands of modern life by trying to make ourselves more efficient by managing our time better. But what if all this efficiency just makes things worse?

Given that the average lifespan consists of only about 4,000 weeks, a certain amount of anxiety about using them well is presumably inevitable: we’ve been granted the mental capacities to make infinitely ambitious plans, yet almost no time at all to put them into practice. The problem of how to manage time, accordingly, goes back at least to the first century AD, when the Roman philosopher Seneca wrote On The Shortness of Life. “This space that has been granted to us rushes by so speedily, and so swiftly that all save a very few find life at an end just when they are getting ready to live,” he said, chiding his fellow citizens for wasting their days on pointless busyness, and “baking their bodies in the sun”.

28 Big Ideas on Investing, Business, Life, Behaviour, and Thinking (Special E-Book)

The world around us is changing pretty fast. Modern computers are becoming cheaper, faster and more intelligent than ever, which means they are ready to replace a large part of human workforce.

The day is not far when your work and skills will be threatened by artificial intelligence. To stay relevant, you need to ensure that you remain valuable to the society in a way which can’t be substituted by a robot.

And your only chance to remain valuable is by being a constant learner…a learning machine, as Charlie Munger says. In fact, he has been saying this for years –

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.

The question is where do you start? There is so much to learn all around, and so little time.

Start with our latest special e-book – 28 Big Ideas on Investing, Business, Life, Behaviour, and Thinking.

Anything You Want by Derek Sivers

Derek Sivers was a full-time musician in 1998 making a comfortable living. One day he decided to sell his music CDs online and found that there was no way for a small time musician to sell online. So he learnt to program and built a website to sell his CDs. Very soon his friends started requesting him to list their CDs on the website. That’s how CD Baby was born and 10 years later it was doing $100 million in sales. In 2008 Sivers sold CDBaby.com and gave away the proceeds ($22 million) to a charitable trust.

Sivers never wanted to start a business and when he was running CD Baby, he intentionally wanted to restrict the growth so that he could run it the way he wanted. Ironically, those self-imposed constraints became the trigger for CD Baby’s growth.

Safal Niveshak Stream – January 14, 2017

Some nice stuff we are reading, watching, and observing at the start of this weekend…

Life/Learning

At times it’s scary to think how time is flying. And then there are posts like these that tell you that you may not learn some of the most important lessons till it’s too late in life, like these three…

1. Time passes much more quickly than you realize.

2. If you don’t take care of your body early then it won’t take care of you later. Your world becomes smaller each day as you lose mobility, continence and sight.

3. People are far more important than any other thing in your life. No hobby, interest, book, work is going to be as important to you as the people you spend time with as you get older.
Does anyone know anything any more? The ease with which one can look up facts on a phone at any time is one of the wonders of the modern age. But are we becoming too reliant on it? A new study indicates, at least, that there might be a snowball effect to such reliance. The more we depend on Google for information recall, it suggests, the more we will do so in the future. In short, Google may be rewiring our minds, and the debate we are now having about the effect of constant internet access on memory and creativity has precedents thousands of years old.

Value Investor Interview: Kuntal Shah

Note: This interview was originally published in the November 2016 issue of our premium newsletter – Value Investing Almanack (VIA). To read more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.

Kuntal Shah is the founder of Oaklane Capital Management LLP and has an opportunistic inclination towards a value-oriented and risk-controlled approach to investments. He has been an extremely successful investor over the past two decades and his success has come from exploiting the inefficiencies inherent in the markets.

Kuntal has an in-depth understanding of value investing with a focus on risk identification and mitigation, emerging trends, and opportunities in key growth sectors in India, taxation and accounting. He also loves to teach on these subjects and in the past has lectured at UTI Institute of Capital Markets, IIM (Ahmedabad), IIT (Mumbai), Symbiosis, FLAME and Chartered Accountants Institute. Kuntal is an Electronics Engineer from Pune University.

Safal Niveshak (SN): Could you tell us a little about your background, and how you got interested in value investing?

Kuntal Shah (KS): I was brought up in a middle-class family in Mumbai. I am an engineer by qualification. Early life was a constant struggle to make ends meet for our family of five siblings given our father’s limited earnings. I was lucky to be brought up in an environment where there was no compromise on education and was fortunate to be inculcated with middle class working ethos, frugality and conservatism of living within one’s means without recourse to borrowing to prepone consumption.