Kenneth Andrade on Spotting Great Businesses, Market Cycles, and Playing the Long Game of Investing

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In the 33rd episode of The One Percent Show, I talked with Kenneth Andrade, Founder and CIO of Old Bridge Capital Management and Old Bridge Asset Management. Kenneth has over 32 years of work experience in equity research and funds management, which includes a formidable track record managing some of India’s most successful equity funds.

In this conversation, I explore Kenneth’s remarkable journey as a money manager, his philosophy on investing and life, and the wonderful lessons he has learned along the way on spotting great businesses, understanding market cycles, and playing the long game of investing.

Listen

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What I’m Reading

Howard Marks on the folly of certainty

Mark Twain said –

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

Howard Marks wrote about him and the folly of certainty, in his latest memo published last week. He discussed how markets are inherently uncertain and unpredictable, and emphasized the importance of acknowledging our limitations in predicting the future and the risks of overconfidence.

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Investing Is Hard

Why is investing so hard? It’s because our brains have been trained, over thousands of years, to trust our fear instincts. In a recent podcast, Barry Ritholtz spoke with Brian Portnoy on why humans aren’t built to be good investors.

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Playing the long game

In early 2023, investor and business columnist Eric Markowitz was given a potentially fatal diagnosis. Ahead of brain surgery, he said goodbye to his family and prepared for the worst. What happened next was nothing short of transformative, something that made Eric re-committed to playing the long game in life and work. Eric writes –

In the last year, I’ve realized something. Being long-term is not actually about the future. It’s about the present. It’s about consistency; it’s about discipline. It’s about giving yourself a reason to be in the game over the long-term. So, why do I play the long game? I play it because I can. Every day is a bonus. I’m very privileged to be here. 

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Why doesn’t advice work?

You would relate to this, like I did. Someone has a problem, they ask you for advice, and you give it to them. Your advice is impeccable, pragmatic, human, wise. But they ignore you and suffer the predictable consequences. All they had to do is listen. So why didn’t they?

Imagine this: someone comes to you with a problem and asks for your guidance. You provide thoughtful, practical, and wise advice. Despite your best efforts, they choose to ignore your suggestions and end up dealing with the predictable fallout. The solution was right there if only they had listened. Why didn’t they?

Well, surprisingly, it seems like this happens a lot. So, why doesn’t advice work? This post has some answers.

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In praise of solitude

At the core of every individual lies a quiet place — a pristine area where one’s inner voice has the freedom to emerge. This space broadens in moments of solitude. Crafting anything — be it a poem, a painting, or a theorem — entails discovering the voice within that silence, a voice that has a message for the world.

This post shares some of the most amazing words ever written in praise of solitude, highlighting its vast creative and spiritual benefits, and its fundamental truths.

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What I’m Thinking

When you look at investing as an infinite game, you don’t concentrate on the scorecard to find out who’s winning or how you stack up against others. The only thing that matters is that you are playing the game with fairness and honesty, and because you find joy in playing it.

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Three words in investing that are magic when you say them in this order-

1. I.
2. Don’t
3. Know

Say them loud so you hear them well. Repeat.

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Most things that happen to us – in life, investing, everywhere – are things that we did not foresee and do not control. Given this, it’s important to give “luck” its due credit for that serves as a humbling reminder of the limitations of our foresight and control.

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How we spend our time in the stock market –

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Quotes I am Reflecting On

What creates opportunities is an interesting question. Think of the market as a cauldron of minestrone soup. Occasionally somebody sticks a ladle in and stirs. Mispricings tend to occur much more than when it’s has been at the same level for a long time.

It takes a while before all the vegetables float back to the level that they were at before. Often we do best in turbulent times, especially if we are fortunate enough to be holding cash going in.

– Seth Klarman

We never see the world exactly as it is. We see it as we hope it will be or we fear it might be. And we spend our lives going through a sort of modified stages of grief about that realization. We deny it, and then we argue with it, and we despair over it. But eventually — and this is my belief — we come to see it, not is despairing, but as vitalizing.

– Maria Popova

If the day and the night are such that you greet them with joy, and life emits a fragrance like flowers and sweet-scented herbs, is more elastic, more starry, more immortal- that is your success. All nature is your congratulation, and you have cause momentarily to bless yourself. The greatest gains and values are farthest from being appreciated. We easily come to doubt if they exist. We soon forget them. They are the highest reality. Perhaps the facts most astounding and most real are never communicated by man to man. The true harvest of my daily life is somewhat as intangible and indescribable as the tints of morning or evening. It is a little star-dust caught, a segment of the rainbow which I have clutched.

– Henry David Thoreau, Walden

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That’s all from me for today.

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Thank you for your time and attention.

~ Vishal