Safal Niveshak Stream – December 3, 2016

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.

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

Investing/Stock Market

• (850 words / 3 minutes read) We are fortunate to be living in an era where we have all the teachings of wise investors available to us. As compared to 19th century, it has become much easier and cheaper for small investors to participate in the growth of businesses through stock market. Jason Zweig, in his recent article, reminds us some of the greatest words of investing wisdom that have been spoken in the past century. Zweig writes –
  

  You don’t need to have known these people to be grateful for their wisdom. As the biologist Richard Dawkins pointed out in a lecture in 1996, many of us today know more about the world around us than Aristotle, the greatest mind of his age, did more than 2,300 years ago: “Science is cumulative, and we live later.

• (2200 words / 10 minutes read) When you look at the compounding graph it gives an impression that getting an early entry is the only way to benefit from it. But even if you catch the compounding train late, it can still get you to your destination. Getting In On The 50th Floor.
  

  A prospective Berkshire Hathaway shareholder in 1992 had no way of knowing the specific actions Warren Buffett and Charlie Munger would take to build value over the next quarter century…[In spite of that] The search for the “next Berkshire” is a near obsession for many value investors. We all want to get in on the ground floor of something great and compound wealth at 20 percent over a half century or more. However, for the vast majority of us, that dream is pretty much impossible to achieve and there is a risk that costly mistakes might be made in the process of pursuing it…However, what can be known, and likely has predictive value, is how management views capital allocation, the quality of a company’s culture, and the general capabilities of the managers involved…In 2016, there is no doubt that there are companies one could invest in on the ground floor that will become phenomenal success stories in the decades to come. There is substantial doubt that investors will be able to identify those companies. However, today there are many candidates for investment where the companies are already well under construction and we can get in on a higher floor.

Reading/Thinking

• (825 words / 3 minutes read) David Brooks argues that Daniel Kahneman and Amos Tversky, who published seminal work on decision making and rationality, themselves didn’t follow their own prescription when it came to making big decisions in life. In his article in NY Times, Brooks wrote –
  

  We don’t decide about life; we’re captured by life. In the major spheres, decision-making, when it happens at all, is downstream from curiosity and engagement. If we really want to understand and shape behavior, maybe we should look less at decision-making and more at curiosity. Why are you interested in the things you are interested in? Why are some people zealously seized, manically attentive and compulsively engaged?

• (923 words / 4 minutes read) Cal Newport, author of Deep Work and So Good They Can’t Ignore You, in his recent post, makes a case in favour of quitting social media. He argues…
  

  In a capitalist economy, the market rewards things that are rare and valuable. Social media use is decidedly not rare or valuable. Any 16-year-old with a smartphone can invent a hashtag or repost a viral article. The idea that if you engage in enough of this low-value activity, it will somehow add up to something of high value in your career is the same dubious alchemy that forms the core of most snake oil and flimflam in business.

Business

• (54 minutes watch) Marc Andreessen created Mosaic, the first internet browser, and opened the gate of world wide web (The Internet) to the common man. He later founded the venture capital firm Andreessen-Horowitz. In this fireside chat, he talks about Change, Constraints, and Curiosity.

Click here if you can’t see the video above.

Life/Learning

• (2575 words / 11 minutes read) When we meet someone for the first time, one of the first few questions we ask them is “what do you do?”. This is especially true in India. However, in a country like Australia, the first question strangers ask from each other is “what do you play?”. In different cultures and different countries, people’s identity is associated with different activities. In India a person is known by his profession or work. In Australia, as we just saw, it’s sports. But there is another very important question, irrespective of culture or country, that can open the doors to fascinating and unending conversations. It’s “What are you reading?”. Will Schwalbe, in his recent article in WSJ, argues that reading books remains one of the best ways to engage with the world. He writes –
  

  We can’t interrupt books; we can only interrupt ourselves while reading them…They speak to us, thoughtfully, one at a time. They demand our attention. And they demand that we briefly put aside our own beliefs and prejudices and listen to someone else’s. You can rant against a book, scribble in the margin or even chuck it out the window…The technology of a book is genius: The order of the words is fixed, whether on the page or on the screen, but the speed at which you read them is entirely up to you. Sure, this allows you to skip ahead and jump around. But it also allows you to slow down, savor and ponder…

  …reading isn’t just a respite from the relentlessness of technology. It isn’t just how I reset and recharge. It isn’t just how I escape. It’s how I engage. And reading should spur further engagement.

• (15 minutes watch) In 2005, Steve Jobs delivered his historic commencement speech at the Stanford University. Interestingly, he didn’t talk business or success or even technology. His spoke about death. Death is the greatest truth of life, yet most of us forget about it. Maybe you have already seen this talk multiple time, but here’s a reminder again.
  

  Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure — these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart…

  …This was the closest I’ve been to facing death, and I hope it’s the closest I get for a few more decades. Having lived through it, I can now say this to you with a bit more certainty than when death was a useful but purely intellectual concept: No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away.

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