Wisest Words Ever Spoken About Investing

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• 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 reminds us of some of the wisest 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.

• 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 –
  

  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.

• Is Robinhood Good For Investors? Michael Batnick answers here –
  

  “Is Robinhood good for investors?” That’s like asking, “Are ETFs good for investors?” Which investors? Which ETFs? What does “good mean?” It’s a question so broad that you can’t possibly find a brush wide enough to paint it with.

  Robinhood is neither good nor bad. Some aspects of it are great, others not so much. Some people will take it too far. They’ll learn the wrong lessons. They’ll over trade. But is any of this unique to Robinhood? A small portion of investors has been blowing themselves up since the beginning of time. They did this before Robinhood was here, and they’ll do it long after it’s gone. Few things are either good or bad.

• I shared an article on Saturday, written by Andy Mukherjee on his giving up hope on India of catching up with China, ever. Here comes a rebuttal from Anantha Nageswaran on why it may be the wrong time to give up hope on India –
  

  …Joan Robinson got India right. A quote attributed to her is of perennial relevance: “Whatever one says of India, the opposite is equally true.” Everyone paints with a wide brush when they attempt to depict the big picture, based on their small experiences. The country’s diversity is such that it is not possible to paint on the right sized canvas with the right brush. Generalisations are too tempting to avoid, for many. There are axes to grind, also, making it more complex.

• How do you get smarter every day? According to neuroscience, education matters but so does fluid intelligence –
  

  The more you learn, the more likely you will be able to associate “old” knowledge to new things. Which means you only have to learn differences or nuances. And you’ll be able to apply greater context, which also helps with memory storage and retrieval, to the new information you learn.

  All of which makes learning even easier, which research shows will result in your being able to learn even more quickly–and retain a lot more.

  So if you like brain training games, master one and then move on to another. And another.

  * * *
  That’s about it from me for today.

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  Stay safe.

  Regards,
  Vishal
  

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  Value Investing Almanack (VIA) Special Offer Ends 7th December: VIA, our premium newsletter that subscribers call “the best resource on Value Investing in India,” which was closed for new subscriptions for the past few months, is now accepting new members, and at a very special 55% discount, or Rs 9,000 off the base price! Click here to join now.