Anshul Khare — Page 50
BookWorm: Mosaic: Perspectives on Investing
Great perspectives on investing from the wonderful investor and multidisciplinary thinker, Mohnish Pabrai.
I am sure the author of this book needs no introduction, but for the benefit of people who don’t know much about him, I am going to start with an interesting trivia. How much would you pay to have lunch with Warren Buffett? How about Rs 4 crore?
Don’t be surprised because that’s the amount Mohnish Pabrai (along with his friend Guy Spier) paid to have a private lunch with Warren Buffett in 2006.
Mohnish manages US$ 850+ million US based fund called Pabrai Funds and is a hardcore Buffett disciple. He has written another popular book called The Dhandho Investor.. However, the book I am talking about here is a rare one.
Mohnish has built 3 successful businesses in the last 25 years, including a technology company, a Buffett style hedge fund and a very successful philanthropic organization called Dakshana Foundation, which educates talented underprivileged children to qualify for IITs. With this kind of experience, I am sure he has some interesting insights for us.
In the previous issue of VIA, we had shared the link to Dakshana’s annual report. If you haven’t read it yet, I would suggest please don’t miss it.
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Behaviouronomics: Do Something Bias
Always being in the thick of action can be dangerous to your long term investment returns. The habit is difficult to overcome, but you must definitely make a start. Read more to find out.
Have you noticed that there are some people who are so restless that they find it impossible to sit at one place quietly? They have very short attention span and can’t stay with one activity for long. In medical science this abnormality is known as ADHD (Attention Deficit Hyperactivity Disorder).
Now before you brush aside ADHD as something which isn’t relevant to you, allow me to hold your attention for one more second. Here is an interesting fact – Evolution has installed the seeds of ADHD in every human brain.
Some people have very severe symptoms of ADHD and they may need medical treatment. But for the rest of us this disorder manifests very subtly in our day to day decision making.
Famous scientist Blaise Pascal figured something very deep when he said, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”
In an attempt to be efficient and productive, we force ourselves to always stay busy with some task or other. But sometimes too much activity is counterproductive. In behavioural finance, it’s called Do-Something Bias.
A wise man once said, “There is no bigger waste of time than doing something efficiently which shouldn’t be done at the first place.”
Do-something bias is not only wasteful but can harm you in the long term.
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Life 2.0: Habits of Life
The key to bringing lasting change in your life is by way of great habits. And the best way to build great habits is by starting small and building up.
I hope you would agree with me that life isn’t all about stock market investing or for that matter just about money. Making money is only a means to a greater end i.e., living a happy life.
But you don’t have to wait till you are financially free to start your work on other areas of life. You can start today. Let’s pick up one area, say health and see how you can bring a change in this part of your life.
Everybody knows that to be more healthy and fit, you need to exercise and eat well. It is a common knowledge and part of everybody’s new year resolution. Problem is that these resolutions are short lived and motivation to carry on the new activity dies down rapidly after few days.
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BookWorm: Latticework
“Latticework”, written by Robert Hagstrom, is unlike most other investment books I have ever read. I won’t advise you to read this book if all you are looking for is magic formulas or readymade rules of sound investing.
This is a powerful book arguing for the importance of a multidisciplinary approach to investing. So if you are one amongst the many investors who have been searching out companies to invest in for a number of years and all you have learned is to plug basic financial information into excel models, this book may be worth a read.
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Behaviouronomics: Alternate History
One peculiar but common way our brain works is that we often remember what’s easily available to us, and see what’s easily visible.
So, we conclude that the stock trader who is rich must know what he is doing. In the same way, an investor who uses leverage to increase his bets and in the process magnifies his returns is also considered a role model.
In business, a CEO who borrows a lot of money to make acquisitions and in process turns his business bigger in quick time, also seem to be doing the right things (at least when times are euphoric).
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