Hey folks
I am going to keep a count of the number of weeks of being able to consistently send out the newsletter. We are at week #2.
Same As Ever
Morgan Housel, my ever favourite writer, has released his second book and also appeared on the Tim Ferris podcast. While I am yet to read his new book, here are a few excerpts from his podcast appearance -
I really have three major life goals. I want to stay married, I don’t want to get fat, and I want to be there for my kids, and I think those are just pithy ways to be.
I think it’s super dangerous in any life to attach your identity to something that’s unsustainable, whether it’s being a model or having a certain career, having an investing strategy. If you attach your identity to something that you cannot sustain when it ends, you’re going to be morally crushed. It’s just going to destroy you. And back to investing, the variable that I want to maximize for is how long can I do this for? It’s not, can I earn the highest returns? It’s, can I maintain this investing strategy for anoth er 50 years? And I know that I could earn a higher return this year and over the next five years if I did something different, but I’m way less confident that I could keep it going and sustain it.
About how do you raise kids that don’t grow up to be spoiled little brats? And I’ve come to the conclusion that the only answer is give them less money. That’s it. That’s the only thing. It’s the answer that nobody wants to hear, but I don’t think there’s any other way around it. The reason that money is valuable is because you usually have to work hard for it. If you don’t have to work hard for it becomes not that valuable to you. In the sense of you just throw it around.
Art Is Just Money On Walls
David Senera runs one of the best podcasts out there call the founders podcast. He also shares notes on twitter some times. This time he shares his notes about a billionaire art deal named Lary Gagosian. I enjoyed his podcast on Gagosian too. Here are some that stood out -
1. The best way to raise the price of something is to say that you would never sell it.
4. Art is just money on walls.
7. Genius lies in ignoring the unimportant.
10. Read biographies. There’s always a blueprint. Gagosian read every biography of Joseph Duveen. Duveen was the art dealer to the Robber Barons. Gagosian is that today.
26. If you love what you do the only exit strategy is death.
29. Go to where your customers are. Gagosian opened a gallery at a private jet airport.
33. There is always somebody somewhere making a lot of money. Find them. Sell to them.
Type 1, 1.5 and 2 Errors
Ankush explains type 1 and type 2 errors using excerpts from Pulak’s book and summarises how one can pick good stocks. I have written in the past about risk reduction. Using this methodology can help you reduce your risks in investing and in life. Another fantastic piece by Ankush where he talks about type 1.5 errors.
Risk is always prevalent, over time you learn where not to invest to reduce the probability of risk. The game of investing should involve the mitigation of risk as much as humanly possible to increase the probability of winning by adhering to set processes
Buying a great business at a fair valuation is crucial because even buying an excellent business at an absurd valuation will lead to the erosion of your capital
JJ Watt on Growth, Investments, and Retirement
Don’t be complacent
“Complacency kills progress. It's one of my favorite quotes. If you want to evolve, if you want to be better, if you want to improve, complacency is the No. 1 way to halt all of that”.
Family and friends are the only ones
“I saw a great thing the other day that was talking about someone on their death bed, and they were like, ‘Who are the people at their side?’ And it was literally just their son, their grandson, and their wife. At the end of the day, the only people with you at the end of this entire ride are going to be your family and maybe maybe your closest friends. So don’t care what anyone else thinks, those are the ones that matter”.
Don’t get caught up in lifestyle
One thing I talk to a lot of rookies that come into the league about is, ‘Don't get caught up in the lifestyle because the lifestyle would be so much better if you play good.’ People come in, and they're so excited about everything that comes along with being an NFL player, but they forget the reason they're getting all this is because they're an NFL player and because they’re playing good.
Focus On “n”
There are 2 components in compounding. "n" which is the tenure and "r" which is the rate of return.
Higher returns will definitely give you the sugar high but is it sustainable is something that you need to question. Too much sugar eventually leads to diabetes and death.
The tenure of your investment is probably the most important. Sustaining high returns for long durations may not be possible due to 2 reasons -
1. Market participants are smart. Strategies that earn high returns don't last long.
2. You may end up making a mistake in the chase of higher returns that could wipe out your entire capital.
Greater duration requires greater patience. Play according to your duration.
As fiduciaries, our duty towards our clients is to create sustainable returns over long periods.
A Primer on Watch Reference Numbers
Watches are recognised by brands by their references numbers. These reference numbers evolved from being simple 4 digit numbers to 12 or 16 digit codes used by computers. Interesting history of watch reference numbers.
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