Most people are wired to seek status and success, not necessarily happiness. It’s remarkable to watch someone fight back against that trend. From the outside they appear frugal. But in fact they’ve rejected what the world tells them they should want and looked deeper, finding their happiness elsewhere.
Nassim Taleb, in his 2012 book Antifragile, expanded on an interesting idea known as the Lindy Effect — If something has been around for a long time, then the probability that it will stick around for longer is higher.
There are two ways to use money. One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others. Many people aspire for the former but get caught up chasing the latter.
Previously on Money:
I think there’s an “ideal” net worth for everyone, when money not only stops bringing pleasure but becomes a social liability. And that number is probably lower than most people think.
Once you see people being respected and admired for reasons that have nothing to do with the stuff they own, you begin to wonder why you have such a strong desire for those possessions. I tend to view material desire as a loose proxy for the inverse of what else you have to offer the world. The higher my desire for fancy stuff, the less real value I have to offer.
There have been numerous other times in my investing career when I knew the business better than most. I knew through channel checks and scuttlebutt the company was going to have a couple weak quarters, and I knew the market wasn’t expecting it. I cut the position in half. What happens? The stock goes up 50% in spite of the mediocre results. Then I’m forced to rebuy the stock higher. My reasoning was correct, but the result was all wrong.
So, my advice to you if you are still reading this, is – Slow down a bit, my friend, in life and investing, and even climbing stairs. You will take a longer time, but then slowing down will leave you with lesser stress and exhaustion, and with a longer time.
Keith Gill was an unlikely revolutionary. His T-shirts featured cats in sunglasses, his red headband made him look like a cross between peak-era John McEnroe and Cousin Greg from Succession, and his YouTube videos were long, dry analyses of corporate stocks. But revolutionary is exactly what he unwittingly became at the start of 2021, when his advice to buy shares in the videogame store chain GameStop made fortunes for a ragtag army of small individual investors and helped send a handful of large hedge funds to the wall.
There are 13 divorces among the 10 richest men in the world. Seven of the top ten have been divorced at least once. Correlation isn’t causation, and that sample size is tiny. But a statistic that is so much worse than the national average, on a topic so fundamental to happiness, among a group whose lives are envied by so many, is interesting, isn’t it?
Last month, I was invited to a happy hour near the White House, so after packing up my things, I left the office around 5:30. I walked past the Hay Adams Hotel, in front of St. John’s Church, across Lafayette Square, and eventually found myself in front of 1600 Pennsylvania Avenue. Despite it being a relatively mild afternoon for this time of year, there were few people on the streets, which unfortunately has become the norm for Washington D.C. in this work-from-home era.
That experience was a good illustration of something I already knew: My definition of luxury has changed over the past few decades. With plentiful funds to cover the purchase (and even without!), my 30-year-old self wouldn’t have blinked; she’d have gone with the Chanel and basked in the admiring looks. But as I’ve grown up and have more funds at my disposal, a funny thing has happened. I’m much less inclined to want or need to show what I have than was the case when I had much less. My “luxury goods” today are much more in the category of things that make me feel good inside rather than looking good on the outside. And they’re not “things” at all.
Trading regardless of whether you are profitable or not can be very addictive. The ability to see gains coming in based on a simple positioning one has taken is seductive. More so when one’s capital is small and limited. Yes, it’s nice to think that with compounding, even a small sum of money can end up being a significant sum in the long term, but one wants it today not tomorrow.
A company's organizational culture is its unique personality. It can be viewed as a system of shared assumptions, values, and beliefs that govern how people behave within organizations. All organizations develop a unique culture that serves as a guideline for its members and cannot be imitated. Indeed, culture may be the ultimate intangible, loved by all but valued by none. Today we will find out if there’s a connection between organizational culture and stock performance
As teenagers, Warren and Wally were each given a small sum of money to invest in the stock market. While Warren only chose stocks that were trading at a deep discount to their intrinsic value with the intention of holding them forever, Wally was always a thrill seeker and considered this to be a boring and tedious strategy. So instead, he pursued the hottest fads of the day, jumping in and out of securities based entirely on emotion.
In my 53 years in the investment world, I’ve seen a number of economic cycles, pendulum swings, manias and panics, bubbles and crashes, but I remember only two real sea changes. I think we may be in the midst of a third one today.
Afunny thing about money is that it’s a negative art. You often have a better chance of accumulating more of it by getting rid of bad traits vs. acquiring good ones.
The buying of pictures affords us an excellent illustration on this point. [Ordinary people] … have to walk weary miles and wait long weeks to get upon the track of their treasure; to use all their knowledge of art and men to circumvent the malignity of dealers; to experience the extremes of trepidation and of hope; to deny themselves comforts, and perhaps food, that they may pay the price which has at last, after infinite dispute, reached an irreducible minimum; and the pleasure of their possession is in the ratio of their pains.
A big difference between professional and amateur athletes is the intensity of training. The intuition of amateur athletes is to push as hard as they can, testing the limits of their potential, maximizing what they’re capable of, grind until you’re broken, no pain no gain.
U.S. household net worth is $80 trillion higher today than it was ten years ago, which is astounding. But it’s about $700 billion lower than it was three months ago, which is honestly nothing. Yet one of those figures creates ten times the headlines, ten times the attention, ten times the emotions, ten times the introspection. It has nothing to do with the level of wealth and everything to do with the trajectory.
Small, brightly colored, and terrible at defense, the guppy faces an unusually high rate of predator attacks. Birds eat guppies. Small fish eat guppies. Big fish eat guppies. Crabs eat guppies. It’s everyone’s favorite lunch.
How does a species under so much threat avoid extinction?
Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead but not necessarily in fast spurts. But you build discipline by preparing for fast spurts… Slug it out one inch at a time, day by day…at the end of the day…if you live long enough…most people get what they deserve.
From the day he started Microsoft he insisted on always having enough cash in the bank to keep the company alive for 12 months with no revenue coming in. In 1995 he was asked by Charlie Rose why he kept so much cash on hand. Things change so fast in technology that next year’s business wasn’t guaranteed, he said, “Including Microsoft’s.” In 2007 he reflected: I was always worried because people who worked for me were older than me and had kids, and I always thought, ‘What if we don’t get paid, will I be able to meet the payroll?’” Optimism and pessimism can coexist. If you look hard enough you’ll see them next to each other in virtually every successful company and successful career. They seem like opposites, but they work together to keep everything in balance.
Everyone who's worked on difficult problems is probably familiar with the phenomenon of working hard to figure something out, failing, and then suddenly seeing the answer a bit later while doing something else. There's a kind of thinking you do without trying to. I'm increasingly convinced this type of thinking is not merely helpful in solving hard problems, but necessary. The tricky part is, you can only control it indirectly.
One day an elderly couple saw a young man, probably in his early thirties, playing tennis in one of the corner courts of their exclusive country club in Florida. This couple had spent their entire life engrossed in their business and had never really followed the sport. They had sold their business and chose a peaceful retired life. Now that they were retired and extremely wealthy, they thought that picking up tennis would be a good thing. The young man who was playing seemed to be doing it effortlessly. The lady decided to try her hand at the sport. The next day she approached the tennis director at the country club who promptly enrolled her on the tennis program. To her dismay, the lady found that the game was really difficult. She was not able to control the ball. It was either sailing wide of the court or hitting the bottom of the net. She went to complain to the tennis director saying that the game which she saw being played by the young man seemed so easy. The guy did not even seem to be making an effort. And here she was huffing and puffing and yet not able to make a single shot. The tennis director turned around and said, “Maam, yesterday the person you saw here was Roger Federer. He is perhaps the greatest tennis player in the history of the game”.
I recently sat down with Dalio to talk about his latest book, The Changing World Order, which uses a historical lens to examine why empires rise and fall — and why the US may be showing some signs of decline.
I simply don’t have the emotional make-up to take extreme positions when it comes to investing. Sometimes I wish I did. But it’s important to remind myself for every Tesla investor who hit the lottery, there are thousands of other tickets that never hit. And I’m not necessarily saying those people who pursue this type of strategy are wrong. I admire people who have the intestinal fortitude to hold a moonshot investment that swallows the rest of their portfolio whole.
Most actions have two sides: skill and behavior. What’s true in theory vs. how it feels in the moment. The gap between the two can be a mile wide. No amount of empathy and open-mindedness can recreate emotions. Textbooks and classrooms can’t teach what genuine fear, adrenaline, and uncertainty feel like. So you think you understand how a field works until you experience a new part of it firsthand. Then you see it through a completely different lens.
In the last few years, Lindy Effect has gained a lot of popularity amongst investors. Ever since Nassim Nicholas Taleb wrote about it in his 2012 book "Antifragile: Things That Gain from Disorder", it has been used in the investing world as a concept that says companies with a competitive advantage that have survived for many years are more likely to survive for many more years.
And in the midst of this miasma, with trillions of dollars being accumulated in full view of everyone, it’s no surprise that two feelings consistently bubble up to the surface – Insecurity and Envy – over and over again. Why am I falling behind? Why is that son of bitch not? You can practically feel it in the air.
Rich people need it. Poor people have it. If you eat it, you die. And when you die, you take it with you. What is it?
Evolution is good at what it does. And one of the things it does is give animals larger bodies over time. Edward Drinker Cope was a 19th Century paleontologist. His work, later deemed Cope’s Rule – not universal enough to call a law – tracked the lineages of thousands of species and showed a clear bias towards animals evolving to become larger over time. Horses went from the size of small dogs to their modern height. Snakes from no larger than a inch to modern boas. Dinosaurs from 3-inch lizards to a brontosaurus.
In the past five decades, the venture-capital (vc) industry has funded enterprising ideas that have gone on to transform global business and the world economy. Seven of the world’s ten largest firms were vc-backed. vc money has financed the companies behind search engines, iPhones, electric cars and mrna vaccines.
While planning for the retail Bank, Deepak had one name in mind: The Bank of Bombay. His logic was they were the only one among a group of ten new private lenders allowed to have its headquarters in Mumbai. Aditya Puri, said, I am NOT coming to join this Bank. I, will, only when you name it HDFC Bank.
Put in simple words, the entire unit economics of these neo-banks are moving against them, and in favor of the Old Banks. And it will continue to be a movement that is net positive for Old Banks, till VCs continue to incentivize this mad rush of ‘customer acquisition’.
That’s it. That’s the stock-picking game. Stocks are not pieces of art. They are not fiat money. Cults of personality do not last forever in the stock market. Narratives break. Eventually, everyone figured out that Galileo was right. Eventually, everyone will figure out that Cathie Wood isn’t. And it won’t take as long either.
Such ideas may still sound abstract. But they will soon be physically embodied on trading floors, whether the theory is adopted or not. Quantum computers, which replace the usual zeros and ones with superpositions of the two, are nearing commercial viability and promise faster calculations. Any bank wishing to retain its edge will need to embrace them. Their hardware, meanwhile, makes running quantum-walk models easier than classical ones. One way or another, finance will catch up.
Imagine you’re at the grocery store, picking up food for the week—bread, eggs, milk, fruit and vegetables, your son’s favorite afterschool snack, the coffee your partner really likes. The total comes to $100. As you swipe your debit card to pay, $20 is automatically added to your retirement account. That simple. You spent $100 and saved $20 for your future financial security.
A No-good, Awful, Terrible Idea!
Thanks to powerful network effects, the theory goes, a digital platform becomes more attractive as it draws in more users, which makes it even more attractive and so on. The end state is a venture that has gathered enough energy to self-levitate and throw off tons of cash.
I believe that the Indian new-age IPO market is in a bubble. A big one at that. And promoters are rushing head over heels to bring their loss-making enterprises to market to secure their own futures. No one is questioning how much of the IPO is an OFS (offer for sale) where the existing promoters and investors are dumping their own holdings onto public shareholders.
Nykaa, commonly known as a company selling beauty products, actually has a lot more to offer. Founded in 2012 by Falguni Nayar, Nykaa offers a comprehensive selection of makeup, skincare, haircare, fragrances, personal care, luxury, and wellness products for women and men. The company is also ramping up its presence in the fashion space. But did you know that the company also sells gadgets and tech accessories, essential home care products, and pet care products?
Every bull market hides within it the seeds of a bear market. The market, as a whole, is mean reverting. So, a bulk of what goes up tends to come down, if not fully but to a large extent, wiping out all the temporary gains made in the process. And in between this going up and coming down investors make their reputation and fortunes.
China was saturated with disabling infectious diseases near the end of 1940s. Tuberculosis, plague, cholera, polio, malaria, smallpox, and hookworm were killing a lot of people in the country. More than 11 million people were infected with the water-borne liver parasite diseases.
What are Rights Issues? Why do companies do Rights Issues? Why are they only available to existing shareholders? What should shareholders consider before exercising their Rights Entitlement? How to apply for Rights Issue?
Dussehra is about the victory of good over evil. Not necessarily is the winner always good, or the loser always bad, as indeed there are temples that worship Ravan as well. Every person has flaws, and there’s a bunch of demons inside of us that we fight. Dussehra is about 10 – the 10th day of victory over a Ravan who had 10 heads, etc. So we’ll stick with that theme.
Ragpickers provide serious value to society by reducing landfill sizes and by the very concept of reuse. If it weren’t such a wretched life, rag-picking would be a more honourable profession.
I collect shares of businesses. Been doing it since my late teens. Not always successfully. I use a certain type of non fungible token called a stock certificate for this. I never lay hands on the certificate, it’s in digital form, living somewhere in the multiverse.
Two little stories from nature that teach us a few things about investing
We start the year with an explainer on what is the meaning of No cost EMIs? This is when you are told: Take this product at 0% EMI for six months! And you wonder why.
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