Interesting conversation: Mohnish Pabrai with Steve Pomeranz

Came across an interesting conversation that the famous value investor Mohnish Pabrai had with Steve Pomeranz. He talks about what value investing is, why individual companies matter to him more than broader markets (though not advised for normal passive or ‘defensive’ investors), the importance of temperament which should be a strange mix of patience and … Read more

Howards Marks Memo: There they go again!

..and again!! That’s the title of a memo sent by the famous investor Howard Marks of Oaktree Capital to his clients recently. And it refers to how he is happiest writing when bull markets start going far, risk aversion disappears and there’s money all around inflating potential bubbles. It is quite a long memo listing … Read more

The exact same thing

The problem with bull markets is there is nothing much to do for the intelligent investor but there is everyone wanting to do something. Like the other day, even my father and my father-in-law now wants to invest in equity mutual funds. Which is not such a bad thing actually – but the timing suggests that it is time to repeat the same old stuff.

So as many times in the past, I went to the ‘Gita’ of value investing “The Intelligent Investor”, and again read some of the underlined writings that need to be repeated at times of such excitement in the markets.

So here goes – some excerpts that are especially to be remembered now. Nothing new, the same old stuff or “the exact same thing” as Jason Zweig says, again:

  1. No statement is more true and better applicable to Wall Street than the famous warning of Santayana: “Those who do not remember the past are condemned to repeat it”.
  2. We have not known a single person who has consistently or lastingly made money by thus “following the market”. We do not hesitate to declare this approach is as fallacious as it is popular.
  3. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of good business conditions. The purchasers view the good current earnings as equivalent to “earning power” and assume that prosperity is equivalent to safety.
  4. The investor’s chief problem – and even his worst enemy – is likely to be himself
  5. Speculative stock movements are carried too far in both directions, frequently in the general market and at all times in at least some of the individual issues.
  6. The beauty of periodic re-balancing is that it forces you to base your investing decisions on a simple, objective standard.
  7. A great company is not a great investment if you pay too much for the stock.
  8. Even the intelligent investor is likely to need considerable will power to keep from following the crowd.
  9. The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests.
  10. The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.
  11. High valuations entail high risks.
  12. Investment is most intelligent when it is most businesslike.
  13. Successful investing is about managing risk, not avoiding it. Without a saving faith in the future, no one would ever invest at all. To be an investor, you must be a believer in a better tomorrow.

And finally, this one which is right at the beginning of the book in the foreword by Buffett.

“By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.”

 

Lessons from My Journey to Health

I was always what in India is called a “healthy boy”. And I have stayed more or less “healthy” throughout my adult life with a few minor fluctuations. I have been through some ‘before-after’ experiments over the past twenty years, but they have all been in a range. And every time I ventured down that … Read more

Of Gardening and Investing Lessons

“To plant a garden is to believe in tomorrow” said Audrey Hepburn. I realized the truth in it over the past few months. The wife has been venturing into gardening – a small beginner home garden – for the past few months, and as an observer, contributor and co-passenger, the ride has taught me a … Read more

New Book: Path to Financial Independence

It has been a while that I have posted to the blog, and one of the reasons has been editing my past writings in preparation for my book being published. So it is heartening to share on the auspicious occasion of Diwali that my book is published and is now available. The title is ‘Path … Read more

Two Books: The Lazy Person’s Guide and The Coffeehouse Investor

I had the opportunity to read two books over the past two weeks. The First One was ‘The Lazy Person’s Guide to Investing’ by Dr Paul Ferrell, a former investment banker with Morgan Stanley and a columnist later, with some really useful and simple advice for the individual investor. Here are some excerpts: “Investing really is very … Read more

A Case for Boredom

“I have learned that the capacity to endure boredom without looking for excitement is one of the foremost requirements to succeed in investing,” said my broker friend Jigneshbhai as we sipped our coffee last weekend. We were meeting after a long time and my broker friend was reading from a speech he had heard in … Read more

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