Everything is calm, everything is bright
“With this virgin mother and her child
Holy child so tender and sweet
Sleep in heavenly peace
Sleep in heavenly peace
Sleeping peacefully in the world of stock investing is hard to imagine. But what if there is a predictable, demonstrated process with proven results and track record?
In addition to solid investment processes that allow you to navigate the rough terrain of investments and sleep peacefully, it is important to have a solid emotional foundation and understanding of what is happening in the immediate environment as well as understanding what happened historically. if one wants to be a successful investor or, for that matter, successfully navigate life.
Without a foundation or process, biases can creep in and impact life and investment decisions. We all build our own processes and understanding, but it’s always helpful to look at the contributions of others who have successfully navigated the world of investments and life situations.
Success in life situations can be described as one who has learned to deal effectively with the ups and downs of life and not get bogged down.
One of the role models that many investors looked to was Charlie Munger for his wisdom in investing and other areas of life. He lived his life after losing his wife and child at a young age, as well as one of his eyes.
Some of the important points to remember from him are:
Reading and having mental models are important to living and investing and legendary investor Charlie Munger espouses this very well. He was a voracious reader and his readings included psychology, finance, letters from well-known investors, philosophy and other subjects.
In my entire life, I have never known a wise person (in a broad area) who did not read all the time – none. Zero. You’d be amazed how much Warren reads – and how much I read. My children make fun of me. They think I’m a book with a few legs sticking out. -Charlie Munger
He was not a value investor in the conventional sense, that is, buying stocks at less than their fair value. He believed in investing in good companies at fair prices and expecting those companies to generate handsome compound returns over the long term.
There are also many such companies in the Indian context, from consumer companies to banks, which have seen strong growth in the past and are poised to do so in the future. These cumulative benefits actually accumulate if investors stay invested for a long period of time – a crucial aspect that many ignore and fall prey to speculation or short-term trading.
In addition to investment advice, one of his favorite tips was to turn any situation around and look at the problem inside out.
He also talked about the motivations caused by incentives and looked closely at incentive structures to study what motivated the CEO or board of directors to make certain business decisions.
Since studying psychology, he has a good understanding of the foundations of good decision-making. He invested in areas he understood well and avoided those he did not.
This is still a very powerful lesson for investors. For example, in recent years, many investors have lost to Bitcoins without any idea of how they work.
It had become popular and many stories were circulating, causing naive investors to invest and lose. Following Charlie Munger’s advice would have saved many.
Losing money means losing capital and it’s even worse when it’s lost in poorly understood businesses. Additionally, the loss of capital reduces the benefits of capitalization.
Staying the course was another important lesson. He made mistakes but that didn’t stop him from investing more. He learned from those investments and then moved on. For example, he admitted that it was a mistake to have invested in Ali Baba.
In his personal life as well, after losing his wife and son at a young age, he continued his work diligently despite his devastation.
Knowledge in multiple fields, discipline to follow and implement what he has learned, and following the age-old principles of honesty and hard work, have led him to live quite a rich life, not only in terms of wealth but in other areas of life as Good.
He was an investor, philanthropist, writer, businessman and vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett; Buffett described Munger as his closest partner and right-hand man.
For those interested, he also recommended many interesting books in various fields. Some of the most interesting include Influence: The Psychology of Persuasion, Guns, Germs, and Steel: The Fate of Human Societies, and Fiasco: The Inside Story of a Wall Street Trader.
(The author is Managing Director and Group Head – Equities at Quantum Advisors Private Limited)
(You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Everything is calm, everything is bright
“With this virgin mother and her child
Holy child so tender and sweet
Sleep in heavenly peace
Sleep in heavenly peace
Sleeping peacefully in the world of stock investing is hard to imagine. But what if there is a predictable, demonstrated process with proven results and track record?
In addition to solid investment processes that allow you to navigate the rough terrain of investments and sleep peacefully, it is important to have a solid emotional foundation and understanding of what is happening in the immediate environment as well as understanding what happened historically. if one wants to be a successful investor or, for that matter, successfully navigate life.
Without a foundation or process, biases can creep in and impact life and investment decisions. We all build our own processes and understanding, but it’s always helpful to look at the contributions of others who have successfully navigated the world of investments and life situations.
Success in life situations can be described as one who has learned to deal effectively with the ups and downs of life and not get bogged down.
One of the role models that many investors looked to was Charlie Munger for his wisdom in investing and other areas of life. He lived his life after losing his wife and child at a young age, as well as one of his eyes.
Some of the important points to remember from him are:
Reading and having mental models are important to living and investing and legendary investor Charlie Munger espouses this very well. He was a voracious reader and his readings included psychology, finance, letters from well-known investors, philosophy and other subjects.
In my entire life, I have never known a wise person (in a broad area) who did not read all the time – none. Zero. You’d be amazed how much Warren reads – and how much I read. My children make fun of me. They think I’m a book with a few legs sticking out. -Charlie Munger
He was not a value investor in the conventional sense, that is, buying stocks at less than their fair value. He believed in investing in good companies at fair prices and expecting those companies to generate handsome compound returns over the long term.
There are also many such companies in the Indian context, from consumer companies to banks, which have seen strong growth in the past and are poised to do so in the future. These cumulative benefits actually accumulate if investors stay invested for a long period of time – a crucial aspect that many ignore and fall prey to speculation or short-term trading.
In addition to investment advice, one of his favorite tips was to turn any situation around and look at the problem inside out.
He also talked about the motivations caused by incentives and looked closely at incentive structures to study what motivated the CEO or board of directors to make certain business decisions.
Since studying psychology, he has a good understanding of the foundations of good decision-making. He invested in areas he understood well and avoided those he did not.
This is still a very powerful lesson for investors. For example, in recent years, many investors have lost to Bitcoins without any idea of how they work.
It had become popular and many stories were circulating, causing naive investors to invest and lose. Following Charlie Munger’s advice would have saved many.
Losing money means losing capital and it’s even worse when it’s lost in poorly understood businesses. Additionally, the loss of capital reduces the benefits of capitalization.
Staying the course was another important lesson. He made mistakes but that didn’t stop him from investing more. He learned from those investments and then moved on. For example, he admitted that it was a mistake to have invested in Ali Baba.
In his personal life as well, after losing his wife and son at a young age, he continued his work diligently despite his devastation.
Knowledge in multiple fields, discipline to follow and implement what he has learned, and following the age-old principles of honesty and hard work, have led him to live quite a rich life, not only in terms of wealth but in other areas of life as Good.
He was an investor, philanthropist, writer, businessman and vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett; Buffett described Munger as his closest partner and right-hand man.
For those interested, he also recommended many interesting books in various fields. Some of the most interesting include Influence: The Psychology of Persuasion, Guns, Germs, and Steel: The Fate of Human Societies, and Fiasco: The Inside Story of a Wall Street Trader.
(The author is Managing Director and Group Head – Equities at Quantum Advisors Private Limited)
(You can now subscribe to our ETMarkets WhatsApp channel)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)