Thread by @Gautam__Baid

1/ Pleased to share the preview of my life's biggest learnings. The principles emphasized throughout the book power the lifelong compounding journey of a value investor

The kick-off quotes at the beginning of the individual chapters convey their underlying key message to readers

2/ “Compound interest,” Albert Einstein reputedly said, “is the most powerful force in the universe.”

So what happens when you apply such an incredible power to knowledge building?

You become a learning machine.

3/ The way to achieve success in life is to learn constantly. And the best way to learn is to read, and to do so "effectively."

4/ We need more than a deep understanding of just one discipline—we need a working knowledge of many of them and how they interact with each other. Investing is a liberal art that involves cross-pollination of ideas from multiple disciplines.

5/ There is power in passion.

Will Durant put it best when he said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

6/ People who are constantly striving to improve themselves usually have a role model in their lives. This is one of the most crucial aspects in the journey of self-improvement.

7/ Blessed is the investor who uses his wealth to do good for others.

8/ The wiser we get, the more we realize how little we know.

9/ Simplicity is the end result of long, hard work, not the starting point. The ability to reduce something to its essence is the true mark of understanding.

10/ True wealth is measured in terms of personal liberty and freedom, not monetary currency. Money by itself does not signify independence. Control over our time does.

11/ We are not perfect, nor should we pretend to be, but the endeavor should always be to be the best version of ourselves we can be.

12/ When you think like a business owner, you no longer view stocks as pieces of paper or buy them with “target prices” in mind. Instead, you now view stocks as part ownership in a business and you want to savor "the journey" alongside the promoters.

13/ The ability to delay gratification is a better indicator of future success than raw intelligence, because the former is an important part of emotional intelligence.

14/ Don’t overweigh what can be counted and underweigh what cannot. Be wary of clinging to false precision in a complex world.

15/ The process of determining the intrinsic value of a business is an art form.

16/ The holy grail of long-term value investing was discovered almost a century ago by Edgar Lawrence Smith, and was subsequently brought to the attention of the mainstream investment community by John Maynard Keynes.

17/ Time and again, the market teaches us that there is a big difference between a great company and a great stock.

18/ When making critical decisions, we should focus on both the frequency AND the magnitude of the consequences.

19/ The alignment between price and value can be greatly distorted by psychological and technical factors in the short term. But, as Graham said, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.”

20/ The only thing that’s new in the world of finance is the history we haven’t read.

21/ Diversification is not about how many things you own, but how different the things you do own are in the risks they entail.

22/ Anyone can identify a winning stock, but the great investors differentiate themselves through superior individual position sizing.

23/ Flexible thinking refers to the ability to keep an open mind upon encountering new facts or situations and to be adaptive to changing one’s view from previously held thoughts or beliefs, however strong held.

24/ Opportunity costs are all about the most basic of economic concepts: trade-offs.

25/ To evaluate the quality of the management, investors don’t need privileged access to insider information. The secret is right in front of them—in black and white—in the words of every shareholder letter, annual report, and other corporate correspondence.

26/ We tend to be overconfident about our capabilities. A checklist can remind us that we are not infallible, that we do make mistakes, and not to be too sure about our decisions.

27/ We tend to remember the things we want to remember and forget the things we would rather forget. As a result, a significant part of our memories is self-distorted fiction.

28/ The capital cycle theory is based on the premise that the prospect of high returns attracts capital (which results in intense competition), just as low returns repel it.

29/ A special situation is one in which a particular development is counted upon to yield a satisfactory profit in the security even though the general market does not advance.

30/ We do what is rewarding and avoid what we are punished for. Incentives are at the root of most of the situations we face, and yet we often fail to account for them. The behavior we observe is usually the result of incentives we do NOT observe.

31/ In this chapter, I share multiple patterns of identifying profitable investment opportunities and discuss the key recurring sources of market inefficiencies.

32/ Good judgment comes from experience, and experience comes from bad judgment. (I have had a great deal of experience.)

In this chapter, I share the notable mistakes from my investing journey and examine the reasons for their occurrence through the lens of behavioral science.

33/ The grand finale - witness how the power of compounding helps us become happier, healthier, better, wealthier, smarter, and more honorable.
#CompoundingPositiveThoughts #CompoundingGoodHealth #CompoundingGoodHabits #CompoundingWealth #CompoundingKnowledge #CompoundingGoodwill

34/ As for Chapter 30 - The book's most intriguing (and my personal favorite) chapter which, in my opinion, is going to potentially be the most significant one for the majority of the readers, will be unveiled separately at a later date. Stay tuned!