Recently read the excellent book by @Gautam__Baid " TheJoys of Compounding" - A passionate pursuit of life long learning
A thread on key takeaways, learnings and insights from the book:
Note: This thread will be updated in due course of time.
A thread on key takeaways, learnings and insights from the book:
Note: This thread will be updated in due course of time.
1. Becoming a Learning Machine:
Reading:
- Regularly read books / articles / blogs on topics of interest
Regular: Could be just a page per day
- Helps hone skills as well as improve as a person
- Way to benefit from experience of our ancestors
- Helps form mental models
Reading:
- Regularly read books / articles / blogs on topics of interest
Regular: Could be just a page per day
- Helps hone skills as well as improve as a person
- Way to benefit from experience of our ancestors
- Helps form mental models
2. Obtaining Worldly Wisdom Through Lattice Work of Mental Models
"Investing is a liberal art that involves cross-pollination of ideas from multiple disciplines"
Mental Models are formed:
- By reading from diverse disciplines
- By thinking & co-relating on what one reads
"Investing is a liberal art that involves cross-pollination of ideas from multiple disciplines"
Mental Models are formed:
- By reading from diverse disciplines
- By thinking & co-relating on what one reads
Aim to be specialist in one but generalist in other disciplines
Thinking:
- Underrated activity
- Helps find similarities in fundamentals of diverse models
- Develop nexus between diverse models
- Concentrate on an idea to form innate understanding
- Helps form own ideas
Thinking:
- Underrated activity
- Helps find similarities in fundamentals of diverse models
- Develop nexus between diverse models
- Concentrate on an idea to form innate understanding
- Helps form own ideas
3. Harnessing the Power of Passion and Focus Through Deliberate Practice
Passion:
- Is self realisation of one's innate desires
- Facilitates self actualization.
- Requires unwavering focus
" Pursue your passion. You won't get this time back ever again"
Passion:
- Is self realisation of one's innate desires
- Facilitates self actualization.
- Requires unwavering focus
" Pursue your passion. You won't get this time back ever again"
"Our lifetime is finite hence choose wisely how to employ it"
Focus:
- On the deep pursuit of your goal to ensure unwavering self actualization
- On this moment & the best way to utilise it
"Excellence at performing a complete task requires a critical minimum level of practice"
Focus:
- On the deep pursuit of your goal to ensure unwavering self actualization
- On this moment & the best way to utilise it
"Excellence at performing a complete task requires a critical minimum level of practice"
Practice:
- Repeatedly to develop expertise in any activity
- Involves continuous evaluation & feedback of each effort
- Top performers spend max time on practicing their craft
IKIGAI is the result when our deepest desire is pursued with passion, focus & deliberate practice
- Repeatedly to develop expertise in any activity
- Involves continuous evaluation & feedback of each effort
- Top performers spend max time on practicing their craft
IKIGAI is the result when our deepest desire is pursued with passion, focus & deliberate practice
4. Importance of Choosing the Right Role Models, Teachers and aAssociates in Life
Role Model:
- Find among ppl around you
- Source of daily inspiration
- Learn from his learnings
- Identify d need of one, then seek accordingly
"When the student is ready, the teacher shall appear"
Role Model:
- Find among ppl around you
- Source of daily inspiration
- Learn from his learnings
- Identify d need of one, then seek accordingly
"When the student is ready, the teacher shall appear"
- Bring right role models in life
- Seek those ppl with who r better than us
- Association with right people leads to self improvement
- Be trust worthy and reliable to build a circle of competence with the right people.
- Seek those ppl with who r better than us
- Association with right people leads to self improvement
- Be trust worthy and reliable to build a circle of competence with the right people.
"You are, after all, the average of the five people you associate with the most in your life"
6. Humility is the Gateway to Attaining Wisdom
Humility:
- Know that you don't know
- Develops open mindset for learning
- Awareness of the limits of your knowledge
Our knowledge is limited by:
- Our experiences
- Boundaries of our thoughts
- Our personal lives
- Ourselves
Humility:
- Know that you don't know
- Develops open mindset for learning
- Awareness of the limits of your knowledge
Our knowledge is limited by:
- Our experiences
- Boundaries of our thoughts
- Our personal lives
- Ourselves
Humility is willingness to learn from others who have diverse experiences, thoughts & thus knowledge.
In Investing:
- Be ready to question our knowledge
- Listen to contrasting views
- Often its our hypothesis which becomes our belief which we consider as knowledge.
In Investing:
- Be ready to question our knowledge
- Listen to contrasting views
- Often its our hypothesis which becomes our belief which we consider as knowledge.
- Knowledge about a business can never be absolute and certain
- Embrace uncertainty in our knowledge to create open-mindedness towards truth seeking.
- This humility is needed to build a circle of competence
Circle of competence:
- Clear awareness of the limits of our knowledge
- Embrace uncertainty in our knowledge to create open-mindedness towards truth seeking.
- This humility is needed to build a circle of competence
Circle of competence:
- Clear awareness of the limits of our knowledge
- Invest only when an opportunity is within that circle.
- Restrict investing to businesses that we understand
- Sticking to the circle increases the probability of success.
- Exclude all unknown things, what remains behind is circle of competence.
- Expand d circle gradually.
- Restrict investing to businesses that we understand
- Sticking to the circle increases the probability of success.
- Exclude all unknown things, what remains behind is circle of competence.
- Expand d circle gradually.
- Study businesses outside the periphery, interpret and analyse
- Study the businesses within same peer group through Annual reports, concalls, rating rationales etc.
- Study the businesses within same peer group through Annual reports, concalls, rating rationales etc.
7. The Virtues of Philanthropy and Good KARMA
Philanthropy:
- Art of giving to those in need
- Creates a positive difference in the society
- Is Self Transcendence as per Maslow's needs hierarchy
Karma:
- What we give does come back
- Good deeds help us someday in the future.
Philanthropy:
- Art of giving to those in need
- Creates a positive difference in the society
- Is Self Transcendence as per Maslow's needs hierarchy
Karma:
- What we give does come back
- Good deeds help us someday in the future.
8. Simplicity is the Ultimate Sophistication
Simplicity: Art of thoughtful reduction
"If you eliminate the impossible, whatever remains, however improbable must be the truth."
-- Sir Arthur Conan Doyle
- Understanding is complete when a concept can be xplained in simplest form.
Simplicity: Art of thoughtful reduction
"If you eliminate the impossible, whatever remains, however improbable must be the truth."
-- Sir Arthur Conan Doyle
- Understanding is complete when a concept can be xplained in simplest form.
Simplicity in investing:
- Aim of investor: Consistently compound capital with highest return & least risk.
- Choose within circle of competence
- Choose businesses with simple business models
- Identify & focus on few key variables governing d business.
- Complex analysis ❌
- Aim of investor: Consistently compound capital with highest return & least risk.
- Choose within circle of competence
- Choose businesses with simple business models
- Identify & focus on few key variables governing d business.
- Complex analysis ❌
Complexity:
- Wastes time and effort
- Confuses
- Makes decision making difficult
Remember:
" A lot of fiction is created in excel spreadsheets."
Steps to simplification:
- Identify the knowable & important
- Have singular focus (Multi-tasking- ❌)
- Reason backwards
- Wastes time and effort
- Confuses
- Makes decision making difficult
Remember:
" A lot of fiction is created in excel spreadsheets."
Steps to simplification:
- Identify the knowable & important
- Have singular focus (Multi-tasking- ❌)
- Reason backwards
- Eliminate impossible to arrive at solution rather than directly finding solution.
- Look for reasons not to buy a business. Find discomforming evidence from short sellers, social media & -ve reports on business
Achieve simplicity in life thru "Minimalism."
- Look for reasons not to buy a business. Find discomforming evidence from short sellers, social media & -ve reports on business
Achieve simplicity in life thru "Minimalism."
9. Achieving Financial Independence (#FI)
FI:
- Doesn't mean not to work
- Freedom to choose employment
- Removes dependence on unpredictable job
- Ultimately FI means owning our time.
- Freedom of choice to employ our time as we wish
- Requires hardwork, discipline & patience.
FI:
- Doesn't mean not to work
- Freedom to choose employment
- Removes dependence on unpredictable job
- Ultimately FI means owning our time.
- Freedom of choice to employ our time as we wish
- Requires hardwork, discipline & patience.
Steps to achieve #FI
- Work hard &
- Live within means
- Spend only upto a moderate level of materialism
- Avoid debt
- Invest in self & learn new skills
- Generate secondary income source thru the new skills
- Build a passive income source to fulfil living expense.
- Work hard &
- Live within means
- Spend only upto a moderate level of materialism
- Avoid debt
- Invest in self & learn new skills
- Generate secondary income source thru the new skills
- Build a passive income source to fulfil living expense.
Staying on the path to #FI:
- Resist the hedonic treadmill to earn more to fulfil rising wants
- Don't confuse pleasure of possessions with happiness
- Material objects don't improve life
"It is not the man who has too little, but the man who craves more, that is poor" - Seneca
- Resist the hedonic treadmill to earn more to fulfil rising wants
- Don't confuse pleasure of possessions with happiness
- Material objects don't improve life
"It is not the man who has too little, but the man who craves more, that is poor" - Seneca
11. The Key To Success in Life is Delayed Gratification
- Businesses focusing on long term strategy of value creation sustain over the years
- In short term they do incur higher expenses, depressed margins.
- Businesses focusing on short term indulge in earnings management.
- Businesses focusing on long term strategy of value creation sustain over the years
- In short term they do incur higher expenses, depressed margins.
- Businesses focusing on short term indulge in earnings management.
- Long term investors should pick businesses whose management practices delayed gratification
- Biggest edge: Investing with long term vision & having patience to hold
- Need to embrace short term volatility
- Our behavior & reactive mind are enemies of delayed gratification
- Biggest edge: Investing with long term vision & having patience to hold
- Need to embrace short term volatility
- Our behavior & reactive mind are enemies of delayed gratification
12. Building Earning Power Through a Business Ownership Mind-set
-Establishing business: Requires huge Corpus; Owning business : possible with small corpus
-Quality management: Difficult to find & hire; Owning a business: Quality management works for you
-Establishing business: Requires huge Corpus; Owning business : possible with small corpus
-Quality management: Difficult to find & hire; Owning a business: Quality management works for you
- Establishing business: Concentration risk; Owning business: Risk minimisation thru diversification
- Owning a business: Freedom to buy when cheap & sell at premium
- Exiting established business: Cumbersome; Exiting a business ownership: Smooth & easy.
- Owning a business: Freedom to buy when cheap & sell at premium
- Exiting established business: Cumbersome; Exiting a business ownership: Smooth & easy.
13. Investing Between the Lines
Traits of good business as in Annual reports:
- Capital allocation discussed explicitly & rationally.
- Emphasis on cash flow.
- Quantifiable Goals & targets
- Candor: Honesty to admit mistakes & without confusing jargon
"Analyse words b4 numbers"
Traits of good business as in Annual reports:
- Capital allocation discussed explicitly & rationally.
- Emphasis on cash flow.
- Quantifiable Goals & targets
- Candor: Honesty to admit mistakes & without confusing jargon
"Analyse words b4 numbers"
14. The Significant Role of Checklists in Decision Making
Checklists:
- To negate overconfidence on our abilities
- To ensure due diligence before any investing decision
- Helps screen and eliminate business at the initial stage saving time & effort of further analysis.
Checklists:
- To negate overconfidence on our abilities
- To ensure due diligence before any investing decision
- Helps screen and eliminate business at the initial stage saving time & effort of further analysis.
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