Chuck Akre Value Investing Conference Talk: ‘An Investor’s Odyssey: The Search for Outstanding Investments’

An Investor’s Odyssey: The Search for Outstanding Investments

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Howard Marks On Investing

Hi All,

Very happy to be back to my blog post routine, there was a gap of 1month, since I am busy with a few personal tasks.

Now I am returning to the blog post with a bang.

The below interview of Howard Marks is a goldmine of knowledge about investing, in simple terms 50 years of investing experience.

 Warren Buffett has written of Howard Marks: “When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something”

Please listen to this to this wide range of conversation with Tim Ferriss and enjoy.

I highly recommend you to listen to Tim’s podcast.

Howard Marks On Investing

What I am Reading Today

A Hidden Cost Called Rented Suit Liability (Safal Niveshak)

Warren Buffett explained the idea of long-tail hidden costs in his 1985 annual letter 

A man was traveling abroad when he received a call from his sister informing him that their father had died unexpectedly. It was physically impossible for the brother to get back home for the funeral, but he told his sister to take care of the funeral arrangements and to send the bill to him. After returning home he received a bill for several thousand dollars, which he promptly paid. The following month another bill came along for $ 15, and he paid that too. Another month followed, with a similar bill. When, in the next month, a third bill for $15 was presented, he called his sister to ask what was going on. “Oh”, she said. “I forgot to tell you. We buried Dad in a rented suit.

 

People vs. Companies (Morgan Housel)

Every business has three main stakeholders: Investors, employees, and customers.

Investors are easy to please, Mackey said. They just want to stock to go up.

Customers want good products at good prices with good service. Hard but simple.

Employees are another story. Their needs are endlessly complicated.

“If you don’t pay them enough they’re unhappy. If you pay them more, they’re still unhappy if they lack opportunities to advance. If you pay them a lot and give them opportunities, they still may hate their boss,” he said. Or their coworkers. Or their commute. Or they get tired of doing the same thing. Glimpses of satisfaction followed by a gravitational pull towards wanting something else.“

 

Big Mistakes of some of the most successful investors: Part1

By three methods we may learn wisdom First, by reflection, which is noblest; Second, by imitation,  which is easiest; third, by experience which is bitterest.

– Confucius

In this post, we will see some of the most common mistakes we make while investing.

Humans are hard-wired with emotion, we are risk averse, we anchor to our purchase price, we are all manipulated with hindsight bias. Difficult as it is, we must figure out how to prevent previous mistakes from interfering with future decisions.

The best way to learn how hard investing is to do it yourself. The second best way is to examine the mistakes committed by the worlds most successful investors.

The best way to learn to invest can only be done through practice. You can’t learn how to invest through reading a book on investing, you just have to do it over and over and over again.

I hope you will enjoy the post as much as I did enjoy writing it, let’s go and see the mistake of some of the most successful investors.

1. Benjamin Graham

Benjamin Graham, the dean of Value investing has written Security Analysis in 1934 which are just as relevant today as they were in 1934. Ben Graham is to investing as what Wright Brothers are to flights.

Value Investing is

“to purchase a security at less than their intrinsic value as determined by careful analysis, with particular emphasis on buying less than liquidation value” 

The most important lesson investors should take from the person who taught us the difference between value and price is that value is not a Solution. Cheap can get cheaper. Rich can get richer. Margins of safety can be miscalculated, and value can fail to materialize.

Value investing is a wonderful option over the long-term, it is not immune to the short-term vicissitudes of the market.

Solution:

Try to Avoid Value Traps

It’s critically important to be aware of the value, but it’s more important not be a slave to it. Graham Taught us that there are no iron-clad laws in finance and that cheap can get cheaper.

Books Recommended

The Intelligent Investor

2. Jesse Livermore

was a full-blooded character who happened to embody every trade maxim of the time.

Here are some of the quotes from the famous trader and market speculator

“They said there are two sides to everything. But there is only one side to the stock market and it’s not bull side or bear side, but the right side”

“The training of a stock trader is like a medical education. The physician had to spend long years learning ”

“I had made a mistake. But where? I was bearish in a bear market. That was wise, and I had sold stocks short. That was proper. But I have sold them too soon, and that was costly. My position was right but my play was wrong”

Always sell what shows you a loss and keep what shows you a Profit”

“a man must believe in himself and his judgment if he wants to make money a living at this game. That is why I don’t believe in tips. If I buy stocks based on smith’s tips I must sell those stocks based on Smith’s tip… No sir. nobody can make big money on what someone else tells him to do”

“All my life I have made mistakes, but in losing money I have gained experience and accumulated a lot of valuable don’ts. I have been flat broke several times, but my losses have never been a total loss. I always know I would have another chance and that I would not make the same mistake the second time. I believed in myself”

What can we learn

“if a man is both wise and lucky, he will not make the same mistake twice. But he will make any other ten thousand brothers or cousins of the original. The mistake family is so large there is always one of them around”

Investing is inherently an act of uncertainty, so we can never say to ourselves “I’ll never let this happen again”. Risk Management is part of investing. Repeating is part of investing. its all part of investing.

Solution:

Focus on avoiding unforced error.

Books Recommended

Reminiscences of a Stock Operator

3. Mark Twain

A Humorist and a highest paid writer in America.

When Dollars transmitted from our pocket to an investment, the expectation is they’ll become more in the future. But when the results disappoint us, we are loath to admit we are wrong. Our natural tendency is to hold onto the losers.

we are deferring the defeat and keeping our ego intact.

In the world of finance, nothing springs eternal like hope. we will watch out holdings fall 5% loss becomes 10%, with fear as it becomes 20% and utter terror as it falls any further.

He has speculated in a lot of new ventures and often throws good money after bad money, which resulted in his bankruptcy.

Great Line to Describe the danger of holding on to losers

“I will get out when I’m even” is a poisonous thought.

“A stock that fell from $100 to $20, that doesn’t  mean it can’t easily fall to $10”

40% of stocks that experienced a 70% decline from which they never recovered.

“If you ever find yourself in a hole stop digging”

Some of his quotes

” A banker is fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain”

“I was seldom able to see an opportunity until it had ceased to be one”

“There are two times in a man’s life when he should not speculate when he can’t afford it, and when he can”

What can we learn?

Risk and reward go together as copy and paste; there cannot be one without the other.

Keep your losses manageable

Solution

The best way to avoid catastrophic losses is to decide before you invest how much you are willing to lose, either in percentage or dollar terms

 

This post is part 1 of the Big Mistakes by Great investors, we will release the Part 2 soon…

We hope you have enjoyed reading this post, if like it please share this post with your friends and family.

Happy Investing

Source:

3 Big Mistakes: The Best Investors and Their Worst Investments

 

Howard Marks on Passive Investing , Quantitative Algorithmic Investing , AI & Machine Learning

This memo covers three ways in which securities markets seem to be moving toward reducing the role of people:

(a) index investing and other forms of passive investing,

(b) quantitative and algorithmic investing, and

(c) artificial intelligence and machine learning

A fascinating discussion, please read it and enjoy!!

 

Investing Without People, Howard Marks

Weekend Brainfeed: 23-June-2018

Every week I go through a ton of reading, these are the interesting content I found useful for this week.

I hope you will enjoy as much as I do.

If you enjoy it please share and comment your feedback.

 

Quote, I’m pondering —

“The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard.”
— Warren Buffett

 

How Much is Enough?

Smarter, Not Harder: How to Succeed at Work

Courage to Be Yourself: E.E. Cummings on Art, Life, and Being Unafraid to Feel

 

How 10 Billionaires Surmounted Failure to Build Massive Empires

“How do you guys have time to manage money, between tweeting and writing and tv and radio?”

 

Enjoy and Have a Great Week End.

 

How to Get Rich (without getting lucky) – Naval Ravikant

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Naval is one of the greatest minds out there in public forum, he is a great reader, thinker. Here is a thread of tweet he shared recently which made a lot of sense on few important aspects of life like wealth, knowledge.

Here is the collection of the thread please read it and enjoy!!

  1. Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.
  2. Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.
  3. You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain your financial freedom.
  4. You will get rich by giving society what it wants but does not yet know how to get. At scale.
  5. The Internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.
  6. Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
  7. Pick business partners with high intelligence, energy, and, above all, integrity.
  8. Learn to sell. Learn to build. If you can do both, you will be unstoppable.
  9. Arm yourself with specific knowledge, accountability, and leverage.
  10. Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.
  11. Building specific knowledge will feel like play to you but will look like work to others.
  12. When specific knowledge is taught, it’s through apprenticeships, not schools.
  13. Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
  14. Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
  15. The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.
  16. “Give me a lever long enough, and a place to stand, and I will move the earth.”
    – Archimedes
  17. Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
  18. Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.
  19. Labor means people working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.
  20. Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep.
  21. If you can’t code, write books and blogs, record videos and podcasts.
  22. Leverage is a force multiplier for your judgment.
  23. There is no skill called “business.” Avoid business magazines and business classes.
  24. Reading is faster than listening. Doing is faster than watching.
  25. You should be too busy to “do coffee,” while still keeping an uncluttered calendar.
  26. Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.
  27. Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.
  28. Become the best in the world at what you do. Keep redefining what you do until this is true.
  29. There are no get rich quick schemes. That’s just someone else getting rich off you.
  30. Apply specific knowledge, with leverage, and eventually, you will get what you deserve.
  31. When you’re finally wealthy, you’ll realize that it wasn’t what you were seeking in the first place. But that’s for another day.

Source:

https://mobile.twitter.com/naval/status/1002103360646823936