The One Percent Almanack

Wit and Wisdom on Investing, Business, and Life

Vishal Khandelwal

Life 2.0: Education Beyond Textbooks

“I have never let schooling interfere with my education.” – Mark Twain

You could laugh it off as a humorous quote, but if you pause and reflect, it is a profound observation. The traditional schooling, including majority of the contemporary education systems, instead of facilitating, impedes the real education.

Based on the opening lines, you might think that I am going to criticize our education system and then offer another cookie cutter solution. But that’s not the purpose because I believe there are no right answers. Instead of offering remedies, I am going to raise few unsettling questions in an attempt to jolt you out of your comfort zone and start thinking about the issue. Let me start by borrowing a quote from Steve Jobs. He mused –

“The minute you understand that you can poke life, you push in and something will pop out on the other side, you can change it, you can mould it, that’s the most important thing.”

So this post is more like a poke, an attempt to make a dent by nudging you and starting a chain reaction.<!–more–>

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Benefits to VIA Members
 
  • Spotlight: Big ideas from Value Investing and why applying them in your investment decision making will be a great deal
  • InvestorInsights: Interviews with experienced value investors, learners, and deep thinkers
  • StockTalk: Thorough analysis of business models of companies (without any recommendations)
  • Behaviouronomics: Deep analysis of human behaviour and how it impacts investment decision making
  • BookWorm: Reviews of the best books on Value Investing and related subjects
  • Free Course – Financial Statement Analysis for Smart People (otherwise priced at Rs 5,900)
  • Archives: Instant access to our huge archive from the past three years
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Super Investor: John Neff

John Neff is one of the best known mutual fund investors of the past four decades, notable for his contrarian and value investing styles as well as heading Vanguard’s Windsor Fund. Windsor was the best performing mutual fund during his tenure and became the largest fund closing to new investors in the 1980s. Neff retired from Vanguard in 1995. During his 31 years (1964 to 1995; a very long time in the mutual fund management business) of managing Windsor, the fund returned 13.7% annually versus 10.6% for the S&P 500. That means a US$ 10,000 initial investment would have grown to close to half a million by the end.

Neff was considered the “professional’s professional,” because many fund managers entrusted their money to him with the belief that it would be in safe hands.

So why was John Neff so successful? The reason in his own words – “We relied on relentless applications of low P/E sympathies, abetted by attention to fundamentals and a liberal dose of common sense.”

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Want to Read More? This content is exclusive for members of Value Investing Almanack. Login to read if you are a member. Else, click here to subscribe.

Benefits to VIA Members
 
  • Spotlight: Big ideas from Value Investing and why applying them in your investment decision making will be a great deal
  • InvestorInsights: Interviews with experienced value investors, learners, and deep thinkers
  • StockTalk: Thorough analysis of business models of companies (without any recommendations)
  • Behaviouronomics: Deep analysis of human behaviour and how it impacts investment decision making
  • BookWorm: Reviews of the best books on Value Investing and related subjects
  • Free Course – Financial Statement Analysis for Smart People (otherwise priced at Rs 5,900)
  • Archives: Instant access to our huge archive from the past three years
Become a VIA Member. Click to Subscribe

InvestorInsights: Ayaz Motiwala

Ayaz Motiwala is the founder of Amala Emerging Asia Fund which is focused on investing in quality businesses primarily in India, Indonesia, Thailand and Hong Kong. He has been investing professionally for 20 years of which the last nine years have been out of Hong Kong.

Prior to the current role, Ayaz worked at Samena Capital, a special situations fund based in Hong Kong. He has worked for four years independently managing the India and South Asia investment portfolio of Highbridge Asia Opportunities Fund in Hong Kong. He has also worked in other funds/ security houses viz. New Vernon Capital LLC, Birla Sunlife Asset Management, Motilal Oswal Securities and Ask Raymond James. Ayaz is an MBA in finance from Institute for Technology and Management, Mumbai and Bachelor of Commerce from Mumbai University.

Safal Niveshak (SN): Could you tell us a little about your background, how you got interested in investing, how have you evolved as an investor and what’s your broad investment philosophy? Has your investment policy changed much through the years as your capital has grown?
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BookWorm: The Halo Effect

A book about Halo Effect and eight other business delusions that deceive managers. It attempts to answer the question why is it so hard to understand the high performance of an organization or individual.

Rajiv Bajaj, MD of Bajaj auto, said this in one of his talks –

I joined the company [Bajaj Auto] twenty years back. In my college I was trained to think ‘Just in Time’ because it was supposed to be one solution for all the problems. And then somebody said, Just in Time is not enough. They said there must be Kaizen, World class manufacturing, Toyota production system, Kawasaki system, automation and robotics. Then they said you must also know CAD, CAM, simultaneous engineering, re-engineering, six-sigma, TQM, and you must wear six hats, follow seven habits, look for blue oceans, be a bit of a maverick and indulge in management by walking around. Every time I learnt something I found myself back at the starting point. There was always the new book on the shelf, and there was always the new consultant on the seminar circuit. And these guys would do anything to keep themselves in demand and keep all of us confused. So I decided to ignore all of these.

Rajiv Bajaj turned around Bajaj Auto from a loss making company in the year 2000 to the most profitable auto company in world and it’s pretty clear from his talk that he didn’t do it by listening to those management experts and celebrity CEOs who claim to have the next new thing.
[Read more…] about BookWorm: The Halo Effect

Behaviouronomics: Domain Dependence

In theory there is no difference between theory and practice, but in practice there is. That’s because, for human mind, insights do not pass well from one field to another.

Picture the following. You are led into a room with a table. On the table are three items: a box of tacks, a book of matches, and a candle. Your job is to attach the candle to the wall so the wax doesn’t drip onto the table. You can take as much time as you need. How do you proceed?

If you are like over 75 percent of the participants in the now-classic study by a psychologist named Karl Duncker, who created this experiment in 1945, you would likely try one of two routes. You might try to tack the candle onto the wall—but you’ll quickly find that method to be futile. Or you might try to light the candle and use the dripping wax to attach it to the wall. Again, you’d fail. The wax is not strong enough to hold the candle, and your contraption will collapse. What now?

No one sees the solution at once. Some people find it after only a minute or two of thought. Others see it after faltering through several unsuccessful attempts. And many others fail to solve it without some outside help.

Here’s a hint – think outside the box. Isn’t that a cliché? Thinking outside the box is a phrase which is being overused, rather over-abused, by a parade of creativity experts since ages.
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