The One Percent Almanack

Wit and Wisdom on Investing, Business, and Life

Vishal Khandelwal

Spotlight: In Investing, Beware the Red Queen

Buying businesses that require constant capital reinvestment and earn lower incremental returns can be disastrous in your wealth creation journey.

In Lewis Carroll’s “Through the Looking Glass”, Alice finds that she has to run faster and faster just to stay in place.

“Well, in our country,” said Alice, still panting a little, “you’d generally get to somewhere else if you run very fast for a long time, as we’ve been doing.”

Here’s the advice Red Queen, an antagonist in the story, offers to Alice…

A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!

In sum, the Red Queen advises Alice to exert ever more effort just to maintain her current position.

Evolutionary biologist Leigh Van Valen took inspiration from the Red Queen’s words and proposed a principle called the Red Queen Effect in 1973 to explain how, for an evolutionary system, continuing development is needed just in order to maintain its fitness relative to the systems it is co-evolving with.

In biology, this means that animals and plants don’t just disappear because of bad luck in a static and unchanging environment, like a gambler losing it all to a run of bad luck at the casino.
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Life 2.0: Experimenting with Water

Scientists say that water constitutes 70% of human body. Of course a quantum physicist would argue that 99.99% of our bodies is nothing but empty space. But I guess whatever is left out from that empty space, 70% of that is water.

From a great skin to fat loss, the benefits of drinking adequate water are universally known. I am not going to harp on the benefits of drinking sufficient water every day. There is enough information on the Internet and hundreds of books have already been written, read and forgotten on this subject.

In this post I am going to share my finding based on a 3-months long personal experiment to increase my daily water intake.

According to one scientific study you should drink 0.033 of a litre of water per day for every kilogram of bodyweight. So if you weigh 65 kg, that is 65 * 0.033 = 2.145 litre of water per day. But that’s bare minimum.

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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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BookWorm: How to Get Lucky

A wise man once said “I am a great believer in luck. The harder I work, luckier I get.”

I am sure you’ve heard of this saying a number of times in the past. It’s usually quoted by those who belong to the meritocratic school of thought which says, “If you’re good, you don’t need luck.”

If you’re successful it’s a natural human tendency to assume the credit for your success. After all you must have worked hard for it and you surely deserve it. But when I think of my life, I have seen and met many individuals who always worked harder and yet they sadly remain unsuccessful.

Goes with saying that I have also met those who achieved great heights with significantly less effort. These are the people who manage to attract much more than their fair share of luck. Usually we look down on such people with disdain. It’s assumed that any success founded on element of luck is inherently undeserving.

Do you know someone who always manages to find himself in the right place at the right time? Before you label him as lucky, ask yourself – do you think his luck is out of pure randomness? May be he has a knack for reaching to the right place at the right time.

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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: Gaurav Jalan

Gaurav Jalan, an enterprising and inspiring young value investor shares his invaluable insights and experiences in sensible, long-term investing.

Gaurav has 14 years of experience in management consulting and investment management. He manages investment portfolios for high net worth individuals and companies as Chief Investment Officer at Avant Garde Wealth Management. Previously, he was an Investment Analyst at Fidelity International in Mumbai and also worked as a Senior Associate Consultant at Bain & Co., New York. Gaurav completed his MBA from Columbia Business School, New York in 2006 and his B.A. in Economics and Computer Science from Amherst College, Massachusetts in 2001.

In his interview with Safal Niveshak, Gaurav shares his wide investment experience and how small investors can practice sensible investment decision making.

Safal Niveshak (SN): Could you tell us a little about your background, how you got interested in value investing?
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BookWorm: The Hard Thing About Hard Things

Building a business is hard and there are no easy answers to the tough problems business throws at you every day. A high technology entrepreneur and a venture capitalist shares an honest and straight talk based on his experience in starting, running and selling a billion-dollar company.

While many people talk about how great it is to start a business, very few are honest about how difficult it is to run one. In fact, calling it difficult would actually be an understatement.

Building a company inevitably leads to tough time. It’s just hard and the hard thing about it is that there is no formula to deal with those hard things.
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