The One Percent Almanack

Wit and Wisdom on Investing, Business, and Life

Vishal Khandelwal

How to Retain What You Read

A Safal Niveshak tribe member recently sent us this email…

I am a regular reader of your posts for more than 2 years now and a big fan as well. I am amazed by the knowledge you have gained by your rigorous reading and am writing this mail to ask you specifically ONE question.

How do you retain what you read?

I constantly see you quoting the investing greats and other writers from their books, not once but many times in your articles. On the other hand, I can barely remember what I read the next day itself. How do you do it? I am sure it must be an art that you have already mastered.

I am sure this would be the problem of countless tribesmen. Please do share how you do it so that people like me can benefit from this.

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Life 2.0: Breathe In, Breathe Out

Some of the greatest things, the greatest discoveries, have come about by serendipity. Let’s explore its magic here.

Few years back while working with a colleague in his cubicle, I noticed that a reminder would pop up on his screen every 10 minutes with just one word written on it – Breathe. I tried ignoring it initially but after some time I had to ask him, “Dude! Do you really need to remind yourself to breathe?”

“It’s not just about breathing!” he replied with a smile.

“Care to throw some light?” I asked him.

He started explaining, “Of course, I don’t need to remind myself to breathe. Nobody needs to. Everyone knows how to breathe. It is something that occurs to us automatically, spontaneously, and naturally. We are breathing even when we are not aware of it.

“However, I do need to remind myself to breathe properly,” he continued, “You might find it foolish that there is a proper and improper way of breathing. I mean how hard is it? Just breathe in, and breathe out. Right?”

“Yeah, right.” I said.

“Wrong! The truth is that most people don’t realize the power of breath. If done properly it can increase your energy and productivity manifolds,” he said.

I was intrigued with his statement, but before he could tell me more about it he had to leave for a meeting. But I couldn’t wait so I went ahead and started reading and researching on my own on this and what I found was remarkably profound and life changing.

Control Switch for Physiology

I guess you would agree with me that our behavior influences our performance and the results we produce.

Now what defines our behaviour? Our thoughts. Isn’t it?

And thoughts are governed by feelings which in turn are controlled by our emotions. Our emotions take shape based on our physiology – health, general state of well-being, breathing, heart-rate, etc. Now this isn’t something new and you probably know about this already.

Most of our physiology is largely seen as an effect rather than cause. A common belief is that our physiology can’t be controlled or changed immediately. But there is one thing which is in our control that can control a lot of other involuntary activities like heart rate, body temperature, etc. And that control button is how you breathe.

Let me share some interesting trivia about where else breathing is a well-known tool for performance.

Tennis players use a certain pattern of bouncing the ball or a breathing pattern to put them in an optimum state of mind also referred as ‘the zone’. Right breathing is an effective tool for not just every sportsperson but for many actors and stage artists also.

Ask any accomplished actor and he will tell you that dialogue delivery is all about breathing in a certain way. I remember Aamir Khan talking about how he can induce an emotion in his body just by changing his breathing patterns. That’s what separates him from others – he doesn’t just act but actually lives the character.
[Read more…] about Life 2.0: Breathe In, Breathe Out

InvestorInsights: Amit Arora

Prabhakar Kudva, an engineer by education and an investor by choice, chronicles his serendipitous journey in to the world of value investing and shares some useful insights on portfolio construction

Amit Arora is one of the founders and Chief Investment Officer of Eleven Dimension Funds. After two short stints in India he had the privilege to serve United Nations, based out of Europe from 2000 through 2007.

Since 2007 he has been rendering professional consulting services to a number of New Zealand Government organisations such as Ministry of Justice, Ministry of Business Innovation and Employment, Ministry of Social Development, Inland Revenue Department, Regional Health Boards as an Independent Consultant.

Amit started and managed an investment partnership registered in India under Indian Partnership Act 1932 with a selective total of nine partners out of one hundred and fifteen plus who evinced interest in joining, with a successful track record from 2012-2014.

He is passionate about spirituality, investments, technology and a need for well rounded and balanced life to realise human potential.

Safal Niveshak (SN): Could you tell us a little about your background, how you got interested in investing, and how you’ve evolved over time as an investor?

Amit Arora (AA): I chose Commerce in 11th standard and did MBA in Finance. I landed a below-mediocre first job with Peerless General Finance and Investment Company which felt like 10 years, though it lasted only for 10 months. In 1999, I saw IT folks earning more money, much more than me. So, I was working for money, not passion, I chose to go into software development. I trained in C, Java and got sacked along with rest of the team in 2000. I then stayed at home for 4 months. Then, thanks to luck, I got a few months consulting job in United Nations in Italy in 2001 after a brief unemployment period. This contract kept extending every 3-6 months from 2001 until I got bored by 2006.

I was 30 years old in 2006, no social circle, I preferred being alone by nature, I was twice as old as a teenager, so my hormones started to kick in by now, no girlfriend ever by this time, so I decided to get married in arranged marriage manner in India through our parents, and then thought of moving to an English speaking country like the New Zealand, US, England, Australia or Canada. I wanted to try consulting for Indian companies like Wipro of Infosys for some time, but my better half did not, so we moved to New Zealand in 2007.
[Read more…] about InvestorInsights: Amit Arora

BookWorm: Antifragile – Part 2

Pat Dorsey’s book is one of the most important text that you can read to untangle the puzzle of moat and competitive advantages.

This is the continuation of our book review which we started in the special report last month. I hope the first part of this review piqued enough interest in you to start reading the book.

This is an extremely rich book, insight-wise, and it took me many weeks to absorb the content.

One of the key distinction that one needs to understand is that organic entities are intrinsically antifragile, while artificial creations are at best robust and likely fragile. Most of the man made things especially mechanical ones are subject to wear and tear and horribly fragile in long term. However, some of the intangible creations of man like ideas, technologies, and businesses exhibit antifragility.

For that matter, if you can find an antifragile business you would be done for life! Let me know if you stumble upon such business model, except of course Berkshire Hathaway 🙂
[Read more…] about BookWorm: Antifragile – Part 2

Spotlight: Capital Allocation – Part 1

What’s interesting about moat is that if a moat needs to be continuously built, it isn’t a moat at all. How do you know if you’re paying up or overpaying for the moat? This time we invert the conundrum of moat to explore the symptoms of false-moat trap.

Proper allocation of capital is an investor’s number one job.” ~ Charlie Munger

“Charlie and I have only two jobs…One is to attract and keep outstanding managers to run our various operations. The other is capital allocation.” ~ Warren Buffett

One of the great skills that any investor or businessperson can have is a talent for capital allocation. And when it comes to capital allocation skills, one of the people even supposedly the world’s best capital allocators, Warren Buffett, looks at is Tom Murphy.

“Who’s Tom Murphy?” you may wonder.

Well, I’ll discuss more on my key learnings from Mr. Murphy some other day. But here’s what Buffett once told Lawrence Cunningham, the author of Berkshire Beyond Buffett1 about this man – “Most of what I learned about management and capital allocation, I learned from Murph. I kick myself, because I should have applied it much earlier.”

In fact, Mr. Murphy has been such a great inspiration for Buffett that when you study what the latter has said and written about managing a business, in many cases you are learning indirectly from the former. That is a good thing since Mr. Murphy did not say or write very much in comparison to Buffett. Like many great capital operators (like Henry Singleton) and managers he mostly let his business results speak for themselves, and did not spend any significant time seeking to be noticed by the public.

Along with Buffett himself, Murphy is one of eight CEOs praised in The Outsiders, a cult business classic, which attempts to define what differentiates a small number of leaders who massively outperform the market through their capital allocation skills.

Buffett is quoted in that book as saying that “Tom Murphy and [his long-time business partner] Dan Burke were probably the greatest two-person combination in management that the world has ever seen or maybe ever will see.”

As you can read in the book, the capital allocation formula that Mr. Murphy practiced and what made him so successful, was – focus on industries with attractive economic characteristics, selectively use leverage to buy occasional large properties, improve operations, pay down debt, and repeat.

Anyways, contrast what Buffett says about Mr. Murphy’s capital allocation skills with what he wrote in his 1987 letter3…

“…the heads of many companies are not skilled in capital allocation. Their inadequacy is not surprising. Most bosses rise to the top because they have excelled in an area such as marketing, production, engineering, administration or, sometimes, institutional politics. Once they become CEOs, they face new responsibilities. They now must make capital allocation decisions, a critical job that they may have never tackled and that is not easily mastered. To stretch the point, it’s as if the final step for a highly-talented musician was not to perform at Carnegie Hall but, instead, to be named Chairman of the Federal Reserve.

The lack of skill that many CEOs have at capital allocation is no small matter: After ten years on the job, a CEO whose company annually retains earnings equal to 10% of net worth will have been responsible for the deployment of more than 60% of all the capital at work in the business.
[Read more…] about Spotlight: Capital Allocation – Part 1