The One Percent Almanack

Wit and Wisdom on Investing, Business, and Life

Vishal Khandelwal

BookWorm: Antifragile – Part 1

Antifragile, written by Nassim Nicholas Taleb, contains more than four hundred pages (excluding the appendix) of densely packed insights and concentrated doses of ideas. And it would be very hard for me, and unfair to you, if I try to squeeze in all the learning from this book in one article.

So I am going to split this BookWorm post into multiple parts. This is the first part. We will be covering the second part (and more, if required) in subsequent VIA issues.

Nassim Taleb is one of my favourite authors. Before Antifragile he had authored two other best-selling books – The Black Swan and Fooled by Randomness, both of which are also must-reads. In fact, all three books are quite related to each other, like a trilogy. Many of the ideas that Taleb wrote about in his earlier two books, have found their logical conclusion in Antifragile.

<!–more–>

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

Industry Scan: Hotels

It was sometime in 2006, when I first visited Bangalore, and went to meet a friend at Leela Palace. I was in awe of the property – it was grand, and amazingly beautiful. On enquiring, I got to know that the hotel was one of the most expensive locations in India and was still completely booked for the next few months.

The story was same everywhere – most of Leela’s properties were booked for months, despite their premium pricing.

“What an amazing business!” I told myself. “Just imagine the kind of profits these guys must be making. I must have this stock in my portfolio!”

The next day, without trying to know more about the economics of the hotel industry and Leela’s business and financial performance, I bought the stock, expecting it to be a story that was waiting to be unveiled.

Well, it was indeed a story waiting to be unveiled…and for me!

<!–more–>

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

Life 2.0: Sleep

Some of the greatest things, the greatest discoveries, have come about by serendipity. Let’s explore its magic here
A wise man once said, “Your future depends on your dreams.” to which a not-so-wise man replied, “So go to sleep”.

That’s an old joke but I believe that there may be some element of truth to it. After all if we spend a third of our lives sleeping, the nature must have a crucial design principle behind it.

I am sure everybody has experienced sleep deprival. Can you recall few such instances in your life? Let me help you – remember those all night movie marathons during college days? Or those night outs spent chatting with your buddies for hours together.

Well, not every night out is for fun. How about those do-or-die project deadlines with unlimited supply of pizzas and coffee but very limited supply of time and tolerance for mistakes?

The only common thread at the end of these kinds of events, apart from bloody red eyes and tired mind, is a burning desire to find a bed and just crash.

Ideally, you shouldn’t lose your sleep over harmful effects of sleep deprival (pun intended), unless it becomes a regular feature of your routine.

On 21st Oct. 2009, 42-year old Ranjan Das, CEO of SAP-Indian Subcontinent and the youngest CEO of an MNC in India, collapsed and died after suffering a massive heart attack. He had returned home after completing a workout at the gym.

Perhaps his body was not prepared to handle overexertion? Actually no! He was as fit as anybody could be at his age. He was very active in sports, was a fitness freak and a marathon runner. So why did an exceptionally active, athletic person succumb to heart attack at a relatively younger age.
[Read more…] about Life 2.0: Sleep

InvestorInsights: Prabhakar Kudva

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.

Prabhakar is the co-founder and executive director at Samvitti Capital Pvt. Ltd. which manages the SEBI approved category III alternative investment funds. He has been involved with the equity markets for about ten years now. His focus has been investing in growth businesses that have the potential to scale up over the next several years. He blogs here.

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?

Prabhakar Kudva (PK): If I have to sum up my life up till now in one word, that word like Prof Bakshi says, would be serendipity.

I was extremely fortunate to be born to a set of parents who imbibed very early into my thought process the value of good education and prudent behaviour. I am eternally grateful to them for encouraging me to read and buying me all the books I ever wanted to buy. I am originally from a place called Mulki, which is a small town in Mangalore district in Karnataka. My father was a banker and I spent most of my transformative years in Delhi. We used to visit our home town once every year during my summer vacations and that’s where my stock market journey began. My maternal uncle is an avid stock market participant and probably one of the early practitioners of technical analysis in India. I was 15-16 years old and when I visited him during vacations he used to make me sit through tens of charts as we analysed them together. I was intrigued at first and subsequently taken – like fish to water.
[Read more…] about InvestorInsights: Prabhakar Kudva

BookWorm: The Little Book that Builds Wealth

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

Warren Buffett, in his 1987 letter to shareholders, while talking about GEICO, gave a new meaning to the word ‘Moat’. He wrote –

“The difference between GEICO’s costs and those of its competitors is a kind of moat that protects a valued and much-sought-after business castle…He [Bill Snyder, chairman of GEICO] continually widens the moat by driving down costs still more, there by defending and strengthening the economic franchise.”

Moat is a metaphor for companies having durable competitive advantage. Pat Dorsey, in this wonderful book The Little Book That Builds Wealth, explains –

“There are lot of ways to make money in the stock market. You can play the Wall Street game, keep a sharp eye on trends, and try to guess which companies will beat earnings estimates each quarter, but you’ll face quite a lot of competition.

You can buy strong stocks with bullish chart patterns or superfast growth, but you’ll run the risk that no buyers will emerge to take the shares off your hands at a higher price. You can buy dirt-cheap stocks with little regard for the quality of the underlying business, but you’ll have to balance the outsize returns in the stocks that bounce back with the losses in those that fade from existence.

Or you can simply buy wonderful companies at reasonable prices, and let those companies compound cash over long periods of time. Surprisingly, there aren’t all that many money managers who follow this strategy, even though it’s the one used by some of the world’s most successful investors. (Warren Buffett is the best-known.)”
[Read more…] about BookWorm: The Little Book that Builds Wealth