Blog – Value Investing Almanack – Safal Niveshak

Special Report: 27 Ideas on What Doesn’t Work — Part Seven

September 30, 2019

This is the seventh and the last post of the multi-part series based on Peter Bevelin’s book — All I Want to Know is Where I’m Going to Die, So I’ll Never Go There.

My favourite author Nassim Taleb is not very generous when it comes to praising other authors but when he does, you can be sure that Taleb means it and not doing it out of politeness. And this is what Taleb says about Bevelin —

Peter Bevelin is one of the wisest people on the planet.

Of Good Stories and Bad Businesses

September 27, 2019

The company WeWork has been in the recent news for a lot of reasons — many of them not so comforting for the company’s private investors. Those who haven’t heard of WeWork or don’t know much about it, here’s a primer on Wework’s business model.

In one line, WeWork leases out large office spaces, upgrades them, makes them look cool and upscale, and rents them out on per seat basis to either individuals or other companies. In case you’ve heard of the term coworking spaces, WeWork is that.
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Bookworm: The Unusual Billionaires

September 15, 2019

Warren Buffett in his 2012 annual letter to investors, recommended William Thorndike’s book The Outsiders. Buffett called it an outstanding book about CEOs who excelled at capital allocation. The eight terrific CEOs that featured in the book have generated exceptional results across a wide variety of industries and market conditions. We had written about Outsiders in April 2016 as part of VIA bookworm series.

Saurabh Mukherjea’s book is the answer to The Outsiders. Mukherjea writes —

The book [The Outsiders] changed the way I perceived and analysed companies which have been successful over long periods of time (we are talking decades here). What Thorndike helped me grasp was that the truly great companies take the surplus cash flows created by their sustainable competitive advantages and then either return those to shareholders or reinvest those in their core franchise, or — and this is the litmus test of greatness — reinvest those successfully in new activities or markets. It is in those latter set of investments outside the core franchise that a great company assures its future regardless of how economic circumstances and customers’ tastes pan out. Without that insight from The Outsiders, there would be no The Unusual Billionaires.

Special Report: 27 Ideas on What Doesn’t Work — Part Six

August 31, 2019

This post is the sixth episode of the multi-part series based on Peter Bevelin’s book — All I Want to Know is Where I’m Going to Die, So I’ll Never Go There.

So why are we talking about ideas on what doesn’t work rather than ideas on what works? Isn’t it a negative approach to talk about what doesn’t work? I’ll let Nassim Taleb explain why this works. In his book Antifragile, Taleb writes —

The greatest — and most robust — contribution to knowledge consists in removing what we think is wrong — subtractive epistemology…we know a lot more what is wrong than what is right…negative knowledge (what is wrong, what does not work) is more robust to error than positive knowledge (what is right, what works). So knowledge grows by subtraction much more than by addition — given that what we know today might turn out to be wrong but what we know to be wrong cannot turn out to be right, at least not easily…disconfirmation is more rigorous than confirmation.

Charlie Munger, while wearing his curmudgeon hat, declared, “All I want to know is where I am going to die, so I’ll never go there.” And that’s his way of driving home Taleb’s point about focusing on the negative knowledge.

Bevelin’s book is dedicated to Charlie Munger’s philosophy. Here are a few more insights from the book on what doesn’t work.
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Investor Insights: Investing Amidst Uncertainty

August 31, 2019

In this special edition of InvestorInsights, we pick the brains of a few experienced value investors and money managers on how they deal with uncertainty like what is seen in the markets currently.

Safal Niveshak: Uncertainty is not a new thing for the Indian economy, companies and the markets. But people still get spooked. Even otherwise, when a lot of people know that investing is important, they are often either too scared, too intimidated, or too uncertain when such situations arise.

You have been in the markets for a long time and may have experienced multiple such periods of high uncertainty with respect to the markets, companies, and the economy. What advice do you have for new, inexperienced, or young investors on how they can deal with such situations?