The One Percent Almanack

Wit and Wisdom on Investing, Business, and Life

Bookworm: Revisiting How to Fail at Almost Everything and Still Win Big

If you’ve been a long time reader of Value Investing Almanack, you’d have guessed that I am a big fan of Scott Adams. For the uninitiated, Scott Adams is the creator of Dilbert, one of the most popular and widely distributed comic strips of the past century. He has been a full-time cartoonist since 1995, after sixteen years as a technology worker for companies like Crocker National Bank and Pacific Bell. Apart from being a cartoonist he has written many bestselling books and is sought after speaker in corporate circles.

I had written about this book in December 2015 issue of VIA. However, some books are so good that they deserved to be read multiple times. This book falls in the category of those “must re-reads.” Don’t let the slipshod title fool you. I can vouch for the tremendous utility of Scott’s methods.
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Behaviouronomics: Motivated Reasoning

An oxymoron is a figure of speech in which apparently contradictory terms appear in conjunction. To me, the word motivated reasoning seems like an oxymoron. Let me explain.

Sound reasoning should be objective — devoid of any or all biases/motivations. Right?

But the human mind is a house of paradoxical features. As it tries to get rid of one bias, it leaves the backdoor open for the same bias. Motivated reasoning is a bias that affects that part of our mind which is often referred to as rational and objective.

Let me give you a quick refresher on System 1 Vs. System 2 concept.

World famous psychologist Daniel Kahneman has done revolutionary work in the field of understanding human cognition. His two systems framework is a brilliant mental construct to decode how our brain makes decisions. System 1 is the result of our reflexive brain — quick and eager to jump to conclusions. System 2 is our reflective brain — slower, effortful, logical, and less prone to error.
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Special Report: 27 Ideas on What Doesn’t Work — Part Two

Inspired by Charlie Munger’s super quote — All I want to know is where I’m going to die so I’ll never go there — Peter Bevelin wrote a book with the same title. Bevelin’s book distills the wisdom from Charlie Munger and Warren Buffett’s quotes from their speeches, interviews, and annual meetings. The book is an extraordinary compendium to learn how to make better decisions in life, investing, and business.

In this multi-part series, I am going to share some insights from this book. These ideas would be focused on identifying anti-patterns — things that one should do to increase the odds of undesired outcomes. Learning the anti-patterns is a more robust form of knowledge acquisition than focusing on success patterns. Anti-patterns are those patterns which consistently lead to poor outcomes and thus need to be avoided.

These ideas are like cautionary tales. Following these anti-patterns gives one a head start on the path to failure — which of course no one wants. That’s another way of saying that if one avoids these anti-patterns, then it increases the likelihood of living a highly satisfying life.

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Investor Insights: Jiten Parmar

Jiten is an entrepreneur and a passionate long-term investor. He has been investing in the market since 1993, starting with US equities and then Indian equities in 2002.

In this interview, Jiten shares his evolution as an investor, key lessons learned, his investment process especially in investing in cyclical industries, and how he tries to minimize decision making mistakes.

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Wandering with a Beginner’s Mind

Among all the contemporary business leaders, very few come close to Jeff Bezos’ talent for communicating business strategies in a simplified manner. Like Warren Buffett, Bezos writes an open letter to Amazon’s shareholders every year. He’s been doing it for over two decades.

These letters have become an extraordinary source of insight into how Bezos (the world’s richest man) and his company (Amazon) think about customers, innovation, building products, and future.

Amazon started as an online bookselling platform and interestingly didn’t turn a profit for the first six years. Today it’s the second publicly traded company (after Apple) to ever hit a market capitalization of $1 trillion.

Like me, if you’re an admirer of Bezos, then you’re in the good company of people like Warren Buffett and Charlie Munger who are also big fans of the Amazon CEO. Buffett and Munger admit that they failed to see Bezos’ genius early on. Buffett called him the most remarkable business person of our age. Munger, in his nonchalant voice, said, “Jeff Bezos is a different species.”
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