The One Percent Almanack

Wit and Wisdom on Investing, Business, and Life

BookWorm: Principles

There are few books that have the capacity to change your life, if you were to practice the lessons shared therein diligently. Ray Dalio’s Principles is one such book. This post contains some of the key life and investment principles and lessons Dalio writes about.

“Some books are to be tasted, others to be swallowed, and some few to be chewed and digested: that is, some books are to be read only in parts, others to be read, but not curiously, and some few to be read wholly, and with diligence and attention.” ~ Sir Francis Bacon, English author, courtier, & philosopher

There are few books that have the capacity to change your life, if you were to practice the lessons shared therein by the author. For me, Peter Kaufman’s Poor Charlie’s Almanack was one of them, and so was Peter Bevelin’s All I Want to Know. Ray Dalio’s Principles, , which I got my hands to recently, is another such book I believe, for reasons you will soon know.
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Behaviouronomics: Incentive Caused Bias

It’s a common fact that people respond to incentives, but the real power of incentives is often unrecognized and underestimated. Incentives influence at the subconscious level, and thus it’s the main culprit behind the immoral behaviour.

2006 was a great year for Google. Two years after its IPO, earnings were growing at 35 percent per year. The company had just bought YouTube for $1.5 billion, and Gmail was quickly becoming the most popular email service in the world. The stock was up almost five times since the IPO and Wall Street loved Google.

However, in its data-center operations, some serious issues were brewing up. Google had not yet perfected the ability to seamlessly scale up and power multiple products that it would later become famous for. Teams struggled to get resources in the data centers.

Sam Schillace, co-founder of the Docs predecessor Writely, described the situation after Google acquired his company as – “They had this crazy hand-cobbled system where there was one guy in the middle doing the planning — it was, like, put a bottle of vodka on his desk, and you’d get your machines for the service.”
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Spotlight: Be the Casino

If you understand probability, then you know how the games at Casino are rigged against you. The strategy then is not to just avoid the casino but become one.

Did you know that some Casinos sell adult diapers at their entrance? That’s a bizarre trivia about casinos. Why in the world would a Casino sell diapers to its customers?

Well, the fact isn’t just strange but very disturbing. Gambling, as we all know, is addictive. And some people get hooked so hard to the slot machines in the Casino that they refuse to leave their seats even for answering nature’s call. Hence the need for adult diapers.

I’m not trying to be funny or sarcastic. Neither am I making this stuff up. “Perfect fit for the gamblers at all-night casinos,” claims one advertisement by a company that markets such diapers.

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Life 2.0: The Hardest Part is Starting, But…

“Sometimes the hardest part isn’t letting go but rather learning to start over.” ~ Nicole Sobon

“The hardest part is starting. Once you get that out the way, you’ll find the rest of journey much easier.” ~ Simon Sinek

If I look back at the most difficult period I went through in my journey of Safal Niveshak, it was the time when I was making the decision to start. The usual fears of quitting a well-paying job and thoughts of not being able to earn enough to feed my family were my chief concerns that led me to several pauses before I finally decided to start this journey.

As I have realized over and over again, and I am sure you would vouch for it, starting something is the hardest part of anything — of cleaning the house, getting into yoga, becoming fit, planning a trip, writing a post like this, learning meditation, building a relationship, or even investing your money.

Starting is no doubt the steepest step, the biggest hurdle, the most giant obstacle standing between where you are and what it is you want to achieve.

Now, the reason starting is often so hard is because that first step is the heaviest, the one with the most resistance. That first step requires the most effort and the most motivation to move through.

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  • Behaviouronomics: Deep analysis of human behaviour and how it impacts investment decision making
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  • Free Course – Financial Statement Analysis for Smart People (otherwise priced at Rs 5,900)
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Two Stories

I have two stories for you today.

Mafias of Silicon Valley

In 2002, eBay acquired Paypal, an online payments company, for $1.5 billion. Unfortunately, the founding members and early employees of PayPal couldn’t adjust to the new corporate culture. Shortly after the acquisition, they left eBay. A number of these ex-PayPal employees worked together to form wildly successful companies in subsequent years. You may recognize some of these names – Elon Musk founded Tesla and SpaceX, Reid Hoffman created LinkedIn, and Steven Chen built YouTube. This group of PayPal alumni became so prolific that a new term was coined for them –PayPal Mafia.

Fortune magazine popularised the term when it published a photo of these former PayPal employees in gangster attire.

The PayPal Mafia (Image Source: Wikipedia)

But PayPal mafia wasn’t the first Mafia group of Silicon Valley. The history goes back to a time when the Silicon Valley didn’t exist.

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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