The One Percent Almanack

Wit and Wisdom on Investing, Business, and Life

📚 Summerhill

What’s your favourite book?

I found one of the best ways to answer this question is to recall which book you have gifted the most.

I always have three copies of Summerhill sitting on my bookshelf waiting to be gifted. The book came as a recommendation from Naval Ravikant — a silicon valley entrepreneur.

The methods suggested in the book will make you uncomfortable because few parents have the courage and independence to care more for their children’s happiness than for their success.
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Spotlight: How Many Stocks Should You Own?

“Never put all your eggs in one basket.” ~ Proverb

“Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket.” ~ Andrew Carnegie

The fight of putting all your eggs in one basket and not doing so seems as old as the egg itself.

The story is the same when it comes to diversifying (eggs in many baskets) or concentrating (eggs in very few baskets) your investment portfolio.

So if you are grappling with this question – “How many stocks should I own to make a diversified portfolio?” – don’t worry for you are not alone in struggling with this question.
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📚 The Elements of Eloquence

Who is considered the greatest writer in the English Language?

William Shakespeare.

His work Antony and Cleopatra contains some of the finest poetry. It was inspired by Thomas North’s 1579 English translation of Plutarch’s Lives. To say that Shakespeare took inspiration from North’s work would be an understatement.
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Behaviouronomics: Memory Bias

On October 12, 1980 Steve Titus, a restaurant manager in Seattle, was pulled over by a police officer. Titus was on his way home with his girlfriend.

The officer informed him that his car resembled a car that was driven earlier in the evening by a man who raped a female hitchhiker. So they took Titus’ picture and put it in a photo lineup which was later shown to the victim. She pointed to Titus’ photo and said, “That one’s the closest.”

Based on this, Titus was put on trial. In the court, the rape victim confirmed, “I’m absolutely positive that’s the man.” That was enough to convict him. The judge pronounced him guilty and sent him to prison.
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Do As I Say, Not As I Do

A few days back, a friend called me to discuss a new stock idea that he was excited about.

“Do you know that Rakesh Jhunjunwala’s investment in Delta Corp was close to 400 crores a few months back. And now even when the stock has gone down by more than 60 percent, he is still holding on to it. With so much at stake, I am sure Delta corp is his high conviction stock.”

“We can’t say for sure if Delta corp is his high conviction stock,” I said. “He has many other stocks in his portfolio.”

“Yes, but look at the size of his investment. Four hundred crores is not a small amount.” My friend reasoned.

I could not find a convincing answer to counter my friend’s argument at that time but I kept thinking about it. This post is my attempt to answer my friend and offer some insights on how to think more rigorously before deciding to copy other successful investors.
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