Here is some stuff I am reading and thinking about this weekend…

Book I’m Reading – How to Fail at Almost Everything and…
If you don’t know who Scott Adams is, odds are high that you would give a pass to a book with such a cheesy and hackneyed title. But if you did that it would be a huge loss. Scott’s How to Fail at Almost Everything and Still Win Big is one of my all-time personal favourites and I can vouch for the tremendous utility of his methods.

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.

The title of the book is intriguing and Scott claims that he has at least failed in 36 different businesses. But in the process of failing he kept accumulating useful knowledge and skills in business, marketing, product, customers etc.

Based on his personal experience he has charted a template for success which, according to him, will not guarantee success but definitely increase your odds. Scott writes in his book –

This is a story of one person’s unlikely success within the context of scores of embarrassing failures…Was my eventual success primarily a result of talent, luck, hard work, or an accidental just-right balance of each? All I know for sure is that I pursued a conscious strategy of managing my opportunities in a way that would make it easier for luck to find me. Did my strategy make a difference, or is luck just luck, and everything else is just rationalization? Honestly, I don’t know. That’s why I suggest you compare my story with the stories of other people who found success and see if you notice any patterns.

That’s the kind of honest confession I look for from anyone whose advice I am willing to take.

Idea I’m Thinking – Give Serendipity A Chance
Sometimes too much emphasis is given to goal setting. Remember, the goal of having a goal is to push you forward, to start the ball rolling and provide a general direction for proceeding. But getting rigidly attached to the goals can turn them into roadblocks.

Having a vision is very important and one should be quite inflexible on that, but goals are supposed to be intermediate milestones which means there should be adequate room to take a detour. If you put blinders on yourself so that you can see only straight ahead, you will miss nearly everything.

Let serendipity take you to new places. Serendipity is finding something better which you weren’t looking for at the first place. You need to allow the serendipitous forces of nature to manifest your desires in whatever ways possible.

In business, planning fallacy is the biggest enemy of progress. Never take long-range plans seriously. Use them for general guidance as long as they seem to be taking you where you want to go, but whatever you do, don’t get stuck with them. Throw them in the trash heap as soon as something better comes along.

I used serendipity in starting and running Safal Niveshak over the past 9+ years. I never had a formal business plan, and have let serendipity and “need of the hour” based thinking to guide me. Look at my entire business plan that I created in 2011 (I didn’t stick to the big idea but, thankfully, to the principles :-)) –

It’s easy for new investors to get confused between a sensible investment goal and achieving a specific rate of return. Legendary investor Seth Klarman, in his book Margin of Safety, wrote –

Setting a goal unfortunately, doesn’t make that return achievable. Indeed, no matter what the goal, it may be out of reach. Stating that you want to earn say, 15 percent a year, does not tell you a thing about how to achieve it. Investment returns aren’t a direct function of how long or hard you work or how much you wish to earn…An investor cannot decide to think harder or put in overtime in order to achieve a higher return. All an investor can do is follow a consistently disciplined and rigorous approach, over time the returns will come.

In fact the focus for people, who set out to achieve a specific rate of return, naturally gravitates towards the upside potential and the analysis of downside risk takes a backseat.

To bring serendipity in your investing process, keep your eyes and ears open. Stay vigilant of the businesses and ideas that you come across when you’re not looking for investing ideas.

Thoughts I’m Meditating On

Warren Buffett: Charlie and I don’t know our cost of capital. It’s taught at business schools, but we’re skeptical. We just look to do the most intelligent thing we can with the capital that we have. We measured anything against our alternatives. I’ve never seen a cost-of-capital calculation that made sense to me. Have you, Charlie?

Charlie Munger: Never. If you take the best text in economics by Mankiw, he says intelligent people make decisions based on opportunity costs – in other words, it’s your alternatives that matter. That’s how we make all of our decisions. The rest of the world has gone off on some ckick – there’s even a cost of equity capital. A perfectly amazing mental malfunction.

~ Warren & Charlie

What you do speaks so loudly that I cannot hear what you say.

~ Ralph Waldo Emerson

Video I’m Watching – Dream
First they ignore you, then they laugh at you, then they fight you, then you win. ~ Mahatma Gandhi

Articles I’m Reading

• The Playing Field (Graham Duncan)
• Li Lu’s 2006 Talk at Columbia (Brian Langis)
• Bill Ackman — The Creative Side of Investing (Medium)
• Why Liquid Net Worth Is So Important For Your Finances (Of Dollars and Data)
• You Must Stare This Scary Fact in the Face (Ryan Holiday)
• Acceptable Flaws (Morgan Housel)
• Naval Ravikant on meditation. (Naval)
• A is for Automation: A Book to Prepare Your Children for the Future of Work (Quartz)
• Nearly Half of Men Say They Do Most of the Home Schooling. 3 Percent of Women Agree. (NY Times)
• The Pandemic is Changing How Human Beings Think about Status (Fast Company)

A Question for You
Is there something you’re still holding on to? Is it time to let it go?

That’s about it from me for today.

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Dream. Stay safe.

With respect,
— Vishal

https://www.safalniveshak.com/how-to-fail-and-still-win-big/