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Kindle Notes & Highlights
by
Gautam Baid
Read between
December 17 - December 30, 2023
Time transforms risk, and the nature of risk is shaped by the time horizon [emphasis added]: the future is the playing field. —Peter Bernstein
People are trying to be smart—all I am trying to do is not to be idiotic, but it’s harder than most people think [emphasis added]. —Charlie Munger
Extreme events are where ruin is found. It’s also true that these extreme changes in securities prices may be much greater than you would expect from the Gaussian or normal statistics commonly used. —Edward Thorp
The most valuable part of history is studying how people behaved when something unprecedented happened. It’s the most consistent thing over time [emphasis added]. —Morgan Housel
If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen to the stock market. —Benjamin Graham
We believe that short-term forecasts of stock or bond prices are useless. The forecasts may tell you a great deal about the forecaster; they tell you nothing about the future. —Warren Buffett
Be a business analyst, not a market, macroeconomics, or security analyst. —Charlie Munger
Nor did they render unsound the negotiated purchases of fine businesses at sensible prices
“In times like these, it helps to recall that there have always been times like these.”
Charlie and I believe that when you find information that contradicts your existing beliefs, you’ve got a special obligation to look at it—and quickly. —Warren Buffett
Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith
If we only look to confirm our beliefs, we will never discover if we’re wrong. Be self-critical and unlearn your best-loved ideas. Search for evidence that disconfirms ideas and assumptions. Consider alternative outcomes, viewpoints and answers. —Peter Bevelin
“Failure terrifies people. They’ll do whatever they have to do to downplay it, wish it away, and just plain pretend it doesn’t exist. Most of the time, they’ll go on living in denial long after the truth of their predicament becomes obvious.”
“The test of a business man is not whether he can make money in one or two boom years, or can make money through the luck of getting into the field first, but whether in a highly competitive field, without having any initial advantage over his competitors, he can outdistance them in a perfectly honorable way and keep the respect of himself and of his community.”
We are capable of changing our minds if the facts change. We’ve done this several times, but I must say, it is hard. —Charlie Munger
“The best time to invest is when you have money. This is because history suggests it is not timing which matters, but time.”
As Munger says, “The big money is not in the buying and selling, but in the waiting.”
As Walter Schloss used to say, “Investing should be fun and challenging, not stressful and worrying.”
Confucius’s teaching well: “A man who has committed a mistake and doesn’t correct it is committing another mistake.”
Benjamin Franklin’s words “Beware of little expenses; a small leak will sink a great ship.”
Within the growth stock model, there’s a sub-position: There are actually businesses that you will find a few times in a lifetime where any manager could raise the return enormously just by raising prices—and yet they haven’t done it. So they have huge untapped pricing power that they’re not using. That is the ultimate no-brainer. —Charlie Munger
Just as animals flourish in niches, people who specialize in some narrow niche can do very well. —Charlie Munger
There’s a model that I call “surfing”—when a surfer gets up and catches the wave and just stays there, he can go a long, long time. —Charlie Munger
One of the lessons your management has learned—and, unfortunately, sometimes re-learned—is the importance of being in businesses where tailwinds prevail rather than headwinds. —Warren Buffett
Cognition, misled by tiny changes involving low contrast, will often miss a trend that is destiny. —Charlie Munger
A business should be viewed as an unfolding movie, not as a still photograph. —Warren Buffett
The financial community is usually slow to recognize a fundamentally changed condition, unless a big name or a colorful single event is publicly associated with that change. —Philip Fisher
If you believe you are in perfect control of your life, you are kidding yourself…
Buffett has said about his experiences with difficult businesses: “There’s never just one cockroach in the kitchen.”
What you should learn when you make a mistake because you did not anticipate something is that the world is difficult to anticipate. That’s the correct lesson to learn from surprises—that the world is surprising. —Daniel Kahneman
The chief difference between a fool and a wise man is that the wise man learns from his mistakes, while the fool never does. —Phil Fisher
For the great majority of transactions, being stubborn about a tiny fractional difference in the price can prove extremely costly. —Philip Fisher
It’s not greed that drives the world, but envy. —Warren Buffett
Once you get something that works fine in your life, the idea of caring terribly that somebody else is making money faster strikes me as insane. —Charlie Munger
There is a complicating factor that makes the handling of investment mistakes more difficult. This is the ego in each of us. —Phil Fisher
As Charles Kindleberger says, “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich.”
Ernest Hemingway’s words: “There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.”
As Munger says, “You don’t have to pee on an electric fence to learn not to do it.”
When we have a negative opinion about the person delivering the message, we close our minds to what they are saying and miss a lot of learning opportunities because of it. Likewise, when we have a positive opinion of the messenger, we tend to accept the message without much vetting. Both are bad. —Annie Duke
October. This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February. —Mark Twain
The degree of one’s emotion varies inversely with one’s knowledge of the facts—the less you know, the hotter you get. —Bertrand Russell
Graham’s words: “The investor’s chief problem—and even his worst enemy—is likely to be himself.”
According to Otto Von Bismarck, “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”
Munger agrees: “The more hard lessons you can learn vicariously, instead of from your own terrible experiences, the better off you will be.”
Life is like a snowball. The important thing is finding wet snow and a really long hill. —Warren Buffett
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. —Charlie Munger
We spend a lot of time focusing on compounding our financial capital, but we overlook the fact that social and intellectual capital also compound. Investing in yourself, in your relationships, and in your understanding of the world pays massive dividends over time.
Acknowledging the good that you already have in your life is the foundation for all abundance. —Eckhart Tolle
Many of life’s failures are people who did not realize how close they were to success when they gave up. —Thomas Edison
Whenever you think that some situation or some person is ruining your life, it’s actually you who are ruining your life. It’s such a simple idea. Feeling like a victim is a perfectly disastrous way to go through life. If you just take the attitude that however bad it is in any way, it’s always your fault and you just fix it as best you can—the so-called iron prescription—I think that really works.
