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Kindle Notes & Highlights
by
Gautam Baid
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January 1 - January 22, 2022
You are what your deepest desire is. As is your desire, so is your intention. As is your intention, so is your will. As is your will, so is your deed. As is your deed, so is your destiny. —Upanishads
The only way to deep happiness is to do something you love to the best of your ability. —Richard Feynman
I fear
not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times. —Bruce Lee
Gates and Buffett gave the same one-word answer: “focus.”
Intensity is the price of excellence. —Warren Buffett
One of the best hacks in the investment field is learning to be happy doing nothing.
The only way to gain an edge is through long and hard work. Do what you love to do, so you just naturally do it or think about it all the time, even if you are relaxing. … Over time, you can accumulate a huge advantage if it comes naturally to you like this [emphasis added].
Most of us miss out on life’s big prizes. The Pulitzer. The Nobel. Oscars. Tonys. Emmys. But we’re all eligible for life’s small pleasures. A pat on the back. A kiss behind the ear. A four-pound bass. A full moon. An empty parking space. A cracking fire. A great meal. A glorious sunset. Hot soup. Cold beer. Don’t fret about copping life’s grand awards. Enjoy its tiny delights. There are plenty for all of us.
Enjoy the little things, for one day you may look back and realize they were the big things. —Robert Brault
The framework I found, which made the decision incredibly easy, was what I called—which only a nerd would call—a “regret minimization framework.” So I wanted to project myself forward to age 80 and say, “Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.” I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not
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idea that excellence at performing a complex task requires a critical minimum level of practice surfaces again and again in studies of expertise. In fact, researchers have settled on what they believe is the magic number for true expertise: ten thousand hours. … Of course, this doesn’t address why some people get more out of their practice sessions than others do [emphasis added]. But no one has yet found a case in which true world-class expertise was accomplished in less time. It seems that it takes the brain this long to assimilate all that it needs to know to achieve true mastery.”10
Deliberate practice is all about having a blue-collar mind-set. In his book The Little Book of Talent, Daniel Coyle wrote: From a distance, top performers seem to live charmed, cushy lives. When you look closer, however, you’ll find that they spend vast portions of their life intensively practicing their craft. Their mind-set is not entitled or arrogant; it’s 100-percent blue collar: They get up in the morning and go to work every day, whether they feel like it or not. As the artist Chuck Close says, “Inspiration is for amateurs.”13
Finding our calling in life, pursuing it with a strong passion and intense focus, and engaging in deliberate practice results in ikigai. Will Durant put it best when he said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”14
SECTION II BUILDING STRONG CHARACTER
CHAPTER 5 THE IMPORTANCE OF CHOOSING THE RIGHT ROLE MODELS, TEACHERS, AND ASSOCIATES IN LIFE
was lucky to have the right heroes. Tell me who your heroes are and I’ll tell you how you’ll turn out to be. The qualities of the one you admire are the traits that you, with a little practice, can make your own, and that, if practiced, will become habit forming. —Warren Buffett
The Education of a Value Investor, Guy Spier writes about the importance of find one’s role models in life: There is no more important aspect of our education as investors, businesspeople, and human beings than to find these exceptional role models who can guide us on our own journey. Books are a priceless source of wisdom. But people are the ultimate teachers, and there may be lessons that we can only learn from observing them or being in their presence. In many cases, these lessons are never communicated verbally. Yet you feel the guiding spirit of that person when you’re with them.1
Throughout my childhood years, I was a weak student. I barely finished tenth grade. My scores were so abysmally low that it was a struggle for me to gain admission to a decent high school. It was only my subsequent awakening, driven by a major personal setback, that made me finally realize the virtues of hard work and determined effort, and that was the catalyst for my academic revival and professional career growth.
legendary investor Arnold Van Den Berg’s life, when I read his inspirational words: I always had this image of myself that I wasn’t very smart, and the way I did in school proved that I wasn’t. But: Once I realized that if you dedicate yourself and you commit yourself, you can learn anything. I will admit this: whatever I learn takes me three times as long as anybody else. But if I spend three times as much time as anybody else, then I’m equal. I can learn it, just give me more time, more books.2
Hang Out with People Better Than You, and You Cannot Help but Improve
Nothing, nothing at all, matters as much as bringing the right people into your life. They will teach you everything you need to know. —Guy Spier
(if you want to know someone’s priorities in life, observe what they do between Friday evening and Monday morning), their value system, how they live each day, how they handle success and failure, and many other important things that textbooks cannot teach you. You get to experience a gravitational pull toward higher qualities. It is better to be an average guy on a star team than a star on an average team. The former will be better for you in the long term; the latter is just an ego trip. For most of my professional and personal life, superior individuals made me feel uncomfortable. And so I
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Priorities
CHAPTER 6 HUMILITY IS THE GATEWAY TO ATTAINING WISDOM
Acknowledging what you don’t know is the dawning of wisdom. —Charlie Munger
The wiser we become, the more we realize how little we know. A lesser-known (and one of my all-time favorite) equation from Albert Einstein rings true: “Ego = 1 / Knowledge. More the knowledge lesser the ego, lesser the knowledge more the ego.” The deeper one dives into any field, the more humble one generally becomes (also known as the Dunning-Kruger effect).
Ralph Waldo Emerson said, “Every man I meet is my master in some point, and in that I learn of him.” Learning and accepting help from others creates value far beyond our individual capabilities.
I was born not knowing and have had only a little time to change that here and there. —Richard Feynman
People couldn’t believe that I suddenly made myself a subordinate partner to Warren. But there are people that it’s okay to be a subordinate partner to. I didn’t have the kind of ego that prevented it. There always are people who will be better at something than you are. You have to learn to be a follower before you become a leader. People should learn to play all roles. —Charlie Munger
Doubt is not a pleasant condition, but certainty is absurd. —Voltaire
Humility doesn’t mean taking fewer risks. Sequoia takes as big of risks today as it did 30 years ago. But it’s taken risks in new industries, with new approaches, and new partners, cognizant that what worked yesterday isn’t
Instead of picking what you know, use the inversion technique, popularized by Charlie Munger, to create your circle of competence. Inspired by the German mathematician Carl Gustav Jacob Jacobi, Munger explains, Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead—through sloth, envy, resentment, self-pity, entitlement, all the mental habits of self-defeat. Avoid these qualities and you will succeed. Tell
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It’s not a competency if you don’t know the edge of it. —Charlie Munger
I learned early in my career that if you read the annual reports, you’ve done more than 90 percent of the people on Wall Street. If you read the notes to the annual report, you’ve done more than 95 percent of the people on Wall Street. —Jim Rogers
I’ve always said that if you look at ten companies you’ll find one that’s interesting. If you look at 20, you’ll find, two; if you look at 100, you’ll find ten. The person that turns over the most rocks wins the game. … It’s about keeping an open mind and doing a lot of work. The more industries you look at, the more companies you look at, the more opportunity you have of finding something that’s mispriced [emphasis added]. —Peter Lynch
Back in 1951 Moody’s published thick handbooks by industry of every stock in circulation. I went through all of them, thousands of pages, motivated by the hope that a great idea was just on the next page. I found companies like National American Insurance and Western Insurance Securities Company that nobody was paying attention to that were trading for far less than their intrinsic values. Last year we found a steel company on the Korean Stock Exchange that had no analyst coverage, no research, but was the most profitable steel company in the world.
CHAPTER 8 SIMPLICITY IS THE ULTIMATE SOPHISTICATION
Most geniuses—especially those who lead others—prosper not by deconstructing intricate complexities but by exploiting unrecognized simplicities. —Andy Benoit
Buffett said, “If you understand chapters 8 and 20 of The Intelligent Investor (Benjamin Graham, 1949) and chapter 12 of The General Theory (John Maynard Keynes, 1936), you don’t need to read anything else and you can turn off your TV.”2
Chapter 8 of Graham’s book talks about not letting the mood swings of Mr. Market coax us into speculating, selling in panic, or trying to time the market.
Chapter 20 explains that, after careful analysis of a company’s ongoing business
margin of safety.
chapter 12 of The General Theory of Employment, Interest, and Money
Munger is able to greatly simplify the path to wealth creation: “Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer.”11
(Every investor should diligently study the white papers titled “What Does a Price-Earnings Multiple Mean?” and “The P/E Ratio: A User’s Manual” by Michael Mauboussin and Epoch Investment Partners, respectively.13)
The difference between successful people and very successful people is that very successful people say no to almost everything. —Warren Buffett
Let’s be honest. We don’t know for sure what makes us successful. We can’t pinpoint exactly what makes us happy. But we know with certainty what destroys success or happiness. This realization, as simple as it is, is fundamental: Negative knowledge (what not to do) is much more potent than positive knowledge (what to do). —Rolf Dobelli
I ask four inverted questions
How can I lose money?
What is this stock not worth?
