Jump to content

rsodhi

Member
  • Posts

    2
  • Joined

  • Last visited

Everything posted by rsodhi

  1. It seems as though this applies to everyone but Warren Buffett and Charlie Munger. It certainly applies to me. They have achieved success at all levels while remaining focused, rational, and completely down to earth. As a student of investing I have been looking for an antidote for this vicious poison, and have tried to develop a frame of mind where it is possible to remain completely level-headed despite achieving success. Charlie Munger said a very powerful thing earlier this month at the Berkshire Hathaway annual meeting. This allowed me to tap in to their intellectual framework and understand their approach to achieving consistent success. Munger, who is often referred to as the reincarnation of Benjamin Franklin referred to the accumulation of knowledge as the removal of ignorance. It is easy to say, “I’m smarter now than I was last year”. But this approach brings a certain air of arrogance. Instead, Munger would say, “I’m a lot less ignorant than I was last year.” This implies that ignorance is something that we should strive to remove, and that we always can remove with hard work. The exact quote reads, “In buying See’s Candies, the main contribution to Berkshire’s success was the removal of ignorance. If it weren’t for fact that we weren’t so good at removing ignorance, we’d be nothing today. We were pretty damn stupid when we bought See’s - just a little less stupid enough to buy it. The best thing about Berkshire is that we have removed a lot of ignorance. The nice thing is we still have a lot more ignorance left.”
  2. Most deep value investors would find that there aren't many actions to be made in the market right now. Especially on the buyers side of things. Still however, human nature pushes us to be active. And recently, this is a dilemma that I've been facing as I've discovered a few compelling businesses selling for cheap. I'm sure I'm not the only one. If, like me, your heart is telling you to buy but your brain is telling you to remain patient you may find value in re-visiting one of Benjamin Graham's lectures. Here is a short excerpt and some food for thought: You have to wait too long for recurrent opportunities. You get tired and restless -- especially if you are an analyst on a payroll, for it is pretty hard to justify drawing your salary just by waiting for recurrent low markets to come around. And so obviously you want to do something else besides that. The thing that you would naturally be led into, if you are value-minded, would be the purchase of individual securities that are undervalued at all stages of the security market. That can be done successfully, and should be done -- with one proviso, which is that it is not wise to buy undervalued securities when the general market seems very high. That is a particularly difficult point to get across: For superficially it would seem that a high market is just the time to buy the undervalued securities, because their undervaluation seems most apparent then. If you could buy Mandel at 13, let us say, with a working capital so much larger when the general market is very high, it seems a better buy than when the general market is average or low. Peculiarly enough, experience shows that is not true. If the general market is very high and is going to have a serious decline, then your purchase of Mandel at 13 is not going to make you very happy or prosperous for the time being. In all probability the stock will also decline sharply in price in a break. Don’t forget that if Mandel or some similar company sells at less than your idea of value, it sells so because it is not popular; and it is not going to get more popular during periods when the market as a whole is declining considerably. Its popularity tends to decrease along with the popularity of stocks generally.
×
×
  • Create New...