Online Value Investing Workshop – August 2024 Cohort: I recently opened admission to the August 2024 cohort of my Online Value Investing Workshop, which has already been taken by 1800+ students ever since I launched it two years ago. Here is what you get when you sign up for this workshop –
- 30+ hours of pre-recorded lectures and Q&A videos
- 60+ questions answered in the Q&A
- Live Q&A session of 3 hours on Sunday, 25th August 2024 (7 PM IST Onwards)
- One-year unrestricted access to the entire content
- 7 readymade screens to filter high quality stocks (and avoid the bad ones)
- Bonus 1: Stock analysis spreadsheet (otherwise priced at ₹1999)
- Bonus 2: Rethinking Financial Freedom Masterclass + The Art of Investing Masterclass (otherwise priced at ₹1998)
I am accepting 100 students for this cohort, and more than half the seats have been booked by now. Click here to read the details of the workshop and sign up.
Welcome to the latest issue of ‘The Journal of Investing Wisdom’, where I delve into the thoughts, reflections, and readings that have recently captured my attention. This journal serves as a window into my contemplations and the resources that inspire and inform my journey as an investor. I hope you like what you read below. If you are new here, and wish to get insights and ideas like these straight into your inbox, please click here to become a member.
Raising Money-Wise Kids in a World of Excess
I have been thinking a bit more about money lately than I usually do. Not just because my son asked for a ₹10,000 pair of sneakers last week (he does not ask much, and so this surprised me a bit), but because I have been wondering if I am doing this whole “teaching kids about money” thing right.
In the last edition of The Almanack of Good Life, I wrote about the importance of health and time over money and recounted the story of William Vanderbilt, who believed the burden of managing his father’s empire had broken his health.
Now, William had a lot of money. We are talking $200 million in the 1800s kind of ‘lot.’ But he was miserable. He confessed to his family that managing all that money was “enough to kill a man” –
It is enough to kill a man. I have no son whom I am willing to afflict with the terrible burden. There is no pleasure to be got out of it as an offset — no good of any kind. I have no real gratification or enjoyments of any sort more than my neighbor on the next block who is worth only half a million. So when I lay down this heavy responsibility, I want my sons to divide it, and share the worry which it will cost to keep it.
Can you imagine? Here is a man who could buy anything he wanted, and he is saying he is not any happier than his neighbour with just 0.3% of his wealth.
It got me thinking about what we are really trying to do when we teach our kids about money. Are we setting them up for a good life where they learn to strive for money and other such desires, or are we accidentally creating a Vanderbilt situation? Okay, not a Vanderbilt kind of inheritance, but large enough to lead them to get too comfortable with the idea of money. A situation where they get used to saying or thinking – “Papa-Mumma hain na!” – when it comes to most or all of their money matters.
Anyway, while reading about Vanderbilt, I remembered advice from Morgan Housel to his daughter when she was born. He wrote –
Your parents will work hard to support you and open the doors of opportunity. But we’re not going to spoil you. We’re not trying to be mean. But no one can learn the value of a dollar without experiencing its scarcity. Learning that you can’t have everything you want is the only way to understand the difference between a need and a desire. It will teach you how to budget, how to save, and how to value what you already have. Learning to be frugal without it hurting is an essential life skill that will come in handy during life’s inevitable ups and downs.
This makes great sense to me.
I remember when I was a child, I wanted this fancy bicycle. My parents could have easily bought it for me, but instead, they made me earn half the money. I had to clean my cupboard, maintain neat notebooks, and eat salads for that! When I finally got that bike, I treated it like it was made of gold. That experience, and a few others like that (like raising hell for a single Chacha Chaudhary comic in a 24+ hours train journey, or starting my life in Mumbai in a chawl so I could buy some books), taught me more about money than any lecture ever could.
So now, with my kids, I’m trying to find that sweet spot. I want to give them opportunities (and comics), sure, but I also want them to know what it feels like to want something and have to work for it.
It’s not always easy. Sometimes I feel like the meanest parent in the world when I say “no” to something I could afford. But then I remind myself that I’m playing the long game here.
We talk about money at home – not in a “money is everything” kind of way, but in a “this is how the world works” way.
We plan together for family vacations. The kids have separate bank and mutual fund accounts. They know how their small savings are invested for compounding over time. And they also understand the importance of giving away money, as they showed during Covid by sending their entire savings (without me asking to do that) to the Prime Minister’s fund to manage the epidemic’s devastation across the country.
The most important thing I am trying to teach my kids is that money is a tool, not a goal. It can open doors, but it does not define you.
I want them to be smart with money, but I also want them to know that the best things in life – like family dinners, laughing with friends, or a beautiful sunset – are free.
Is it working? With my 20-year-old daughter, I can see that it is. With my 13-year-old son, ask me in another 7 years.
But for now, I’m doing my best to raise kids who can manage with less, appreciate what they have, and know the difference between wanting something and needing it.
And if they end up happy whether they have ₹200 or ₹2 crore, well, then I’ll know I’ve done something right.
As of now, I need to talk to my son about the ₹10,000 sneakers.
The Sketchbook of Wisdom: A Hand-Crafted Manual on the Pursuit of Wealth and Good Life
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Morgan Housel, Author, The Psychology of Money
What I’m Thinking
The sunk cost fallacy is a silent wealth destroyer. How often do we hold onto losing stocks, hoping they’ll recover, instead of cutting our losses? This pattern of thinking could be costing us more than any market downturn.
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Contrarian investing is less about opposing the crowd and more about mastering our own psychology. The real edge comes from recognizing our emotional responses to market movements and learning to act against our instincts, our reflexive thinking.
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As the average lifespan of a business continues to reduce due to competitive destruction, disruption, and other such forces, maybe we should replace the idea of “permanent moats” with “adaptive moats” – the ability of a business to evolve its competitive edge. This shift could significantly change how we evaluate long-term business prospects.
Quotes I am Reflecting On
The reason our ideas haven’t spread faster is they’re too simple.
– Charlie Munger
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You have to think of yourself as an owner of a business, rather than an owner of a piece of paper. You own a small piece so therefore you really don’t control the business. So it’s almost self-defence to demand a large margin of safety because whatever value you perceive may not be there because you can’t control it.
– Li Lu
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The investor cannot enter the arena of the stock market with any real hope of success unless he is armed with mental weapons that distinguish him in kind—not in a fancied superior degree—from the trading public.
– Benjamin Graham
That’s all from me for today.
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Thank you for your time and attention.
~ Vishal