Several times in life, I’ve sat at the wrong table and waited for things to get better. A wrong job, a bad investment, a bad industry… to list a few. Talk about table selection and I’ve made all mistakes one could!
2 years in a job I hated. 3 years with a significant investment I wasn’t sure about. 2 years in an industry that I knew would take me nowhere.
Ever since 2005, I have really enjoyed studying businesses and have kept my money mostly in publicly listed stocks and since 2011, been interested in building one myself. At the same time, I love and seek inspiration from nature.
I’ve had trouble keeping them together because capitalism and its main cogs – business and finance, seem to be largely working against nature. I find it disturbing and hard to balance.
Several years ago, I owned ITC shares – a friend questioned how I could make money from smoking and tree-chopping (paper). I got out (though my reasons are ambiguous at best).
I used to track my expenses religiously for 8 years – initially using notepad and Excel, later with GnuCash.
In 2011, when I started my own company, time became a limited commodity. I found it hard to keep track of my expenses. So I devised a simple minimalistic method to track my expenses – one that took just 15 minutes every month.
Charlie Munger often says, “tell me where I’m going to die, so I will never go there”. Avoidance of terminal risk is of great importance to him (and to Warren Buffett).
That is a very important thing to follow in life.
A Russian roulette is one game that is simply not worth playing at any price, even though the odds are in your favor. (There is a 5/6th chance that you will survive and there is a 1/6th chance that you’ll get the bullet, if the chamber is reset every time.)
Any game that can get you killed is just not worth it! Even if there is a good chance that you might survive and win a hefty prize.
A friend and I were discussing money and financial freedom, amongst other things in life.
“How much is enough money to be financially free? How do you decide?” I asked my friend.
Is it a fixed number? The ability to not work for money and have enough of it to pay all your bills through your lifetime? Is it 30 times your annual expense? 50 times? Having a good part of it in inflation beating investments? Or having a business that has good free cashflow and longevity?
For several years, I used to track my expenses religiously – partly because of my interest in personal finance and largely because I have an OCD on maintaining data, esp numbers.
From 2003 until 2007, I used excel sheets to manage my accounts. From 2008 onwards, I used Gnucash. Whichever the system or tool, the data is only as good as the data entry. And that can be time consuming! By 2012, I was pressed for time and it no longer made sense for me to track my expenses so religiously. Especially since I had good control over it and roughly knew my numbers. (I realized its way better to spend time on investments than on expenses.)
I just realized its been exactly 10 years to the day since I first entered the stock market. Being risk averse and skeptical, I equated stock market to casinos and thought I’d never touch it with a long pole. Little did I know that a large part of my own life would be devoted to studying and investing in that very same treacherous market.
The date was May 17, 2004. A senior colleague looked very pale and I came to know that he had lost a lot of money that day in the crash. I was perplexed as to why people invested in risky things such as the stock market and vowed that I would do no such stupid thing.
Last year, in June, I liquidated most of my debt investments thinking that I would invest it in my own company.
In that period, I also read this book – “The Outsiders”. I really liked the modus operandi of the entrepreneurs featured in the book. They were all capital allocators and had done very interesting things – many a time going against conventional ‘grow big’ logic. Those guys often would ask themselves, “which is the best option to put my next Rupee into?”. They would always seek an edge. And got out of businesses with leaky-boat economics. And invested heavily into businesses where they could build more competitive advantage.
Today, I found an excellent video that attempts to explain the concepts in a very crisp manner. How the economic machine works by Ray Dalio.
Watch it. You wont regret spending 30 minutes on it. I watched it twice.
PS: Usually, one thing leads to another. I noticed a lot of people talk highly of “Principles” – the manual Ray wrote to share his life and business management principles with his employees. I found it here and here (Kindle). Will be reading it soon.
This is the 2nd part of my notes from the book “Letters from a self-made merchant to his son”. You could read the first part here.
Graham on the art of selling:
A salesman has to talk, but before that he ought to know when to talk.
“A real salesman is one-part talk and nine-parts judgment; and he uses the nine-parts of judgment to tell when to use the one-part of talk.”
Never badmouth competition, never give up your dignity. Yet, be humble enough to sell.
“Never run down your competitor’s brand to them, and never let them run down yours. Don’t get on your knees for business, but don’t hold your nose so high in the air that an order can travel under it without your seeing it. You’ll meet a good many people on the road that you won’t like, but the house needs their business.”
3 steps to making it big in sales.
“First—Send us Orders. Second—More Orders. Third—Big Orders.“