Curiosity@Intelsense
Weekly dose of learning
In the Media
I published an article on investment psychology in The Economic Times yesterday. Here is the link to it, in case you missed it.
1.
History keeps repeating itself - and that’s why we need to study economic and business history
The whole history of business and the economy is a story of one technological disruption after the other. Steam, electricity, aviation, the automobile, the telephone, the computer, the microchip, the Internet, and many more in the future. These innovations tend to follow patterns, have similar growth rates, similar obstacles to growth, and so on. Cars at first had no highways and gas stations, the Internet had no broadband, telegraphs had no poles and wires.
There is a tremendous amount to be learned by studying how entrepreneurs and corporations dealt with such challenges, how technologies evolve, and how they die or are replaced with newer ideas.
A fundamental understanding of how companies grow, survive, and die applies to every era. And to every technology. Each innovation builds on the prior ones.
2.
Spread your bets
Every investment decision has a range of outcomes. Some are knowable, some not. The best we can do is focus on what we know: figure out the best and worst case for each investment, where the most likely outcome falls in that range, and assess whether that most likely outcome is worth the risk — knowing that it’s not guaranteed.
No other question matters more in an uncertain world than: are you comfortable with the consequences if you’re wrong? It’s the heart of risk management. You don’t bet the ranch on uncertain outcomes. You spread your bets. You diversify.
Your odds of going broke are significantly reduced when you own a basket of businesses (stocks). Those odds are further reduced when you add bonds and other assets to the mix. That’s a process you can control. And in markets where anything can happen, a good investment process is the difference between surviving and going bust.
Pic of the Week
Although most of us have heard of and maybe eaten Belgian or Swiss chocolates, Germany exports the highest-value chocolates in the world.
Thought of the Week
In investing, nothing is certain. The best investments we have ever made, that in retrospect seem like free money, seemed not at all that way when we made them. ~ Seth Klarman
The future is genuinely uncertain, and therefore cannot be predicted with the same degree of certainty as it can be explained in retrospect. ~ George Soros
Video of the Week
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