{"id":376,"date":"2022-01-31T16:13:51","date_gmt":"2022-01-31T10:43:51","guid":{"rendered":"https:\/\/www.smevalueadvisors.com\/blog\/?p=376"},"modified":"2022-03-18T21:17:52","modified_gmt":"2022-03-18T15:47:52","slug":"richer-wiser-and-happier-by-william-green","status":"publish","type":"post","link":"https:\/\/www.smevalueadvisors.com\/blog\/index.php\/richer-wiser-and-happier-by-william-green\/","title":{"rendered":"Richer, Wiser and Happier by William Green"},"content":{"rendered":"\n

Everyone dreams of being three things in their lives: Richer, Wiser, and Happier. Fortunately, this book can help you follow that path. \u201cRicher, Wiser, Happier\u201d by William Green is an insightful yet exclusive collection of his interaction with some of the most brilliant minds in the world of investing<\/a>. This book is not about learning \u2018how to make money\u2019 but \u2018how to improve our thinking and decision-making process\u2019 to become richer,<\/a> wiser and happier. Read on to learn how you can follow this path.<\/p>\n\n\n\n

Clone the great minds<\/strong><\/h4>\n\n\n\n

Find out some great investors around and clone them.<\/em><\/p>Mohnish Pabrai<\/em><\/cite><\/blockquote>\n\n\n\n

All great people in the world are continuous learners; learning from their experiences and others\u2019. You need to continuously observe what works and what doesn\u2019t and why. <\/p>\n\n\n\n

For example, you can clone the attitude of Swami Vivekananda, who said, \u201cTake up one idea. Make that one idea your life. Think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea and just leave every other idea alone. This is the way to success.\u201d<\/p>\n\n\n\n

Investing has little to do with frenetic activities in the market<\/strong><\/h4>\n\n\n\n

You don\u2019t have to swing at everything \u2013 you can wait for your pitch. The problem, when you are a money manager, is that your fans keep yelling, \u2018swing, you bum!<\/em>‘<\/p>Warren Buffett<\/em><\/cite><\/blockquote>\n\n\n\n

What happens when you visit your relatives every day? After a while, they stop offering you even tea, forget lunch or dinner. Similarly, think of Mr. Market as a host which you\u2019re better off visiting once in a while (a few times a year or even a decade). <\/p>\n\n\n\n

The book states, \u201cThere are no prizes for frenetic activity. Rather, investing is mostly a matter of <\/em>waiting<\/em><\/strong> for these rare moments when the odds of making money vastly outweigh the odds of losing it.\u201d<\/em> Mohnish says \u201cPlace fewer bets, larger bets and infrequent bets.\u201d<\/p>\n\n\n\n

Therefore, you need to focus on research and be patient for opportunities and hatching the investments, having made the investment decision<\/a>. Howard Marks states \u201cMoney is not made in buying and selling but sitting on the investments.\u201d<\/p>\n\n\n\n

Say \u2018no\u2019 to almost everything<\/strong><\/h4>\n\n\n\n

The difference between successful people and really successful people is that really successful people say not to almost everything. <\/em><\/p>Warren Buffett<\/em><\/cite><\/blockquote>\n\n\n\n

The way one becomes remarkable is by focusing their energy and efforts on only a few things. Saying no to most things means saying \u2018yes\u2019 to only a few things.<\/p>\n\n\n\n

Buffett is a master of this practice. What he’s looking for is a reason to say no, and as soon as he finds that, he’s done. Invest only in a few things, which you understand with clarity and leave the rest.<\/p>\n\n\n\n

Investing is a lonely game<\/strong><\/h4>\n\n\n\n

It is impossible to produce superior performance unless you do something different from the majority.<\/em><\/p>Sir John Templeton<\/em><\/cite><\/blockquote>\n\n\n\n

Independent thinking, brevity, a conviction in one\u2019s ideas and lack of urge to follow a tribe is the ideal attitude to possess to invest successfully<\/a>. Unfortunately, most people follow the herd. As John Maynard Keynes stated, \u201cWorldly wisdom teaches that it is better for the reputation to fail conventionally than to succeed unconventionally.\u201d <\/p>\n\n\n\n

But, great minds follow their own unconventional path. They don\u2019t care about what other people think about them.<\/p>\n\n\n\n

Manage your emotions<\/strong><\/h4>\n\n\n\n

People are crazy and emotional. They buy and sell things in an emotional way, not in a logical way, and that’s the only reason why we have any opportunity<\/em>.<\/p>Joel Greenblatt<\/em><\/cite><\/blockquote>\n\n\n\n

Mastering yourself is of supreme importance. We can\u2019t control the circumstances and outcome, but we can definitely control ourselves and our actions. The most enduring advantage in the market is psychological.<\/p>\n\n\n\n

Mr. Templeton states \u201cMost people become excessively careless and optimistic when they have big profits, and excessively pessimistic and too cautious when they have big losses. Get away from that emotionalism.\u201d  <\/p>\n\n\n\n

Staying in the game is key<\/strong><\/h4>\n\n\n\n

Investing is a popularity contest, and the most dangerous thing is to buy something at the peak of its popularity<\/em><\/p>Howard Marks<\/em><\/cite><\/blockquote>\n\n\n\n

Maintain cash to capture the rare opportunities that show up in front of you. Avoid margin plays and debt to the extent possible. Keep your expenses under control<\/a>. This will ensure that you survive in the most challenging situations. Consistently focus on \u2018risk mitigation\u2019, \u2018error elimination\u2019 and \u2018prudent acts of omission\u2019. In a sense, it’s winning by not losing and never forgetting the value of being the last man standing.<\/p>\n\n\n\n

No one can predict the future<\/strong><\/h4>\n\n\n\n

Prediction is very difficult, especially about the future<\/em><\/p>Neils Bohr<\/em><\/cite><\/blockquote>\n\n\n\n

Change is the only constant. You can\u2019t predict the future. Be honest with yourself about your limitations and vulnerabilities. But we can prepare ourselves to face it with confidence. This confidence is the product of knowledge, experience and behavioural sturdiness. Be humble and know that you are never immune from forces greater than you.<\/p>\n\n\n\n

Almost everything is cyclical<\/strong><\/h4>\n\n\n\n

Cycles eventually self-correct. Investors repeatedly make the mistake of overestimating the longevity of the market\u2019s upswings and downturns. They forget that nothing lasts forever<\/em><\/p>Howard Marks<\/em><\/cite><\/blockquote>\n\n\n\n

The book states, \u201cEconomy expands and contracts, consumer spending waxes and wanes, corporate profitability rises and falls, the availability of credit eases and tightens, asset valuations soar and sink. Instead of continuing unabated in one direction, all of these phenomena eventually reverse course. Markets swing like a pendulum from one extreme to the other because of the peoples\u2019 behaviour which vacillates between euphoria and despondency, greed and fear, credulousness and scepticism,  complacency and terror.\u201d<\/p>\n\n\n\n

The future may be unpredictable but this recurrence process of boom and bust is remarkably predictable. Once you recognise this underline pattern, you can respond appropriately – turning more defensive or aggressive depending upon the current status of the cycle. <\/p>\n\n\n\n

Focus on the things with the longest shelf life, not the ephemeral<\/strong><\/h4>\n\n\n\n

In a world that\u2019s increasingly geared towards short-termism and instant gratification, a tremendous advantage can be gained by those who move consistently in the opposite direction. Focus on the things with the longest shelf life, not the ephemeral<\/em>. <\/em><\/strong>Be it life, your activities or businesses.<\/em><\/p>Nick Sleep and Zakaria<\/em><\/cite><\/blockquote>\n\n\n\n

Delayed gratification<\/a> is an important principle in life. Sacrifice today so that you can have more tomorrow. Choices are essentially between the present and the future, the instant and deferred. One must look long term and have the capacity to suffer in the short term.<\/p>\n\n\n\n

Nick and Zakaria thought long term about what they called \u2018destination analysis\u2019, aiming to understand where the business can be in 10 years, what would make that happen and what would be the impediments on the way. <\/p>\n\n\n\n

They came up with the model of \u201cscale economics shared.\u201d Amazon and Costco perfectly follow this playbook. As they get bigger, they use their scale to get lower prices and pass those savings onto consumers, fuelling the cycle even further.<\/p>\n\n\n\n

Everything compounds over time \u2013 good and bad<\/strong><\/h4>\n\n\n\n

Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it<\/em><\/p>Albert Einstein<\/em><\/cite><\/blockquote>\n\n\n\n

The best investors build habits<\/a> whose benefits compound over time. Time is the enemy of bad habits and the friend of the good. Directionally correct and moderate efforts produce a cumulative effect, which is stunning. Forget about perfection, instead focus on continuous improvement that can compound over time. This is the aggregation of marginal gains.<\/p>\n\n\n\n

Aim to be consistent, not stupid<\/strong><\/h4>\n\n\n\n

It is remarkable how much long term advantage people like us have gotten by trying to be consistently not stupid instead of trying to be very intelligent.<\/em><\/p>Charlie Munger<\/em><\/cite><\/blockquote>\n\n\n\n

The habit of actively collecting examples of other peoples\u2019 foolish behaviour is an invaluable antidote to idiocy. Collect stupidities and learn vicariously through the mistakes of others. Inversion is a really powerful thinking habit. One must have great clarity on what not to do.<\/p>\n\n\n\n

Devil’s advocate reviews, pre-mortem (opposite of post-mortem) memos, conversations with sceptical people, and checklist approach to investing are the disciplined analytical techniques that can help us systematically to slow down, coupon our minds and consider risks that we might otherwise overlook.<\/p>\n\n\n\n

Evolve in the journey<\/strong><\/h4>\n\n\n\n

Warren and I are very good at destroying our own best-loved ideas.<\/em><\/p>Charlie Munger<\/em><\/cite><\/blockquote>\n\n\n\n

The book states, \u201cThe reluctance to re-examine our views and change our minds is one of the greatest impediments to rational thinking. Instead of keeping an open mind, we tend consciously and unconsciously to prioritise information that reinforces what we believe.\u201d<\/p>\n\n\n\n

The way to progress is by questioning your own thought process and beliefs. Look at the evolution of Buffett – he started out by investing in cheap stocks, then moved to buy great businesses at a fair price, then bought whole companies, then ventured into the foreign markets and then invested in tech stocks. It is unbelievable. <\/p>\n\n\n\n

The best opportunities to invest are in the pockets of gloom<\/strong><\/h4>\n\n\n\n

When there is a really powerful bias against an asset class, that\u2019s a way to get a bargain.<\/em><\/p>Howard Marks<\/em><\/cite><\/blockquote>\n\n\n\n

Mr. Templeton states \u201cthe best way to find bargains is to study whichever assets have performed most dismally in the past few years and then to assess whether the cause of those woes is temporary or permanent.\u201d Also, he would constantly search \u2018Where is the outlook worst?\u2019 These pockets of gloom are likely to yield the most enticing bargains since asset prices would reflect the tribe\u2019s pessimism\u201d. World doesn\u2019t come to an end. Remember, this too shall pass.\u201d<\/p>\n\n\n\n

To summarize<\/strong><\/h4>\n\n\n\n

Life is all \u2018inclusion and confusion\u2019, while art is \u2018all discrimination and selection’.<\/em> <\/p>Novelist Henry James<\/em><\/cite><\/blockquote>\n\n\n\n

All these great investors reflect some consistent qualities. They are continuous learners, voracious readers, independent thinkers, patient, even-tempered, rational, disciplined and have the ability to ask questions. Integrity, intellectual honesty, travelling, humility, scepticism and prudence are some other qualities of these minds. They emphasize wisdom along with knowledge and follow what philosopher William James stated, \u201dThe art of being wise is the art of knowing what to overlook.\u201d and \u201cTo attain knowledge, add things every day. To attain wisdom, subtract things every day.\u201d<\/em><\/p>\n\n\n\n

Results matter but their means matter a lot more. Therefore, \u2018the rich man who is barren of virtues is, in reality, poor\u2019. Ultimately, these great investors use their wealth<\/a> to help and serve others.<\/p>\n\n\n\n

Further Reading <\/strong><\/h4>\n\n\n\n

One Up On The Wall Street <\/a>– John Rothchild and Peter Lynch<\/p>\n\n\n\n

A Short History Of Financial Euphoria – John Kenneth Galbraith <\/p>\n\n\n\n

The Intelligent Investor – Benjamin Graham<\/p>\n\n\n\n

Common Stocks And Uncommon Profits – Philip Fisher <\/p>\n\n\n\n

Poor Charlie’s Almanac: The Wit And Wisdom Of Charlie Munger – Charlie Munger<\/p>\n","protected":false},"excerpt":{"rendered":"

Everyone dreams of being three things in their lives: Richer, Wiser, and Happier. Fortunately, this book can help you follow that path. \u201cRicher, Wiser, Happier\u201d by William Green is an insightful yet exclusive collection of his interaction with some of the most brilliant minds in the world of investing. 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