On Life's Principles, Regret Minimization, and the Education of a Value Investor
On Life's Principles, Regret Minimization, and the Education of a Value Investor
Books that changed my life
Hello all!
Here is your weekly dose of books that changed my life.
1. Personal development
Principles: Life and Work
Summary
The lessons in this book are endless (as you’ll see from my personal notes). Almost every sentence provides value. This is a generational book. It is a compilation of knowledge for your personal life and work life. It is a book you will go back to every so often to re-read its wisdom.
Principle: Pain is nature's reminder that there is something important to learn. Learn to love struggles. The satisfaction of success doesn't come from achieving your goals, but from struggling well.
Principle: The quality of your life will depend on the choices you make at those painful moments.
Principle: The greatest success you can have as the person in charge is to orchestrate others to do things well without you. A step below that is doing things well yourself, and worst of all is doing things poorly yourself.
Insight: Maturity is the ability to reject good alternatives in order to pursue better ones.
Insight: Bad times coupled with good reflections provide some of the best lessons.
Insight: Heroes don’t begin as heroes. Unattainable goals appeal to heroes.
Formula: Dreams + reality + determination = A successful life
When encountering your weaknesses you have four choices:
You can deny them (which is what most people do)
You can accept them and work at them in order to try to convert them into strengths (which might or might not work depending on your ability to change)
You can accept your weaknesses and find ways around them
Or, you can change what you are going after
Authors: Ray Dalio
Themes: Personal development, Leadership, Entrepreneurship, Decision making, Investing, Management, Running a business
My personal notes from the book
2. Entrepreneurship
The Everything Store: Jeff Bezos and the Age of Amazon
Summary
H/T to my friend David Mishkin for recommending this book to me many years ago. It’s filled with wisdom and does a nice job telling the origin story of Amazon.com. One of the things I like most about Bezos is his decision to leave a lucrative and comfortable Wall Street job to start from scratch and build Amazon.com block by block. To help make this decision, he describes a “regret-minimization framework” (see below) that has also been helpful to me throughout various adventures in my own life.
Principle: Regret-minimization framework – when you are in the thick of things, you can get confused by small stuff. I knew when I was 80 that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn't something you worry about when you're 80-years-old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way...it was incredibly easy to make the decision.
Insight: Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.
Quote: When you are 80-years old, and in a quiet moment of reflection narrating for only yourself the most personal version of your life story, the telling that will be most compact and meaningful will be the series of choices you have made. In the end, we are our choices. -Jeff Bezos commencement speech at Princeton University May 30, 2016
Author: Brad Stone
Themes: Entrepreneurship, Running a business, Management, Product development, Marketing
My personal notes from the book
3. Personal finance
The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment
Summary
Another hidden gem for the common investor. Its focus is on value investing and is a derivative of the “Warren Buffett school of investing.” It is easy to read with many pearls and provides an interesting background of its author, Guy Spier. If you are looking to expand your personal investing knowledge, this book is worth your time.
Principle: Temperament is more important than IQ when it comes to investing.
Insight: People often justify their improper or misguided actions by reassuring themselves that everyone else is doing it.
Quote: It takes 20 years to build a reputation and five minutes to ruin it -Warren Buffett
Guy Spier's Investing Rules:
Stop checking the stock price
Check stock prices as infrequently as possible
If someone tries to sell you something, don't buy it
If the seller has a self-interest in me buying, I ain't buying
Don't talk to management
Beware of CEOs and other top management, no matter how charismatic, persuasive and amiable they seem
Gather investment research in the right order
Pay attention to the order in which you consume information. And don't eat your dessert until you've finished your meat and vegetables
Discuss your investment ideas only with people who have no axe to grind
Pool your knowledge with other investors, but stick with people who can keep their ego in check.
Never buy or sell stocks when the market is open
Keep the market at a safe distance. Don't let it invade your office or your brain
If a stock tumbles after you buy it, don't sell it for two years
Before buying any stock, make sure you like it enough to hold on for at least two years, even if the price halves right after you buy it
Don't talk about your current investments
Don't say anything publicly about your investments that you may live to regret
Author: Guy Spier
Themes: Personal finance, Value investing, Wealth creation, Entrepreneurship
My personal notes from the book
That’s a wrap. Thanks for reading!
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Best,
Adam
P.S. Do you have a favorite book that changed your life? Please share it with me by replying to this email.
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