Category: BookReview

‘This is that rarity – a useful book‘ is the blurb Warren Buffett uses for this remarkable book by Howard Marks,the legendary fund manager of Oaktree Capital.

In this book, Howard Marks shares his wisdom and explains the most important things an investor should focus on

The things he feels investors should focus on are:

1. They should have second level thinking-ability to go beyond superficialities and think differently from the crowd
2. Investors should focus on relatively inefficient markets where hard work and skill can pay off.
3. Be able to accurately estimate the intrinsic value of the asset
4. Understand “well bought is half sold”. A weak/fundamentally poor asset can be a great investment if bought at the right price.
5. Understand risk.Returns alone tell very little of the quality of investment decisions without evaluating the risk taken to achieve it.
6. Recognize high risks primarily comes with high prices
7. Control risks.Loss is what happens when risk meets adversity.Remember great investors are considered great not just because of their high returns but because of absence of disasters
8. Remember that some of the greatest opportunities for gain and loss will come when people forget that most things are cyclical.
9. Be aware of the mood swings of the investment markets-between euphoria and depression,between overpriced and underpriced….rarely stable.
10. Protect yourself from the emotions thar will make you lose money-fear,greed,delusions,social proof , envy,ego and capitulation
11. Do the opposite of what others  do – be contrarian
12. Find bargains that provide value at unreasonably low prices
13. Be a patient opportunist-wait for investments to come to you,don’t go chasing investments
14. Ignore forecasts,ignore forecasters and ignore people who think knowledge of the future is essential for investment success
15. Have a sense of where you are in the market cycle
16. Appreciate the role of luck…its possible most “skilled investors” are “lucky idiots”
17. Invest “scared”.Worry about loss.If you avoid the losers,the winners will take care of themselves

All in all,a fantastic book.The kind of book you will read again and again to draw water from its well of investment wisdom.

Go Buy it.

Billionaire Peter Thiel is  one of Silicon Valley’s most successful investors and entrepreneurs

In his book, “Zero to One-Notes on Startups”, Peter lays out his thoughts on startups and how to build new businesses.

Zero to One ( 0 to 1) means building something new (think Uber,Amazon etc).

One to N (1 to n) means copying something that somebody else has created in your own geography or some other incremental change (think Ola,Flipkart etc)

He opens the Book with a provocative Question:

“What important truth do very few people agree with you on?”

And its business corollary:

“What valuable company is nobody building?”

Both are very tough questions and I still have not found the answers to both.

The book contains lots of such thought provoking ideas and questions

For example,both capitalism and competition are anti-thesis of each other…Capitalism emphasizes on the accumulation of Capital while Competition destroys it

Another illuminating aspect is his take on how Venture Funds should deploy their funds in startups.His approach can be useful for investors in their asset allocation to stocks.

In his opinion,there are 7 Questions each startup/business must answer:

1. The Engineering Question-Can you create break through technology which is 10x better than the Competition?
2. The Timing Question-Is now the right time to start your business?
3. The Monopoly Question-Are you starting with a big share of a small market?
4. The People Question-Do you have the right team?
5. The Distribution Question-Do you have a way to deliver/sell your product?
6. The Durability Question-Will your market position be defensibile 10 and 20 years from now?
7. The Secret Question-Have you identified a unique opportunity that others don’t see?

All in all, a great book on business by one of Silicon Valley’s topmost thought leaders.

Go Buy It.

“In India, everyone has a price”

This is the central premise of the book “A Feast of Vultures-The Hidden Business of Democracy in India” by Josy Joseph

The author proves this point by quoting a variety of examples-
-How stenographer R K Dhawan owns a bungalow in posh Delhi’s Jor Bagh

-How Congress typist  Vincent George owns multiple properties

-How Sudhir Choudhrie and Suresh Nanda manipulated defense deals

-How a Army Chief took bribes

-How Naveen Jindal destroyed the environment

-How Mukesh Ambani usurped an orphanage property to build his house and so on.

The most startling revelation in the book is that the author alleges that Jet Airways Boss Naresh Goyal gave a ‘supari’ to the Dawood Ibrahim gang to get rival East West Airlines owner Wahid killed.

Reading this book fills one with despair on how India works-with its middlemen,corruption, ruthless industrialists,rapacious politicians,thieving bureaucrats etc

One flaw in the book is that the author’s leftist,pro-AAP and anti-Modi biases are obvious.Also,the narrative is a bit meandering which could have used a tighter editorial control.

Read this book to know how our country really works

Saurabh Mukherjea of Ambit Capital is well known for his Coffee Can portfolios.

The “Coffee Can” portfolio is a portfolio is a portfolio of stocks that you buy and keep for ten years.

In his book, The Unusual Billionaires, he expands on this concept in detail.

Stocks that make it to the Coffee Can portfolio have to meet only 2 criteria for every year in the last 10 years:

1.Revenue Growth > 10%

2. ROCE > 15%

Using examples and detailed case studies of 7 companies (Asian Paints,Berger Paints,Marico,Page Industries,Astral Poly,HDFC Bank,Axis Bank) , he makes a persuasive case why such a portfolio will work in the Indian context.

There is also a checklist to evaluate a business.

One flaw in the book I found was the author paid no attention to price.A business may be great but does it make sense to buy it at nose-bleed valuations?

There is one particular excerpt in the book which I found particularly interesting:

“While there are other successful modes of investing in the equity market,their ability to deliver sustained outperformance over long periods of time (say 3 years or more) is unproven in the Indian context.

In more mature markets,which have much greater liquidity and greater transparency,short-term trading have been practiced over long periods of time by legendary investors such as George Soros,Juilan Robertson and Michael Steinhardt.

However,given that India is the least liquid amongst the world’s fifteen largest equity markets,the only viable option open to those who want to deploy large sums of capital successfully is long term investing.”

A worthwhile read for those interested in the Indian Equity Markets.