Home Finance Avoid Multiplying by Zero – Successful Investing

Avoid Multiplying by Zero – Successful Investing

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Sketchbook of Wisdom: First print of my new book – Sketchbook of Wisdom – Almost 90% finished, and bought in 30+ countries within 2 months of launch. Click here to get your copy today. If you want to place bulk order send me an email at vishal@safalniveshak.com.

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Peter Bevelin in his wonderful book “All I Want to Know…” tells the story of Letizia, the mother of Napoleon. She could not understand why Napoleon should confront the British as things were going so well. Therefore, he sold all his French assets and converted them into British pounds.

Why? He argued, if his son won, he should lead a good life in the victorious nation. But if Napoleon lost, he would not be wiped out but would still be fine because he had pounds. He defended against the possibility of encountering zero.

Letizia’s story is a perfect example of how to organize our affairs in life to protect them from the negative side.

Warren Buffett said, “Anytime zero is zero, and I don’t care how good the record is every other year. If one year is zero… Charlie and I have seen people break or close to it.” Because out of 99 his 100 decisions were good, but the 100th did them.”

Buffett said these words at the 2007 annual meeting of Berkshire, a year before the global financial crisis, wasting investors’ money.

Bevelin wrote in his book that efficiency is the benefit of looking at the downside or what can go wrong.

Take investing as an example – if you first remove something that doesn’t work or won’t get what you want, you don’t need to spend a lot of time and attention analyzing the company.

If there is a major downside – for example, a disaster risk of not key factors needed for success or some other disqualifying factor such as no lasting benefits, poor and unreliable management of anything else – simply say ‘no thanks’. ‘

Howard Marx wrote it sometime in 1990 –

The best foundation for above-average long-term performance is the absence of disasters. There will always be cases and years in which, when all goes well, those who take more risks will do better than us. In the long run, however, I feel strongly that looking for relative performance that is slightly above average on a consistent basis – with protection against poor absolute results in tough times – is more than ‘dangling for the fence’. will prove effective.

So, the key mantra of wise investing is – if I avoid the losers, the winners will take care of themselves.

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note

The story of mankind is in you, the vast experiences, deep-rooted, anxieties, sorrows, joys, and all the beliefs that man has accumulated over the centuries. You are that book.

~ J Krishnamurthy

You never really recover from the loss of a loved one. You learn to live in spite of it.

~ Ruskin Bond in his autobiography, after the death of his father

a question for you
One of the side effects of the second wave of the pandemic in India is panic buying and hoarding – including essential medicines and oxygen cylinders. But the problem with this kind of buying – or buying more than is needed – is that it doesn’t leave enough for the next needy person or the next. Worse, it is heartbreaking to see people trying to extort money quickly from someone else’s misfortune.

My hope is that this crisis teaches us that our own actions have an impact on many others and that our actions have many, sometimes unintended, effects on many others.

So my question for you today is – have you assessed the ripple effects that your next action could have on others around you?

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That’s all from me for today.

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Be safe

Regards,
vast

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Sketchbook of Wisdom: First print of my new book – Sketchbook of Wisdom – Almost 90% finished, and bought in 30+ countries within 2 months of launch. Click here to get your copy today. If you want to place bulk order send me an email at vishal@safalniveshak.com.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of knews.uk and knews.uk does not assume any responsibility or liability for the same.

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