Richer, Wiser, Happier (by William Green)

• Pabrai
  • Cloning: indentify the best, analyse what they do, add it to your approach.
    • But you have to do it for real, not 3%.
  • Ownership mindset.
  • Patience to wait for a good opportunity and speed once you see it.
  • Emotional control: think of yourself in third person.
  • Say no to almost everything (cloned from Buffett).
  • Stay within your circle of competence.
  • Margin of safety. Heads I win, tails I don't lose much.
  • If a financial statement is hard to understand, it's intentional.
  • CEOs are unreliable source of information about the company. They want you to like it and they are great salesmen.
  • Don't underestimate the importance of simple ideas (e.g. compounding).
  • Hang out with people who are better than you.
  • Don't worry what the others think. Inner scorecard.
• Templeton
  • Beware of emotion.
  • Sell when others are buying, buy when others are selling.
  • Look for worst peformers (~5 yr back) and see if the setback is temporary.
• Marks
  • Avoid the most efficient markets (look for not covered companies in boring markets that people don't like).
  • Watch out for excessive optimism.
• Greenblatt
  • What wins is not some mysterious technique but profound mastery.
  • Buy businesses that:
    • You can understand,
    • With good long term prospects,
    • Operated by honest and competent people,
    • Available at an attractive price.
  • Avoid complicated models, instead understand key variables of the business and relationships between them so that you could write model on a napkin.
  • A good strategy that you can stick with (even when things are hard) is better than a great strategy that you won't be able to execute.
• Sleep and Zakaria
  • Quality!
  • Focus on information with long shelf life.
  • Destination analysis:
    • What is the intended destination for this business in 10 years?
    • What factors affect getting there or not getting there?
  • A business model that produces good compounders is scale economies shared.
  • Long-termism gives you an edge in the world focused on the short term.
• Gayner, Grundlach
  • Small incremental advances, slow incremental improvement. Always improve your understanding, your strategy, your portfolio.
  • Criteria:
    • Profitable businesses with good ROC and not too much leverage.
    • Talented managers with integrity.
    • Opportunity to reinvest profits with good ROI.
    • Reasonable price.
  • Make your mistakes non-fatal.
  • Geritz: edge by understanding local situation (Turkey, Brazil, Japan).
  • Remove distraction. Optimise your environment to focust on the important.
• Munger
  • Pre-mortem, murphijitsu.
  • Think how most investors mess up and don't do those things.
  • Be honest with yourself. Admit mistakes.
  • Write the list of common biases. Identify the ones that especially apply to you.
  • Falsify your ideas. Try to write a bear case for your investments.
  • Meditation, exercise, sleep, nutrition.
• Epilogue
  • Be stoic. Don't worry about things outside of your control.