Petrol station

At any fuel station now a days there are two options. You either pay for it fuel at the pump itself. Or you pay at the kiosk.

Paying at the kiosk is the good old way. You put the fuel. Walk to the cashier inside a store. And can buy some refreshments or car related stuff, coffee or you could just pay.

Version 2.0 is you enable the payments at the pump. The user doesn’t hae to walk to the oops. He fills the fuel. And off he goes.

The experience is annoying when you are waiting for the car ahead of you! They have chosen to pay at the kiosk. They may also want to buy some stuff. This makes your wait even longer!

From the perspective of the company the client who uses the pay at pump frees the nozzle and allows for a better turn over rate (number of customers per hour).

And if you are trying to increase your revenues separating the two is the key. Right now the nozzles operate in a hybrid mode. You can pay at pump or pay at kiosk. The issue happens when the car ahead chooses to pay at kiosk and the car behind goes for pay at pump.

The incentive for the user who choses to pay at pump is not guaranteed.

The right way to implement an improved layout would be the nozzles closer to the exit should be pay at pump only! So the drivers can fill and go. The nozzles further from the exit need to be pay at the kiosk. So shoppers can fill and also buy refreshments should they chose.

These design decisions will make for a better experience at the filling stations.

Independence of thought.

Crowds make me uncomfortable. I have never been a person who needs others approval to feel comfortable. If people turn right, by default I go left. I am unaware, whether it is because I do not trust people or I prefer to have the independence of thought. I like to believe that it is the latter. Trust, but verify. Always 😇

I started to study investing late in my life. In my early thirties. What appeals to me the most is independence of thought. The article below does a great job of charting the similarities in the journies of a sportsperson and an investor. A must read for any investor or someone who is thinking of becoming an investor.

Risk and luck

Morgan Housel is soon becoming one of my favourite writers and thinkers.

A thought-provoking quote from his Ironies of luck article

If risk is what happens when you make good decisions but end up with a bad outcome, luck is what happens when you make bad or mediocre decisions but end up with a great outcome. They both happen because the world is too complex to allow 100% of your actions dictate 100% of your outcomes. They are mirrored cousins, driven by the same thing: You are one person in a 7 billion player game, and the accidental impact of other people’s actions can be more consequential than your own.

▶ People are good at discounting risks that threaten the continuation of their past success. They are equally good at discounting the role of luck in their past success.

▶ risk doesn’t care about how much effort you put into something, and neither does luck. Both just show up, unannounced, eager to humble you. The only difference is that risk humbles you as soon as it arrives, while luck humbles you down the road, once it vanishes, leaving you with only the memories you shared together. You can manage risk and luck. You can ignore risk and luck. But you can’t get rid of either.

▶ structural luck is harder to identify, because the person enjoying it becomes used to it. That skews their perception of how most of the world operates, which almost always comes back to bite them at some point, and is hard to accept when it does.

I know one couple of people who do not believe in luck but only their hard work. 🤦🏽‍♂️


Investing reads

You have to live it to believe it – Morgan Housel

▶ Seeing the world around you was not enough to understand how it works. You had to actually experience that world to learn how to operate in it.

▶ One of the most important topics in business and investing is whether all of us are, in some ways, like these blind cats. Sure, we’ve read about the Great Depression. But most of us didn’t live through it. So can we actually learn lessons from it that make us better with our money?

▶ Investor Michael Batnick says, “some lessons have to be experienced before they can be understood.” We are all victims, in different ways, to that truth.

▶ John F. Kennedy grew up in one of the wealthiest American families, and the rare clan whose wealth surged during the Great Depression. His father Joe Kennedy’s life goal was to make so much money that his kids could devote their life to politics. He did just that.

▶ Both campaigns used the same logic: someone who merely read about a big event cannot fully empathize with those who experienced that big event.

▶ That’s our history. That’s what we know. And what we know is more persuasive than what we read.

▶ You can’t expect countries whose experiences are that divergent from our own to have similar views about economic and social policies. And this goes beyond economics.

▶ the psychological scars of our experiences don’t discriminate on IQ. Or more specifically, they sit above IQ in the information hierarchy that people use to make decisions.

▶ People with different experience than us aren’t necessarily smarter. They just see the investing world through a different lens.

▶ Daniel Kahneman calls this the “experiencing self” and the “remembering self.” They can be two completely different minds. Memories of big events are influenced by a few punctuated oments, not the full story.

▶ The hardest part of studying history is that you know how the story ends, often before you begin researching a topic.

▶ They highlight the badass success and glory, because that’s how the story ended. But no one knew that before or during the raid.

▶ “The customer is always right” and “customers don’t know what they want” are both accepted business wisdom. Examples of both are only known with hindsight, and it’s impossible to think about these topics with an open mind when you know the eventual outcome of how certain products perform.

▶ Going out of your way to speak with people whose backgrounds are different than yours, knowing that their view of the world may look nothing like your own, though they are just as sure of their views as you are of yours, is a humbling thing. But it’s so important to expand your mind to the range of possibilities you may come across as an investor.

▶ As Jim Grant says, “Successful investing is getting others to agree with you … later.”

▶ Another takeaway is remembering that people whose views and decisions look crazy to you may be less crazy than you think, because they’re being made by people whose views on risk and reward were shaped in a different world than you’ve experienced.

▶ When you realize that other people can make decisions that look crazy to you but make perfect sense to them because they’ve experienced something you haven’t, you become less cynical about the investing industry and more focused on whatever works for you.

▶ When the study was over the blind cats were left in a fully lit room. Forty-eight hours later, all were effectively normal, regaining their “vision” and learning how to match the world around them to their movements. Eight weeks of seeing their world taught them virtually nothing. Two days of experiencing it, and they had it all figured out.😀



Fives Crashes – Jonathan Clements

▶ WE GET MORE pain from losses than pleasure from gains—which might explain why I often think back on the five major market crashes that have occurred during my investing lifetime. There’s something about the massive hemorrhaging of money that has a way of focusing the mind and sticking in the memory.

▶ To invest successfully, we need to stand apart from the crowd, never purchasing something we don’t understand and never buying just because others are doing so. That doesn’t mean we should be knee-jerk contrarians. But it’s crucial to diversify broadly, while shunning big bets on the market’s most popular merchandise.

▶ In fact, the housing mania was arguably even worse than the tech mania that preceded it. It affected far more people. Barely half of Americans own stocks, while—at the time—almost seven out of 10 owned their home.

▶ The financial pain of the housing bust was exacerbated by the psychological shock: Folks expect stocks to be risky, but they’d long viewed homes as the safest of investments.

▶ As we learned from the 17th century philosopher Blaise Pascal, when we ponder the risks we face, we need to think not only about probabilities, but also about consequences.



Danger Zone: Traditonal value investors – David Trainer

▶ 99.8% of “Value” ETFs Rely on Book Value

▶ As Warren Buffett noted above, he was wrong on Kraft. He overestimated the value of the company’s brands and distribution networks and underestimated the significance of changing consumer tastes.

▶ Investing capital that earns a return below your cost of capital destroys value for shareholders.

▶ Very few investors these days can truly be classified as “value” investors. Value investing, in theory, is a comprehensive strategy that involves thoroughly analyzing assets and cash flows to identify companies that are trading below their fair value. In practice, almost no one does that work. 🧐

▶ For many other investors, value is merely a component of their portfolio, a bucket to fill, rather than an overall strategy for selecting stocks. This way of thinking leads investors to abdicate their responsibility to perform the diligence upon which the value investing philosophy was built. As long as investors have exposure to the “value“ factor, they don’t feel they need to know the details of that exposure.

▶ Many tech companies rely heavily on intangible assets that the balance sheet doesn’t capture, which is why value indexes systematically underweight tech.



Investingin shipping stocks: Lessons from Walter Schhloss

▶ Investment Philosophy: Buy Stocks Like Groceries, Not Perfume

▶ This approach can be surmised in the following bullets:

    • Start with beaten-down losers, the 52-week lows and companies with temporary issues.
    • Don’t lose money.
    • Avoid debt like the plague.
    • Try to buy stocks that manufactured products while sporting long histories of operations (20+ years).
    • Focus on assets rather than earnings, citing the claim that earnings aren’t as predictable as assets on the balance sheet.
    • Avoid talking to management.
    • Read the entire annual report and familiarize himself with the basics of each business he bought.
    • Purchase hundreds of stocks, keeping a well diversified portfolio.
    • Exhibit around 25% turnover — i.e., holding period of four years.

▶ “Basically, it’s a contrarian philosophy, and people really like buying things that are doing well.” I wish Schloss was more complicated — it would help me get more pages out of the piece — but that’s really all there was to it.

▶ Unlike Buffett, Schloss made a point of not talking to management or factoring them in at all. His reason was that good management would eventually show up in a higher stock price and a higher multiple.



Smart people saying smart things – Michael Batnick


Bad Blood: Secrets and Lies in a Silicon Valley Startup – John Carreyrou

I love to read, and I mostly read books on investing and anything subject that would help me to be a better investor. As a result, non-fiction books dominate. As a luxury, I do read autobiographies and try to transport myself into those moments where the subject would have experience living their inspiring lives.

My work also requires me to travel which results in a lot of time waiting at the airport, long journeys in public transport and downtime on the plane. This is when I pick books which I may otherwise not have picked up. On my recent week-long trip to Vienna to attend a conference I bought Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou. And boy oh boy it did not disappoint.

Being a phlebotomist early in my life and having worked in a diagnostic lab the industry, its practices and the science behind this book were natural to me. I have lived the life of a technician. And could relate to the problematic ethical point of view the whistleblowers would have experienced.

John does an excellent job to paint a vivid picture. Theranos was nothing but a sham. In hindsight, everything is evident. What Elizabeth Holmes (EH) wanted to achieve would have made patients lives easier no doubt about it. The principle was ambitious and also defied physics. It is the second part which the Theranos could not bend. Everything else was easy to bend and that it what happened.

What surprises me is how the stalwarts like Geroge Schultz, Richard Kovacevich, James Mattis and an industry veteran former VP on Amgen Fabrizio Bonanni failed to spot the fundamental flaws in the technology itself.  Numerous project delays, willy-washy promises and excuses should have got these people to dig further, and none did!

Influential people yielded their power to protect EH rather than the common man or common sense. Everyone was smitten by EH and her charisma! Can we define a pathological liar’s ability to manipulate people as charisma? Who knows.  🤥😤

It is the determination of the author, the Wall Street Journal’s wider team and of course the whistleblowers who with their sheer will brought this fraud into the light.

I can only imagine how John would have felt when he was met with resistance at every point of his investigative journey to get this story published. At the end the investors lost money, the culprits paid a little price for their crimes, but the truth prevailed.

Growing the Pie – Howard Marks – Q1 2019

Howard Marks letter every quarter is something that I eagerly look forward to. Q1 2019 letter can be found by clicking here.

My favourite excerpts are below

On the ability of the populism to stir people;

Sound bites like these find receptive audeinces amonth people who are unhappy with their lot, whereas detecting the error in these statements requires an insight, sense of history and understanding of economics that many people lack.

Winston Churchill’s quote of capitalism and socialism;

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virture of socialism is the eual sharing of miseries.

Summarising China’s agricultural history from a paper published in the Journal of International Affairs in 1986;

You can’t have it all. Most people lived much better because of the reforms, whereas under the prior system everyone had it the same, but most people lived far less well. Which is fairer?

Captialsims doesn’t know about or care about fairness in the sense of equal sharing. What it considers fair is the proposition that people who have greater ability or work harder should be able to earn more. That potential, it says, provides incentives for hard work and rewards those who achieve, ultimately resulting in a better life for almost everyone.

Vishal Khandelwal is one of my favourite thinkers out there. A sensible guy who is a devout investor.

Thinking in Bets – Annie Duke

As an individual, I believe a lot in processes. If you have a process and you are disciplined, the outcomes should be in your favour. Not all the time, but most of the times.

As a student of investing, I wanted to make the decision-making process robust. I also know that outcomes are beyond one’s control. Control what you can control, the central tenet of Stoic philosophy.

Annie Duke does a great job to explore the topic of seeing this in terms of the probabilistic way instead of a 0 or 100% certainty. Maybe it is our fundamental flaw that we need a sense of certainty to feel in control, but the reality is very different. Nothing is guaranteed, except death and taxes may be? 😬

Thinking in Bets guides you through the process of assigning probabilities to the possible outcomes and being comfortable in the fact that you do not know anything for sure. Annie tells an incredible story, and the book reads well.

My gauge of a good book is one where I do not want to keep it down. I want to pick it up the moment I get up, and I want to keep reading until I want to go to sleep. And this book does not disappoint.

Learning and highlights

▶ Life is Poker, not Chess


▶ Treating decisions as bets help to avoid decision traps and inaction


▶Thinking in bets allows you to move towards objectivity and accuracy and being open-minded


▶A good quality decision can still deliver a non-favourable outcome, and it happens all the time, and it is OK 😇