Showing posts from July, 2011

Management vs. Investment

Smart people manage. Smarter people invest.


Context is not a well understood concept in context of decision-making:-) By context, I mean a set of conditions (mostly interconnected) under which something works or occurs.  We go to school (higher education) and learn theory which tells you how the world should work and not necessarily how it actually works. Subjects are taught in universal terms and not in relative (or context-specific) terms. How many classes have you seen on mastering context? So, how do you learn context? Mainly, by experience and thinking. However, most people are mentally lazy and they don't think about why something worked. One of my heroes, George Bernard Shaw , famously said, " Few people think more than two or three times a year . I have made an international reputation for myself by thinking once or twice a week."  We tend to think that success was because of our actions and failure was because of others' actions. We like simple rules of thumb which don't require us t

Obituary: Jens-Uffe Andersen

My dear friend, Jens-Uffe Andersen, passed away on May 26th, 2011. Jens-Uffe was a great man and I admired him. He spent his life being a productive member of the society and made significant contributions to the success of SIEMENS in Denmark. Jens-Uffe taught me valuable lessons in business, specifically: In a big centralized corporation, when managing a big account, one has to spend more time within the organization aligning various entities than with the customer.    Internal alliances are necessary to get anything done in a big organization.  People like to do business with with people they like even if it costs a bit more.  I am sure that I am not doing justice to wisdom of the man by just listing three things I learned from him because the list is very long. May Jens-Uffe rest in peace. My condolences to his family.

Take Joy in Admitting Mistakes and other Wisdom from Charlie Munger

Charlie Munger , my hero, answered questions from his fans at " A Morning with Charlie" in Pasadena, California on July 1, 2011 (formerly, this annual gathering with Charlie was known as Wesco Financial Annual Shareholder meeting).    Just like all the other meetings with Charlie, this one offered wisdom, humor, and admiration for the man. I could not attend the meeting and am thankful to Morgan Housel  who complied the notes from the meeting for the Montley Fool. [click here for the original post]. Following are the notes: ----   On the Wall Street meltdown: It all started with an asinine bubble. The cause was a combination of megalomania, stupidity, insanity, and I would say evil on the part of bankers and mortgage brokers. And it was widespread. Alan Greenspan was a smart guy, but he totally overdosed on Ayn Rand when he was young. You can't give bankers the freedom to create gambling games. That's what it was. Wall Street was a gambling house, and the

Charlie Munger's Parody of the Great Recession

Charlie Munger , my hero, handed out the following parody at " A Morning with Charlie" in Pasadena, California on July 1, 2011 (formerly, this annual gathering with Charlie was known as Wesco Financial Annual Shareholder meeting).  The parody identifies the causes of the recent financial crises in the US. Most "experts" have not been able to do that. Furthermore, it offers valuable lessons in human behavior, economics, accounting, and morality. I am still laughing after having read the story twice:-). Enjoy!  --- In the country of Boneheadia there was a man, Wantmore, who earned his income as a home mortgage loan originator. Wantmore operated conservatively. All his home loans bore interest rates of 6% or less, and he demanded of all borrowers large down payments, documented proof of adequate income and an immaculate credit-using history. Wantmore sold all his loans to life Insurance companies that, before closing purchases, checked loan quality with rigor—th