CDOQ

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...

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.

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 th...

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...

Taiwan is a fascinating place. We would be living in a very different world today if Taiwan had not found a way to mass produce consumer electronics (TV, laptops, Smartphones, etc. etc.) at low cost.  Taiwan used to be a Japanese colony and received its independence after WWII. Now, the political status of Taiwan is disputed. Commonly, Taiwan is also known as Republic of China (ROC) which is different than People's Republic of China (PRC) commonly known as China. PRC claims ROC to be part of PRC after PRC was established by the communist party in China in 1949. The Taiwanese people speak Mandarin but are closer to the Japanese than to the Chinese in terms of culture. Taiwanese do not have animosity towards the Japanese because they built the infrastructure in Taiwan. And, Taiwan is one of the top tourist destinations for the Japanese. The relationship between the Chinese people and the Taiwanese people is still not trustworthy. Because of its history, Taiwan culture is unique. ...

Thought varies more widely among women. 

I just finished reading a fantastic book- Seeking Wisdom: From Darwin to Munger  by Peter Bevelin. The book offers a systematic approach to becoming a better thinker and a better decision maker. It synthesizes thinking of two of my heroes- Charlie Munger  and Charles Darwin.   The book gives you fundamentals from various disciplines- biology, physics, chemistry, mathematics, and psychology and then shows you how they are applied to reality. The core idea of the book is to understand that there 28 common misjudgments  people make, why we make them, and if we just learn to avoid them, we will be much better decision makers and will live better lives. And, it also outlines guidelines to better thinking.  One of the guidelines of better thinking is better attitudes. I think that changing attitudes can do wonders for people. Following are the attitudes for better living adapted from the book:  1. Life is long if we know how to use it....

If you stop caring about what others think and develop an independent mind, I guarantee that you will live a happy life. 

Why do we complain of Nature? She has shown herself kindly; life, if you know how to use it, is long. But one man is possessed by an avarice that is insatiable, another by a toilsome devotion to tasks that are useless; one man is besotted with wine, another with is paralyzed by sloth; one man is exhausted by an ambition that always hangs upon the decisions of others, another, driven on by the greed of the trader, is led over all lands and all seas by the hope of gain...many are kept busy either in pursuit of other men's fortune or in complaining of their own; many, following no fixed aim, shifting and inconstant and dissatisfied, are plunged by their fickleness into plans that are ever new; some have no fixed principle by which to direct their course, but Fate takes them unawares while they loll and yawn- so surely does it happen that I cannot doubt the truth of that utterance which is greatest of poets delivered with all the seeming of an oracle: "The part of life we really l...

The road to hell is paved with good intentions - Saint Bernard of Clairvaux

I spent the last weekend in Omaha, Nebraska with two of the my heroes- Charlie Munger and Warren Buffett . After attending the Berkshire Hathaway (BH) for a few years, I still get amazed how a shareholder meeting attracts 40,000+ people and the meeting is about two guys having fun. Everyone else  enjoys watching them have fun. The format is six hours of open Q&A. There is no preparation by Munger and Buffett. Anyone can ask anything about anything expect what BH is going to buy/sell next. You will see it in the notes  that a wide variety of topics are covered. Notes from previous years are available here . The David Sokol issue was covered by Buffett and that part of the meeting has been recorded so I have not covered it in my notes. You can see it here. Munger talked more this year compared to previous years. I just love this man. He is brilliant! Following are my random notes from the meeting: Buffett does two things in his job- 1) keep operating manag...