Things read - Week 09

Capital is king

With the increasing dependency on AI, as usual, capital will continue to matter. Corporations will have less incentive to care about humans, and in order to succeed, we will need substantial capital. Thankfully, for now, AI is roughly in the affordable range if you want to excel, and I hope they will continue to become cheaper. Link

Sabbatical

Arun.is took a sabbatical and focused on his health. I am using the word 'focus' lightly, but it's not light. Focus requires commitment. Focus requires sacrifices. Sacrifices to skip binging on the couch. Sacrifices to skip food on tap and commitment to spend time in the kitchen, cooking clean food. But when you do focus, over the long term the results are amazing. He dropped his resting heart rate from 65 to 55 and body fat from 20.5% to 13.5%. Be like Arun! Link

Surviving through a market fall

The Indian stock market is experiencing a bubble. It has been continuously falling for the last 6 months or so. This post is for both seasoned and new investors. There are no new revelations, but it serves as a reminder that markets do not go up in a straight line. They swing between greed and fear. When they crash, it may feel like they never go up again, but history tells a different story. The most important thing is to withstand the volatility by keeping your asset allocation in place, i.e., having enough debt such that if you need cash, you use the debt instead of the equity. Link

Lessons from the 2024 Berkshire Letter

It might seem counter-intuitive, but a diversified portfolio can be more forgiving in the long run because the good, great, and phenomenal companies more than make up for the rest of the returns. Probably not an overly diversified portfolio though. There's a saying that you shouldn't invest in an asset if it's not going to be at least 5% of your portfolio to have a meaningful impact. And then, the weekly reminder that it is only in the long run that compounding works. So, it's important to stay in the game by having the proper asset allocation, etc.

Buffet also offers two pieces of advice to beat inflation: invest in companies because they have the ability to raise prices over time to offset the cost of inflation. Second, increase your income by making yourself more desirable to employers. Be indispensable. Link

Independence

And then the final piece of last week was 'Pure Independence' by Morgan Housel. Independence + purpose = pretty nice life. Misery comes from dependency. Doing something on your terms feels better than doing the exact same thing when someone else is peering over your shoulder.

Ideas are dangerous, but the man to whom ideas are more dangerous is the one with least ideas. You should have a strong view on what kind of life you want to live. If that's not the case, you will want to mimic the first visually appealing person you come across. This may or may not work. It's hard to sit and reflect on what you want and why you want, but it's worth it. This reminds me of Ramit Sethi, when he asked people what their rich life looks like. Most of the respondents had no clear idea of what their rich life looks like, and that's a problem because if you don't exactly know where you want to be, who would you go there? Link