Archives

Ashoka University Lecture on The Practical Utility of Seven Math Ideas

This is a re-recording of an expanded version of a talk delivered by Sanjay Bakshi to undergraduate students of Ashoka University on 23 March 2019.

Link

Moneylife Lecture

I delivered my 4th Annual Moneylife Lecture recently.

You can watch it from here (paywall, no payments to me).

Talk on Fragility and Optionality in Business Models

I recorded this talk over many sessions, thanks to Jatin Khemani, a value investor and a friend.

See it from here.

Tom Russo in India

In December 2018, respected value investor Tom Russo was visiting India and CFA Society hosted him for a talk which I had the privilege of moderating.

You can see it from here.

Moneycontrol Podcast

In February 2019, I met with Santosh Nair of Moneycontrol over breakfast. I have long been a fan of Santosh thanks to his awesome book titled “Bulls, Bears and Other Beasts: A Story of the Indian Stock Market” which I highly recommend to you.

Santosh recorded the chat we had over breakfast and turned it into a four-part podcast. You can listen to them from here:

  1. Part 1
  2. Part 2
  3. Part 3
  4. Part 4

“It seemed like a good idea at the time”

Oh, I just love this story told by Charlie Munger at 2002 shareholders meeting of Wesco:

“[Our investment in] USG obviously hasn’t worked out very well. It wasn’t just asbestos — the market for wallboard went to hell. We missed that too. What can I say? It reminds me of a story about a man who had a wife and three kids. He conceived an illegitimate child with a woman he’d just met. When asked why he did it, he said, ‘It seemed like a good idea at the time.'”

Hilarious, isn’t it? But it explains so well how we think before making dumb decisions.

Like the explanation I give to my students in my class on why couples have unwanted pregnancies. I mean, what the hell were they thinking? Why didn’t they use protection?

The answer is that when people are in a “hot state,” they think differently. And they get into situations which clearly look like a dumb idea to anyone in a “cold state.”

Now, this is a very important point. What is obviously a very dumb idea to anyone in a “cold state” doesn’t look like a dumb idea at all to someone in a “hot state.”

People in a “hot state” never think of risks. They only think of the returns. Later, when they are facing the consequences of their prior dumb behavior, their explanation is usually along the lines that Munger gave: It seemed like a good idea at the time.

And there are all sorts of “hot states” in the world of business and investing. The second highest bidder in an auction which is about to end is in a hot state. The investor/speculator who just made a killing in the market is in a hot state.

Hot states make people do very dumb things. And just a recognition of that fact is worth something, isn’t it?

I think it’s a great idea to use the Munger joke on yourself because it makes you laugh at your own dumbness. At least it works for me. I laugh at some of my past dumb decisions. I first ask myself: What the hell was I thinking before doing so-and-so. And then I say to myself: “It seemed like a good idea at the time.”

And that makes me laugh. But hopefully, post that laugh, I also learn some important lessons for the future about how not to make the same type of mistake again.

I think a lot of people out there take life too seriously. They never laugh at their own dumb behavior. That’s a shame. Laughter reduces stress caused by mistakes without taking away the lessons that mistakes teach us.