Famous investing author, blogger and partner at Collaborative Fund, Morgan Housel said it almost a year back. It is so profound:
“If your investment returns are in the 50th percentile every year you’ll probably end up in the top 5-10% over a 20 year period.
Average returns for an above-average period of time = ✨”
I learned from Nassim Nicholas Taleb, the brilliant author, also renowned for calling out frauds left, right, and center on social media, that it won’t be appropriate to summarize any of the aphorisms.
And what Morgan has said is an aphorism, so I will let it be and not dilute it by trying to explain.
Mark Manson, whose self-help books have sold more than 20 million copies, is also someone I follow. He tweeted a few days ago:
“A good life is largely defined by what’s missing:
– The fights that don’t happen
– The health problems you don’t have
– The debt you avoid
– The desires you don’t indulge
A good life’s not about gaining. It’s about letting go.”
If I rewrite the above tweet for an investor, I will write something like this:
A good investing is largely defined by what’s missing:
-The fights, to prove others that you are a better investor, that don’t happen
-The bankruptcy problems you don’t have
-The debt you avoid
-The desires, to own the current hot thing, you don’t indulge
A good investing is not about winning. It’s about letting go.
Now let me tell you about someone you must know if you are a cricket fan in India. And that person is Rahul Dravid. He is nicknamed “The Wall” for a reason.
3️⃣1️⃣,2️⃣5️⃣8️⃣ – the amount of deliveries Rahul Dravid has faced in his test career. He has faced more balls than anyone else in Test cricket. No other batsman has even crossed 30,000 deliveries!
To put this in perspective. The master blaster, Sachin Tendulkar, has played test for 9 more years than Rahul Dravid. That gave Sachin 36 more matches than Dravid. Dravid and Sachin batted at number 3 and 4 respectively for the majority of their career which proves that conditions for Dravid were a tad more difficult than for Sachin.
And given the craze we have for T20s these days, I believe, this is one record which will never be broken by any modern-day cricketer.
As investors also we have forgotten the test matches (read long-term) and are hooked on the T20s (read short-term, high churn).
While I have no problem with T20s, be it cricket or investing, I believe that when hardly anybody is looking at investing as a test match, if you approach it like Rahul Dravid you have higher odds of survival. Focus on playing the most deliveries, learning about most businesses, exposing yourself to different industries, and above all staying invested in good or great businesses for that above-average period of time, as recommended by Morgan Housel.
If you still don’t get it by reading the stories of 3 people who have done outstanding work in completely different fields, I will make one last attempt.
Here’s an excerpt from the classic book, Siddhartha, written by Hermann Hesse in 1922.
The protagonist, Siddhartha, a monk who looks like a beggar, meets a merchant and the merchant asks, “What can you give that you have learned?”
Merchant: “. . . If you are without possessions, how can you give?”
Siddhartha: “Everyone gives what he has. The soldier gives strength, the merchant goods, the teacher instruction, the farmer rice, the fisherman fish.”
Merchant: “Very well, and what can you give? What have you learned that you can give?”
Siddhartha: “I can think, I can wait, I can fast.”
Merchant: “Is that all?”
Siddhartha: “I think that is all.”
Merchant: “And of what use are they? For example, fasting, what good is that?”
Siddhartha: “It is of great value, sir. If a man has nothing to eat, fasting is the most intelligent thing he can do. If, for instance, Siddhartha had not learned to fast, he would have had to seek some kind of work today, either with you, or elsewhere, for hunger would have driven him. But, as it is, Siddhartha can wait calmly. He is not impatient, he is not in need, and he can ward off hunger for a long time and laugh at it. ”
***
While you can use this story of Siddhartha in any walks of life to inspire yourself, I will narrow it down to the investing field. As an investor, I think these are my takeaways:
“I can think” → Having good rules for decision-making, and having good questions you can ask yourself and others about investing.
“I can wait” → Being able to plan long-term, play the long game, and not misallocate your investing capital.
“I can fast” → Being able to withstand market volatilities and cycles. Training yourself to be uncommonly resilient and have a high pain tolerance when others around you are incapable of doing that.
You might have noticed a common thread in these 4 unrelated stories.
It’s the focus on survival and playing the long game.
Morgan talks about an average performance over 20 years.
Mark talks about avoiding the simple vices to do well over the long term.
Dravid tells you about batting out for a very very long time.
Siddhartha gives you a framework to use if you wish to play the long game.
They all tell you just one thing. Survive.
If you Survive for a long enough time in your field, your odds of doing well are unbelievably high as most people in your field will not even survive that long.
Survive.
Survive to Thrive.
To motivate me to think about Survive To Thrive, for maybe 20-30 years, I have committed to writing one blog a year on this subject. I started this in 2019, so this is the 5th in this series. Let’s see how far I can go on this journey.
You can read the previous four posts here:
Thanks for reading.
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