Read Aloud the Text Content

This audio was created by Woord's Text to Speech service by content creators from all around the world.

Text Content or SSML code:

Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life Author: William Green Book Summary Book Summary In the book, “Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life,” William Green skillfully highlights the investment commandments of some of the greatest investors of our mes. Through his interviews with these invesng greats, we learn not just how to become rich but also how to improve the way we think and reach decisions. Key Takeaways In invesng, paence is your biggest virtue. You can be a successful investor only if you are paent with your investments. Ÿ Ÿ Senment and behaviour are your biggest enemies. In order to succeed at invesng, you must be able to control your emoons and make raonal decisions. Ÿ Trying to predict the future is redundant. Instead, you should focus on trying to learn from the past. Ÿ A successful investment mantra is to buy cheap. A beer mantra is to buy quality at cheap prices. Ÿ Always queson whether the price that you are paying for an investment is reasonable. Ÿ Whether in life or in invesng, there is no substute for hard work and discipline. Lessons from Mohnish Pabrai When it comes to invesng, the queson to ask is not, “how to make money”, but “how to compound money”. Pabrai's approach to the challenge of becoming a billionaire holds important lessons for us all, not just as investors but in every area of life. He didn't aempt to reinvent the wheel by, say, devising a new algorithm to exploit subtle pricing anomalies in the markets. Instead, he idenfied the most skillful player of this parcular game, analyzed why he was so successful, then copied his approach with scrupulous aenon to detail. Pabrai's term for this process is cloning. We could also call it modeling, mimicry, or replicaon. His core commandments include: Ÿ You should invest your money in a company only if it falls within your “circle of competence.” This means that you should make an investment only when you truly understand the business. Ÿ The company has to trade at a large enough discount to its underlying value to provide a significant margin of safety. Ÿ Ÿ The company's financial statements should be clear and simple. It is more important to buy quality businesses than to simply buy cheap businesses. Lessons from John Templeton The only way you can make money is if you buy at a me when other people are desperately trying to sell. This means buying at the “point of maximum pessimism.” Like Buffe and Munger, he had an unemoonal appreciaon for a mispriced bet that offered an asymmetry between risk and reward. His core commandments include: Ÿ Do not let your emoons get the beer of you. Emoons can make you become excessively careless and opmisc when you make big profits and get excessively pessimisc and too cauous when you make big losses. Ÿ Beware of your own ignorance. Many people buy something with only the niest amount of informaon. They just don't understand what it is that they are buying. This is a big mistake. Ÿ Always diversify your porolio. It is the best kind of protecon that you can give your porolio. Ÿ Successful invesng requires paence. Ÿ The best way to find bargains is to study whichever assets have performed very badly in the past five years. Once you idenfy these assets, then you need to assess whether the cause of those woes is temporary or permanent. Ÿ One of the most important things you need to do as an investor is not to chase fads. Howard Marks In a world where nothing is stable or dependable and almost anything can happen, the first rule of the road is to be honest with yourself and about your limitaons and vulnerabilies. Marks believed that if you want to add value as an investor, you should avoid the most efficient markets and focus exclusively on less efficient ones. The single most reliable route to investment riches is to 'buy cheap' and the greatest risk is to overpay for an investment. Thus, 01 Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life Author: William Green Book Summary Book Summary the essenal queson to ask about any potenal investment should be “is it cheap?” Some of his core commandments include: Ÿ Ÿ We can't change the market environment. But we can control our response, turning more defensive or aggressive depending It is almost impossible to predict the future. However, you can always learn from the past. Ÿ Markets move in cycles and thus, cycles will always reverse. By studying paerns of the past, you can take advantage of the Ÿ Both in markets and life, the goal isn't to embrace risk or eschew it, but to bear it intelligently while never forgeng the on the climate. cyclicality by behaving countercyclically. possibility of an unpleasant outcome. Five Rules of resilience as exemplified by Graham, Jean-Marie Eveillard, Warren Buffet, Irving Kahn, and Mahew McLennan Ÿ First, you need to respect uncertainty. Ÿ Second, to achieve resilience, it's imperave to reduce or eliminate debt, avoid leverage, and beware of excessive expenses. Ÿ Third, instead of fixang on short-term gains or beang benchmarks, you should place greater emphasis on becoming shock resistant, avoiding ruin, and staying in the game. Ÿ Fourth, beware of overconfidence and complacency. Ÿ Fih, as informed realists, you should be keenly aware of your exposure to risk and should always require a margin of safety. Lessons from Joel Greenbla When it comes to invesng, the number of choices available can make your head spin. Thus, in praccal terms, the ability to reduce complexity is immensely valuable. This means that simplificaon is a very important strategy. It is best to have a simple way of looking at things – this will help you sck to your strategy during market ups and downs. The most important thing that you as an investor can do is to value businesses and then pay much less for them than they're worth. Always remember that while buying cheap is great, buying good businesses cheap is even beer. Further, it is not enough to find a smart strategy that stacks the odds in your favor over the long-term. You also need the discipline and tenacity to apply that strategy consistently, especially when it's most uncomfortable. Lessons from Will Danoff The boomline is that “stocks follow earnings.” With that principle in mind, you should relentlessly search for the “best-of- breed businesses” that are expected to “grow to be bigger in five years.” The principle behind this is simple. If a company can double its earnings per share in the next five years, then the stock price is also likely to more or less double. In their own way, Greenbla, Buffe, Bogle, Danoff, and Miller have all been seekers of simplicity. They believe that all you need is a simple and consistent investment strategy that works well over me—one that you understand and believe in strongly enough that you will adhere to it faithfully through good mes and bad. Lessons from Nick Sleep and Qais “Zak” Zakaria Quality trumps everything. To become a successful investor all you need to do is deep research and create a concentrated porolio of really high-quality companies. Some of their core commandments include: Ÿ Extraordinary advantages can accrue to investors with the discipline and paence to resist the temptaons of instant graficaon. In a high-speed era dominated by short-term thinking, this capacity to defer rewards is one of the most powerful contributors to success, not only in markets, but in business and life. It is not necessary to behave unethically or unscrupulously to achieve spectacular success. In a world that's increasingly geared toward short-termism and instant graficaon, a tremendous advantage can be gained by those who move consistently in the opposite direcon. Ÿ Ÿ