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02 Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life Author: William Green Book Summary Book Summary Great success tends to come from small, incremental advances and improvements sustained over long stretches of me. It is important to accept that you cannot control the outcome. However, you can control the effort and the dedicaon and the giving of one hundred percent of yourself to the task at hand. Some of his core commandments include: Ÿ You do not need a secret sauce or a super high IQ to become a success. What you need is a selecon of sensible habits that are direconally correct and sustainable—habits that give you a marginal advantage that will compound over me. Ÿ Always look for profitable businesses with good returns on capital and not too much leverage. Ÿ The management team of a company must have “equal measures of talent and integrity.” Ÿ The company should have ample opportunity to reinvest its profits at handsome rates of return. Ÿ The stock must be available at a reasonable price. Lessons from Jeff Vinik, Paul Lountzis, and Laura Geritz Vink has used the same consistent approach to invesng throughout his career, which is to focus on individual companies with good earnings outlooks that are selling at very reasonable valuaons. He also believes that there is no substute for hard work. Paul Lountzis too, is a consummate praconer of connuous learning. Lountzis is a ravenous consumer of insights from the tans of business and invesng. He adores books about entrepreneurs. As he listens, he keeps pondering the same underlying quesons: “What am I missing? Who's doing something that no one else is doing? How can I get beer?” His aim is never to replicate other investors' behavior. “You can't mimic them because you're not them,” he says. “Learn it and adapt it and modify it into your own process.” Similarly, Laura Geritz also believes that it is important to build an informaonal advantage. The gap between reality and percepon offers an ideal opportunity to invest for the long haul. Lessons from Charlie Munger He strives consistently to reduce his capacity for “foolish thinking,” “idioc behavior,” “unoriginal error,” and “standard stupidies.” This can be achieved by looking at a problem backwards. Idenfy the disaster areas and then try to figure out what went wrong. Once you know what went wrong you can acvely take steps to avoid the same errors. Lessons from Ed Thorp, Jason Karp, Bill Miller, and Arnold Van Den Berg Ed Thorps believes that beyond invesng, it is important to realise that problems tend to arise when you become so consumed by the pursuit of money and possessions that you lose sight of what maers more. Thus, you should always behave decently and avoid harming others. Both Jason Karp and Bill Miller are of the opinion that resilience is a prerequisite for success in markets and life. Thus, it is important to focus on what you can control and try to let go of the rest. Arnold Van Den Berg sums it perfectly well with his philosophy - if your life is more important than your principles, you sacrifice your principles. If your principles are more important than your life, you sacrifice your life. Van Den Berg developed a consistent investment methodology that was infused with common sense. Among other things, he analyzed hundreds of acquisions to construct a record of what sophiscated private buyers would pay for various types of business. He then formulated a few praccal rules of thumb that he refused to violate. For example, he wouldn't invest in any stock unless it traded for at least 50 percent less than its private market value. And whenever a stock rose to 80 percent of its private market value, he insisted on selling. His unswerving discipline and rigorous focus on valuaons kept him on the right track. The book undoubtedly packs endless investment wisdom and tells us how to become beer investors. Many of the pracces highlighted can be easily followed by individual investors. On the other hand, there are many which would simply prove to be challenging to follow. The good thing is that in addion to praccing the principles highlighted in the book you can also choose to invest via vehicles that pracce these principles. An ideal investment vehicle would be mutual funds. These funds pool investor money and invest it in different asset classes based on a pre-determined investment criteria. Since they follow a certain investment strategy, they are less prone to behavioural biases. Further, there are certain long-term mutual fund schemes that invest in quality companies at cheap valuaons and then stay invested paently to reap the benefits of the investment. So, through a mutual fund investment, you get to minimise behavioural biases, you get paent and disciplined long-term invesng, 03 Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life Author: William Green Book Summary Book Summary and you get to buy investments at a reasonable price. In that regard, mutual fund investments can help you follow most of the principles highlighted in the book. An investor education initiative All Mutual Fund Investors have to go through a onetime KYC process. Investor should deal only with Registered Mutual Fund (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints – please visit on https://www.edelweissmf.com/kyc-norms MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. 04