THE
JOYS OF
COMPOUNDING
The views expressed in this book are the personal views of the author and do not reflect the views of the authors employer. This book was prepared by Mr. Baid in his individual capacity and not in his capacity as an employee of Summit Global Investments. Any recommendations, examples, or other mention of specific investments or investment opportunities of any kind are strictly provided for informational and educational purposes and do not constitute an offering or solicitation, nor should any material herein be construed as investment advice. Readers should consult with a professional where appropriate. The views expressed reflect the current views of the author as of the date hereof and the author does not undertake to advise the readers of any changes in the views expressed herein. In addition, the author assumes no duty to, nor undertakes to update forward-looking statements. No representation or warranty, express or implied, is made or given by or on behalf of the author, the authors employer, or any other person as to the accuracy and completeness or fairness of the information contained herein, and no responsibility or liability is accepted for any such information. By purchasing this book, the recipient acknowledges its understanding.
THE
JOYS OF
COMPOUNDING
The Passionate Pursuit of Lifelong Learning
REVISED AND UPDATED
GAUTAM BAID
Columbia University Press
New York
Columbia University Press
Publishers Since 1893
New York Chichester, West Sussex
cup.columbia.edu
Copyright 2020 Gautam Baid
All rights reserved
E-ISBN 978-0-231-55211-0
Library of Congress Cataloging-in-Publication Data
Names: Baid, Gautam, author.
Title: The joys of compounding: the passionate pursuit of lifelong learning / Gautam Baid.
Description: Revised and updated. | New York: Columbia University Press, [2020] | Includes bibliographical references and index.
Identifiers: LCCN 2019051276 (print) | LCCN 2019051277 (ebook) | ISBN 9780231197328 (cloth) | ISBN 9780231552110 (ebook)
Subjects: LCSH: Investments. | Value investing. | Success in business.
Classification: LCC HG4521 .B3448 2020 (print) | LCC HG4521 (ebook) |DDC 332.6dc23
LC record available at https://lccn.loc.gov/2019051276
LC ebook record available at https://lccn.loc.gov/2019051277
A Columbia University Press E-book.
CUP would be pleased to hear about your reading experience with this e-book at cup-ebook@columbia.edu.
Copyrighted materials from Berkshire Hathaway shareholder letters reproduced with permission from Warren Buffett
In loving memory of my grandfather, Deepchand Nahata (19262007)
The best thing a human being can do is to help another human being know more.
Charlie Munger
The true value investor, who deserves my utmost respect, is somebody who devotes their life to their passion for reading. Nobody can spend their life studying for 50 yearswhich is what we doif they dont enjoy it.
Francisco Garca Params
Its startling how much life wisdom can be gleaned from the maxims and approaches of value investors.
Rolf Dobelli
The wisdom of the wise, and the experience of ages, may be preserved by quotations.
Isaac Disraeli
CONTENTS
A little more than twenty years ago, I discovered Warren Buffett, Charlie Munger, Ben Graham and the art of Intelligent Investing. Even before attending my first Berkshire Hathaway meeting, I had become a converted disciplesuch that, when I first arrived at Berkshire, I felt like I had found my tribe. At the time, we were one or two thousand people in Omaha. But the tribe was growing. Today, tens of thousands attend the Berkshire meeting, and many more watch online.
And just as the size of the tribe has not been static, neither has its world view or self-understanding. Back in those early days, I saw value investing as merely a way to invest well, get rich, and live The Good Life. But as the years went on, I came to realize that there was far more to it than this. I began to see it as a system for living the best possible life. Thus, the Value Investors view of life encompasses far more than concepts like Mr. Market, and Margin of Safety. It extends to questions like, What is Worldly Wisdom and How does one Acquire it?, How does one build a Latticework of Mental Models, What role can and should Stoicism play in life and investing?, and What can the Mahabarata, the Gita and other great works of Eastern Wisdom teach us about investing and life?
Gautam Baids book is another step in the Value Investing tribes unfolding knowledge about the world we inhabit. In it, you will learn his lessons from the greatsas updated by more recent students. So in addition to Buffett, Munger, and Graham, you will read about what Baid has learned from people like Mohnish Pabrai, Tom Russo, Mike Mauboussin, Peter Bevelin, Saurabh Madaan, Marcelo Lima, Paul Lountzis, and others. You will also benefit from Baids broad reading across many disciplines as he distils his understanding of works by a broad range of authors, including Herbert Simon, Shane Parrish, Nassim Taleb, Rolf Dobelli, Richard Zeckhauser, and others.
And, just as all true value investors are travelers on a path, this book itself has come a long way since it crossed my desk not so long ago. This Columbia Business School Publishing edition benefits from improved organization around topics and a clearer focus on Gautams voice and insights. It offers fresh opportunity to learn and relearn those key lessons that will make us better investors and better human beings.
Guy Spier
Zurich, Switzerland
I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.
Charlie Munger
I n his 2007 University of Southern California School of Law commencement speech, Charlie Munger said that lifelong learning is paramount to long-term success. Without it, we wont succeed, because we wont get far based on what we already know.
If you take Berkshire Hathaway, which is certainly one of the best-regarded corporations in the world and may have the best long-term investment record in the
Most people go through life not really getting any smarter. But you can acquire wisdom if you truly want to obtain it. In fact, a simple formula, if followed, is almost certain to make you smarter over time. Its simple but not easy.
It involves a lot of hard work, patience, discipline, and focus.
Read. A lot.
This is how Warren Buffett, one of the most successful people in the business world, describes his typical day: I just sit in my office and read all day.
