MoneyWiseSmart held an informative session with The Joys of Compounding author Gautam Baid on its YouTube channel early last year.
Here are some of my key takeaways from the awesome sharing by Gautam (screenshots below are from the deck shown during the talk).
1. Compound interest is the eighth wonder of the world. However, there’ll be this “valley of disappointment” one has to go through before we can see the magic of compounding happening.
2. Finding your North Star helps you to stick through the “valley of disappointment” and not give up.
3. You can find your calling by discovering your Ikigai.
4. The key to compounding is time and endurance. It’s not necessarily earning the highest returns.
5. But volatility may affect you from doing sound things in investing. However, the up-and-down movements in the stock market are normal, just like how day follows night and night follows day.
6. If you had invested in great businesses through the volatility, however, you would have done well across all business cycles. This is despite all the uncertainties in the market like rising interest rates, inflation, political tensions, etc. But bad businesses destroy wealth, even at low entry prices.
7. We shouldn’t be timing the market. Time in the market is what matters.
8. So what we should do is stay the course; focus is the key to success.
9. On why investing at a young age is powerful.
10. The +-x/^ formula to wealth.
11. How transaction costs, no matter how small they look, add up over time.
12. Always reinvest your dividends.
13. On bull and bear markets: Never let a bear market go to waste (reminded me of the recent March 2020 market crash).
14. On value traps: Everything trades at the level it does for a reason, so respect the market’s wisdom.
15. As investors, we need to adapt to changing times.
16. We should avoid psychological biases (by using a checklist and by keeping an investing journal).
17. Traditional accounting is not keeping up with the changing times. Always focus on unit economics for digital businesses and not on their accounting profits.
18. Investors who have a strong investing psyche have an edge and it is their competitive advantage. How you behave will matter far more than the fees you pay, asset allocation, or analyses.
19. Here’s how to sustain wealth after we have created it.
20. As you gain experience, you will develop a “feel” for the stock market over time (I totally agree with that).
21. Look beyond the short-term “suffering” when analysing companies that are investing for long-term growth.
22. Have humility and be a learning machine.
23. Have a constant learning mindset so you can be a lifelong learner.
If you would like to read the above in a Twitter thread, here’s the summary I wrote a year back on my Twitter account:
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Disclaimer: This information provided in this article is purely based on my opinions and is not intended to be personalised investment advice. The ideas discussed here are not recommendations to buy/sell any stock. The writer Sudhan P doesn’t own shares in any companies mentioned.