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 author’s 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 author’s 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
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 332.6—dc23
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 [email protected].
Copyrighted materials from Berkshire Hathaway shareholder letters reproduced with permission from Warren Buffett
In loving memory of my grandfather, Deepchand Nahata (1926–2007)
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 years—which is what we do—if they don’t enjoy it.
—Francisco García Paramés
It’s 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
1. Introduction: The Best Investment You Can Make Is an Investment in Yourself
SECTION I—ACHIEVING WORLDLY WISDOM
2. Becoming a Learning Machine
3. Obtaining Worldly Wisdom Through a Latticework of Mental Models
4. Harnessing the Power of Passion and Focus Through Deliberate Practice
SECTION II—BUILDING STRONG CHARACTER
5. The Importance of Choosing the Right Role Models, Teachers, and Associates in Life
6. Humility Is the Gateway to Attaining Wisdom
7. The Virtues of Philanthropy and Good Karma
8. Simplicity Is the Ultimate Sophistication
9. Achieving Financial Independence
10. Living Life According to the Inner Scorecard
11. The Key to Success in Life Is Delayed Gratification
SECTION III—COMMON STOCK INVESTING
12. Building Earning Power Through a Business Ownership Mind-Set
13. Investing Between the Lines
14. The Significant Role of Checklists in Decision-Making
15. Journaling Is a Powerful Tool for Self-Reflection