Lessons, learnings and gratitude - 2023
Back in January of this year, I promised myself to write as much as possible this year. Naturally, I clasped at every opportunity to write and share my thoughts on almost everything - personal and professional. And while we are wrapping up this year, it’s only fitting that I end the year with a blog.
In this piece, I share most of the things I have learned and picked up this year. I believe I am a better person today - personally and professionally - than 12 months ago. I think that is all that matters.
Some of the following learnings I have listed are related to finance, trading and investing, while the rest are a few things I picked up in interactions with folks around me. So here we go,
Since I live in the world of Finance day in and out, I must start with that - Finance is all about managing cashflows, where cashflows are just the inflow and outflow of money from a company or an individual or a household or a shop or anything at all. And if you are to do well, you better plan on having inflows more than outflows at some point in time to be sustainable (meaning not to need external capital). That’s all there is to it, and everything else probably is just an add-on to this fact.
All the jargon that makes up finance in a conventional sense - including balance sheets, P&Ls, valuation ratios, graphs, charts, etc. does have substance, but you can’t explain that to a 10-year-old, can you? This is why simplifying finance to the barebones is probably the best thing I have learned to date. Maybe this is a learning from 2021, but a lot of contextual understanding happened this year.
For example - if you are a company where you have managed to produce and sell a good, that is great. But now, say you get paid by the customers in advance, well, that’s a bonus. And add to that that you can pay your suppliers a couple of months beyond your actual sales date, which is quite something. All along this value chain, the company is generating cash flows and making a profit (hopefully) by selling the product, but it also manages capital flows well to put more money to work. Magical stuff. But you see how all of the numbers along the way augment the story itself?
And the same goes for the dreaded valuation of a company. As Aswath Damodaran says - Valuations are just stories in motion. So, we can pick a company, build a story around it, and represent it in numbers. At every step, the numbers involved must represent the story you initially had in mind - and different folks can have other stories. That’s the beauty of valuations. I think this simplifies valuation and pricing so much more for everyone. Simplification and stripping complex concepts into basic elements help. An extension of this is that Finance is more about storytelling than numbers. Understanding the story of how the business operates and what it intends to do is more important. And some of this story is easily accessed by speaking to employees at the company, the customers of the company or folks who understand the space.
You can’t predict anything, mate. Since I work in finance, I keep getting asked what the indices will do tomorrow, next week and next year. Heck, I dont know what the market will be doing in the next hour. Predictions are mostly a waste of time - where maybe a few handful of predictions come true by pure luck.
Instead, what has helped me is thinking about specific factors impacting the end state and having a view based on that. Like how stories help valuation, stories also help predictions. For example - if I were to predict the financial markets in India, here is what I would do. I would look at the country’s social, economic and political situation and understand what is happening with the broader demographics. I would speak to as many people as possible to get their views. And use that along with data such as growth rate, a few high-frequency indicators, inflation, job data, and sentiments from the regulators to build a narrative. It should effectively give me a high-level view of what is happening. But any attempt, even after this, to predict the end state accurately will be fantasy. Rather, the narrative will help guide decisions which otherwise might have been based on random sentiments.
And a continuation of this is something I read from a Morgan Housel blog - Long-term news matters. This is quite an important point to consider. Almost all of us try to model our lives based on available information, but that information is often all noise. And the best way to model anything would be to look at the long-term repercussions of anything and consider that while making decisions. Thank me later.
Thinking in probabilities - continuation of the previous point on prediction. Something that has changed my life is looking at everything in terms of probabilities. Not only has it helped with thought processes, it has also helped communication. I can quantify not for the sake of it but to express my view on the question/topic. Has it helped me learn more? It has for almost 70% of the days this year. See what I did there? 🙂
Thinking in probabilities also helps me internalize that life has shades of grey with almost everything, and we all must live with those uncertainties. All of which help us cope with all kinds of situations we face
Role of luck vs the working of skill - one of the things I have heard and read repeatedly in podcasts and books this year has been how every successful individual credits luck almost all the time. I think this is humbling. And the human mind does not like this because it means letting go of control. But this is true - luck and being at the right place at the right time plays a larger role in life than other things.
If work feels like fun, cherish it - yep, this is probably the most repetitive piece of advice I have given to anyone asking for it. (Not that too many have asked for advice). I keep repeating to younger folks (yeah, younger folks. I feel old) that they must chase what keeps them happy. What keeps one happy might not just be relaxing, but it must also improve your ability to think and introspect daily. So as long as you find that and stay happy doing that day in and day out, never lose it.
Be the dumbest in the room - this is quite important. This means always walking into any meeting, any gathering and any interaction wanting to learn maybe one thing and over a period of time, compounding kicks in, and you will see the joy and benefits in it. I have learnt that there is always something to learn from everyone and everything around us. You need to observe and pay attention.
Let me share an example - the other day, I saw the security guard at my apartment behave calmly despite a resident yelling at him for something he had nothing to do about. He wasn’t trained for it (had asked him the next day). He kept his composure so well because he inherently believed that was the right thing to do. He was going above and beyond his job. Simple thought process, but something for all of us to learn from him.
Write, write and write - writing helps refine thoughts - not just for others to understand you but also for yourself. As someone on Twitter recently said - Writing is the only thing that can save you from yourself.
If you are thinking about an idea, an initiative, or anything else at all, write it down and see how that changes your life. When I write, I spend a lot of time writing the first shitty draft, and then I clean it up over the next few days. That would mean cutting and chopping paragraphs or sometimes junking the entire piece. Nonetheless, there is a learning curve, which is the fun part. By the way, it does not have to be blogs or long-form content. You can write short - 100-200 word blurbs and start with that. And boy, it helps articulate ideas well in any situation. Structure helps always, and that is what writing brings.
As I said earlier, I promised to write one blog every month at the start of this year. While I did not hit that target, I did write six pieces, so it was a great start nonetheless. Here is my blog.
Dont let criticisms affect you - this is quite important. When I was younger, I heard criticism, and I would almost always end up with self-pity and defensive mechanisms. As I have grown older, I have realised that self-pity does not help. You can always avoid it. And every criticism is an opportunity to improve or learn a new skill. Try to be kind to yourself because that is how you will eventually be kind to others.
So, if you are having a bad day, start over. The next day brings tons of opportunities to do well, and the world has an abundance of these opportunities. There is no point in sulking. Always look ahead and be optimistic.
Always value constructive feedback - this has been one of the best lessons of this year. Nobody has time for you unless they care. The world is a cutthroat place today; everyone is rushing towards something. And so, if anyone is spending time on giving you feedback, please take it constructively and work on it. Sure, you might choose not to but never have bitter thoughts about people genuinely trying to help you improve. Take every feedback available and get cracking on it.
Delegation is not passing on work to others - this was one other profound learning of this year. We all link delegation to handing over stuff to others due to lack of time. Sure, that is one way to think about it. But as I kept reading more about delegation a few weeks ago, I learnt how it was more about building capacity to focus on every aspect of decision making. For example, you might not look at every small aspect of the ongoing project for whatever reason, but what if you had one other individual who would do that? Who would then give the tiny details the same attention as the bigger aspects of the project? That would lead to compounded benefits for everyone over a period of time.
India needs healthcare infra, education and more capital - Over the past decade, India has seen rapid development on several fronts. The national highway network saw a near doubling from ~79K km in 2012 to ~140K km in 2022, domestic air travel passengers more than trebled from ~54 mn in 2009 to ~170 mn in 2019, households with broadband connections grew ~7x from ~20 mn in 2013 to ~137 mn in 2023, the number of bank accounts grew ~3x from ~100 crores in 2015 to ~300 crores in 2023. Overall GDP grew from USD 1.8 tn in FY13 to USD 3.75 tn until June 2023. Yet, we have seen minimal advancement in healthcare and education. While changes are being brought about, more of us need to help the government in some of these causes.
Well, this learning comes from visiting a Govt hospital nearby. I was quite distressed to see how things work there and some of the hurdles people around us with basic means of living have to go through for basic healthcare. While there are positive things as well - I did visit a Govt hospital in a village (my hometown), and things were drastically different - there is immense scope for improvement. Maybe this is because our cities are overcrowded or for other structural reasons, but we need to fix this and fix it quickly. So, hopefully, some of you reading might take it upon yourself; I will certainly keep my eyes open for opportunities to help out in this space.
Markets beat everything else - In investing and anything you do in life, markets are a signal you dont want to miss. Investing in a startup, a public company, a career choice, and everything else can be guided by what the market suggests as the future of that particular sector. This has become a reflex for me - I hear any news, I look at the markets to figure out the impact and the extent of validity of the news.
Thanks for reading through these pointers. They have all been personal lessons, and I hope you can take away a few things to think about. Hopefully, they will come in handy. But if there is one thing only that you will take away from this blog, it must be that in most cases, the world is not a Zero-Sum game, meaning, all your gains won’t be someone else’s losses. So be kind to one another, and always help each other. As it is probabilistically proven that there are so many opportunities for you to cash in on, it makes no sense to pull each other down.
Cheers to 2023, and I look forward to another year of relentless learning in 2024. My goal for this year is to keep learning how to write and storytell better. And maybe, just maybe, my next year-end blog will be 10x better than this one.
Thank you to everyone who helped me become better this year. 🙂