Thursday, March 29, 2001

Book Review: Trade like Warren Buffett



‘Trade Like Warren Buffett’
By James Altucher
Wiley

Warren Buffett is considered world’s greatest value investor. Though he is famous for “buy and hold forever” strategy, the author James Altucher says perhaps no other investor has applied so many diverse set of investment strategies, as Buffett has done. This book is a testimony to that. (Warren Buffett claims to be 15% Philip Fisher and 85% Benjamin Graham.)

In this book, James tries to cover all the important different investment styles used by Buffett, e.g. merger arbitrage, relative value arbitrage, bonds, fixed income arbitrage, stocks, commodities, and currencies, and focuses on how we can learn some trading tips from him. The pages explain strategies like mean reversion, market timing, funds, as well as Graham Dodd (margin of safety). The important role of internet and technologies in investing is also well explained.

The book also contains very interesting interviews with two Buffett style hedge fund investors. I also liked the chapters “Buffett and disasters”, “trade like Bill Gates”, and “Jealousy”. This is a very good book, though the beginners may find it slightly difficult at some places. Highly recommended for Warren Buffett fans.

- Rahul

Wednesday, March 14, 2001

Book Review: Tao Te Ching


‘Tao Te Ching’
By Lao-tzu

Translated by Stephen Mitchell

Harper & Row, Publishers, Inc.


This is a wonderful book for which I am grateful to our library. The introduction to the book says this is a book which is translated maximum number of times after Christian bible and only a few other books. It contains a philosophy which is foundation for Taoism religion and has influenced a lot others.

Lao-tzu is said to have lived around 6th century BC, though everything about him is debated and unauthenticated. It is said that he served in some small nation in China and after its downfall he left the state. Before he was leaving, the security personnel at the border asked him to leave his thinking in form of a book, and hence the great philosopher wrote it in the form of this book. Though it is still debated if he himself was the original thinker and author of the philosophy in the pages.

Tao means “way”, and the title of the book is “Tao Te Ching”, meaning “Book of the way”.

It was a delight to go through this book. At many places, I found the philosophy to be similar or same to that of Hinduism, Sanatan Dharma or the Vedanta. This was not surprising, because if there is one truth, no matter who tries to get it and in what geography, one should make the same conclusions and observations. Many times I wondered if Lao-tzu had read the Vedas or if he got the concept of nirguna brahma from there. I am reproducing some texts from this book, with regret if there are any errors.

I also thank the translator Stephen Mitchell for making this book understandable for us.



The Tao is infinite, eternal
Why is it eternal?
It was never born;
Thus it can never die.
Why is it infinite?
It has no desires for itself;
Thus it is present for all beings.



Fill your bowl to the brim
And it will spill
Keep sharpening your knife
And it will blunt
Chase after money and security
And your heart will never unclench
Care about people’s approval
And you will be their prisoner.



Do your work, then step back
The only path to serenity.



We join spokes together in a wheel,
But it is the center hole
That makes the wagon move
We shape clay into a pot,
But it is the emptiness inside
That holds whatever we want.
We hammer wood for a house,
But it is the inner space
That makes it livable
We work with being
but non-being is what we use



Success is as dangerous as failure.
Hope is as hollow as fear.
What does it mean that success is as dangerous as failure
Whether you go up the ladder or down it,
Your position is shaky.
When you stand with your two feet on the ground,
You will always keep your balance.
What does it mean that hope is as hollow as fear?
Hope and fear are both phantoms
That arise from thinking of the self.
When we don’t see the self as self,
What do we have to fear?
See the world as your self.
Have faith in the way things are.
Love the world as your self;
Then you can care for all things.



The Master doesn’t talk, he acts.
When his work is done,
The people say, “Amazing!:
We did it, all by ourselves!”



Throw away holiness and wisdom,
And people will be a hundred times happier.
Throw away morality and justice,
And people will do the right thing.
Throw away industry and profits,
And there won’t be any thieves.
If these three aren’t enough,
Just stay at the center of the circle
And let all things take their course.



The Tao is ungraspable.
How can her mind be at one with it?
Because she doesn’t cling to ideas.
Since before time and space where,
The Tao is.
It is beyond is and is not.
How do I know this is true?
I look inside myself and see.



There was something formless and perfect
Before the universe was born.
It is serene. Empty.
Solitary. Unchanging.
Infinite. Eternally present.
It is the mother of the universe.
For lack of a better name,
I call it the Tao.
Man follows the earth.
Earth follows the universe.
The universe follows the Tao.
The Tao follows only itself.



All things end in the Tao
As rivers flow into the sea.



The Tao never does anything,
Yet through it all things are done.



When there is no desire,
All things are at peace.



Teaching without words,
Performing without actions:
That is the Master’s way.



Knowing others is intelligence;
Knowing yourself is true wisdom.
Mastering others is strength;
Mastering yourself is true power.



Men are born soft and supple;
Dead they are stiff and hard.
Plants are born tender and plaint;
Dead, they are brittle and dry.

You can also get a few quick Wiki links related to this: http://en.wikipedia.org/wiki/Taoism ; http://en.wikipedia.org/wiki/Tao_Te_Ching ; http://en.wikipedia.org/wiki/Tao ; http://en.wikipedia.org/wiki/Laozi

- Rahul

Tuesday, March 13, 2001

Book Review: The Rules of Wealth



‘The Rules of Wealth: A personal code for prosperity’
First Impression, 2007
By: Richard Templar
Pearson Power

What interested me into this book first and foremost was its title. “Rules of wealth”: interesting enough. And I enjoyed reading it and got experienced perspective too. Richard Templar is the bestseller-author of “The Rules of Life”, and a very successful man himself, hence an authority to write on this topic.

The book lists 100 rules which we can apply to gain, enjoy and sustain wealth in the best manner possible. It is divided into five parts: 1. thinking wealthy, 2. getting wealthy, 3. get even wealthier, 4. staying wealthy and 5. sharing your wealth. It was the first part which I enjoyed most. Thinking wealthy is the first point to start becoming wealthy anyway.

I found the author to have the right balance and mix of optimism with caution. At places he is conservative, and rightly so, and at other places he is bold and not risk averse. There are rules which make us keep humane and family causes above pure financial greed, and there are others which ask to give up short-term gains for the long term wins, and the vice versa. The key, as the author rightly says, is to apply the strategy and take actions rather than keep thinking or procrastinating.

Though there were places where I found the rules to be against the present or future business models and too conservative also, I think prudent readers would separate the chaff from the seeds. Recommended.

- Rahul

Wednesday, March 7, 2001

Book Review: Deming Goldratt




‘Deming and Goldratt: The Theory of Constraints and the System of Profound Knowledge: The Decalogue’
First Indian Edition 2007
By Domenico Lepore and Oded Cohen
Productivity and Quality Publishing Pvt Ltd

Edward Deming is considered father of modern quality management. Eliyahu Godratt is a business management guru and his theory of constraints (TOC) has changed the way we looked at problems and improvements. In this book, the authors Lepore and Cohen have tried to integrate the contributions of these two great men. The System of Profound Knowledge by Deming and TOC by Goldratt has been assimilated and the product is a comprehensive system and a conceptual framework.

The approach put forward in this book is as follows:

The Decalogue:

Step 1: Establish the goal of the system, the UOM and the operating measurement
Step 2: Understand the system
Step 3: Making the system stable
Step 4: Identify the constraint and carry out five focusing steps
Step 5: Implement the buffer management
Step 6: Reduce the variability of the constraints and the main processes
Step 7: Creating a suitable management structure
Step 8: Eliminate the external constraint: selling the excess capacity
Step 9: Bringing the constraint inside the organization when possible
Step 10: Set up a continuous learning program

The goal of the book is “to provide a path to follow in order to deal with the constraint that prevents us from achieving continuous improvement in our organizations.”

- Rahul