In the heat of the dot-com bubble, a few of my friends opened brokerage accounts and started trading. Listening to their exploits, I realized that I had no idea what they were talking about.

So I went to the library, and by complete chance (quite fittingly!) picked up Burton Malkiel’s “A Random Walk Down Wall Street“. I loved the book. In the book, Malkiel lays out a compelling case for why both technical and fundamental analysis don’t work.

Over the next year or so, I devoured all the “general investing” and personal finance books (Bogle, Lynch, Solin etc.) in the library. I became convinced that indexing was the best way to go. I still believe in the virtues of low-cost index funds, and nearly all my retirement money is parked that way.

However, I am getting ahead of myself.

Along the way, I read Warren Buffett’s essay “The Superinvestors of Graham and Doddsville“. It planted some initial seeds of doubt. If a group of investors belonging to a certain cult materially outperformed the indexes over long periods of time, there had to be more to the story than “random walks”. After reading “Contrarian Investment Strategies” by David Dreman, I began understanding the psychological and structural underpinnings that made value investing work.

As an experiment, in 2001, I took all of my savings and split them into two unequal parts. The large part ($5000), I stuck into a Vanguard index fund. The smaller part ($2500), I put into three individual stocks.

That was roughly in proportion to my belief in the logic of indexing and value investing.

Then I went to get my PhD, find a wife, and land a job.

In 2008, initial rumblings of the Great Recession were audible. I have a natural contrarian streak, which springs up from slumber when things get bad. Once again, I stuck in all of our discretionary savings into the stock market, and some high-quality stocks (Berkshire).

Seth Klarman once said:

Value investing is at its core the marriage of a contrarian streak and a calculator.

I was born with one part (the contrarian streak). In 2008-2009, you did not need a calculator!

I lucked out. The Great Recession was good to me. Unfortunately, not as good as it could have been, if I had been more prepared. Since 2009, I’ve been spending about an hour or so, casually reading books, forums, and blogs on value investing.

I’ve also amassed a motley bunch of stocks in my portfolio. Some have worked out; some haven’t. Overall, I’ve done modestly better (~1%) than S&P since 2007. This is surprising, since I have made lots of mistakes – both of commission and omission. I will happily admit that I’ve been lucky – all my positions were based on reading somebody else’s analysis, and then performing some superficial “due diligence”.

My “critical” analytical contribution has been minimal.


The one thing that I’ve had going for me is my innate psychological ability to get excited when things are bad, and endure short term pain.

Short-term masochism, for long term hedonism. Haha!

In summer 2016, I resolved I was going to work on the “calculator” part of Seth Klarman’s equation more seriously.

Thus far, I have only been a consumer of other people’s valuations. I thought I could buy stocks like I buy items on Amazon. Read enough reviews, and you get a reasonable idea of what you should buy.

Now, I am going to try to learn how to do valuations, all by myself.

This blog is my notebook.