Introspection illusion...Building Wealth, Building Judgement and Building Health

We live in interesting times - FED is continuing to raise interest, WALMART has issued a profit warning, commodities have turned volatile and geo-politics more complex. Debt markets are indicating a potential recession, yet equities are surging. Recession playbooks are imploring us to act fast... they say it’s different this time, but their proposed solutions still feel ‘like old wine in a new bottle’.?

While the negative news can make us despondent, on reflection, there are more compelling reasons to be optimistic and resilient. We beat the biggest human crisis (Covid) of this century with both businesses and society emerging stronger. We will do it again. We need to keep in mind that this is an economic crisis, and we will not let this become a human one.

Keeping aside the dichotomous standpoints (recession vs resurgence), i have ventured into Building Wealth, Building Judgement, and Building Health inspired by Morgan Housel and Naval Ravikant. My intention is not to connect them (I will leave that to you ) but share some reflections and contradictions. I like it when my friends debate and disagree … I gain new perspectives.?

Building wealth

In a recent press conference Masayoshi Son of Soft bank (after reporting a $ 23bn loss) admitted that his famously aggressive global investment strategy should have been more selective, adding: “I am ashamed of myself for being so elated by big profits in the past.”?

My take - businesses in their infancy and with a mere proposition (and with no demonstrated product market fit) raised significant capital and commanded staggering valuations. We quickly buried fundamentals i.e. every business and every industry?has a natural growth rate – push beyond it and short-term growth comes at the cost of long-term quality, and eventually survival. Companies should want the valuation they deserve, and not a penny more.

It equally important and true that if we do not own a piece of a business, we do not have the path to financial freedom. Owning a company means you own the upside. Without ownership, your inputs are closely tied to your outputs (you are paid by the hour – may be high or low) and when you are sleeping, you are not earning. So, start early, investment with discipline and have patience.

Everyone wants to become rich immediately, but the world is an efficient place. It takes time to generate wealth. You just can’t crypto it.?

Building Judgement

3 Important questions: In our early lives, there are three important questions we need to address i.e., where do you live, who you are with and what you do. We spend a lot of time working but little time deciding. Should we not re-visit these questions and make different choices? In hindsight, while I have thoroughly enjoyed my ride, I could consider some different decisions.

Collecting mental models is another interesting perspective. Mental models are how we understand the world. Not only do they shape what we think and how we understand but they shape the connections and opportunities that we see. The more models, the bigger is your toolbox and it helps one make intelligent decisions. (If that has your interest, explore more by reading ‘’farnam street blog’’) i am not giving any easy answers.

Expertise: We all start with some expertise but quickly move to be well rounded (handle everything from strategy to operations to leadership). As we keep moving further in our careers, we lose our edge – no wonder many leaders feel and sound the same. The trick (for me) is to be deep into something (your edge /expertise) failing which we will be mile wide and inch deep and not get real joy from life or job. We should aim to achieve mastery in one or two things i.e., where your passion comes to the fore.?

Building Health

I found a recent Linkedin post by my friend Neelesh to be energising and inspiring.?Neelesh had a phenomenal 182-day uninterrupted streak of closing all his 3 daily fitness targets despite inter-continental travels, inclement weather and even a job change (not any – he is a CFO in the exciting start up space). He said the key to achieving goals lies in execution. I agree with him.

It is also quite intuitive that happiness = health + wealth + good relationships. We focus wealth and relationships at the expense of health and cannot get off the hedonic treadmill. When we say we are busy, what we mean is that health is not a priority. Let the trifecta work in perfect harmony and this will help us stay out of catastrophic losses.

So, Neelesh taking you as inspiration, I recommit to focus on my health. And like most healthy people I will focus on what I eat more than how much. Quality control is easier and surely leads to quantity control.

On a parting optimistic note, in this world driven by stories, feelings and cold calculations, we will do better if stop asking Why and start saying WoW…. the world is indeed an amazing place.?

Srinivas Phatak

August 2022