Richer, Wiser, Happier:

How the World's Greatest Investors

Win in Markets and Life
Author: William Green Book Summary
In the book, “Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life,” William Green skillfully
highlights the investment commandments of some of the greatest investors of our mes. Through his interviews with these
inves ng greats, we learn not just how to become rich but also how to improve the way we think and reach decisions.

Key Takeaways

Ÿ In inves ng, pa ence is your biggest virtue. You can be a successful investor only if you are pa ent with your investments.
Ÿ Sen ment and behaviour are your biggest enemies. In order to succeed at inves ng, you must be able to control your
emo ons and make ra onal decisions.
Ÿ Trying to predict the future is redundant. Instead, you should focus on trying to learn from the past.
Ÿ A successful investment mantra is to buy cheap. A be er mantra is to buy quality at cheap prices.
Ÿ Always ques on whether the price that you are paying for an investment is reasonable.
Ÿ Whether in life or in inves ng, there is no subs tute for hard work and discipline.

Lessons from Mohnish Pabrai

When it comes to inves ng, the ques on to ask is not, “how to make money”, but “how to compound money”. Pabrai's
approach to the challenge of becoming a billionaire holds important lessons for us all, not just as investors but in every area of
life. He didn't a empt to reinvent the wheel by, say, devising a new algorithm to exploit subtle pricing anomalies in the markets.
Instead, he iden fied the most skillful player of this par cular game, analyzed why he was so successful, then copied his
approach with scrupulous a en on to detail. Pabrai's term for this process is cloning. We could also call it modeling, mimicry, or
replica on. His core commandments include:
Ÿ You should invest your money in a company only if it falls within your “circle of competence.” This means that you should
make an investment only when you truly understand the business.
Ÿ The company has to trade at a large enough discount to its underlying value to provide a significant margin of safety.
Ÿ It is more important to buy quality businesses than to simply buy cheap businesses.
Ÿ The company's financial statements should be clear and simple.

Lessons from John Templeton

The only way you can make money is if you buy at a me when other people are desperately trying to sell. This means buying at
the “point of maximum pessimism.” Like Buffe and Munger, he had an unemo onal apprecia on for a mispriced bet that
offered an asymmetry between risk and reward. His core commandments include:
Ÿ Do not let your emo ons get the be er of you. Emo ons can make you become excessively careless and op mis c when you
make big profits and get excessively pessimis c and too cau ous when you make big losses.
Ÿ Beware of your own ignorance. Many people buy something with only the niest amount of informa on. They just don't
understand what it is that they are buying. This is a big mistake.
Ÿ Always diversify your por olio. It is the best kind of protec on that you can give your por olio.
Ÿ Successful inves ng requires pa ence.
Ÿ The best way to find bargains is to study whichever assets have performed very badly in the past five years. Once you iden fy
these assets, then you need to assess whether the cause of those woes is temporary or permanent.
Ÿ One of the most important things you need to do as an investor is not to chase fads.

Howard Marks

In a world where nothing is stable or dependable and almost anything can happen, the first rule of the road is to be honest with
yourself and about your limita ons and vulnerabili es. Marks believed that if you want to add value as an investor, you should
avoid the most efficient markets and focus exclusively on less efficient ones.

The single most reliable route to investment riches is to 'buy cheap' and the greatest risk is to overpay for an investment. Thus,

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Richer, Wiser, Happier:
How the World's Greatest Investors
Win in Markets and Life
Author: William Green Book Summary
the essen al ques on to ask about any poten al investment should be “is it cheap?” Some of his core commandments include:
Ÿ It is almost impossible to predict the future. However, you can always learn from the past.
Ÿ We can't change the market environment. But we can control our response, turning more defensive or aggressive depending
on the climate.
Ÿ Markets move in cycles and thus, cycles will always reverse. By studying pa erns of the past, you can take advantage of the
cyclicality by behaving countercyclically.
Ÿ Both in markets and life, the goal isn't to embrace risk or eschew it, but to bear it intelligently while never forge ng the
possibility of an unpleasant outcome.

Five Rules of resilience as exemplified by Graham, Jean-Marie Eveillard, Warren Buffet, Irving Kahn, and Ma hew McLennan

Ÿ First, you need to respect uncertainty.

Ÿ Second, to achieve resilience, it's impera ve to reduce or eliminate debt, avoid leverage, and beware of excessive expenses.
Ÿ Third, instead of fixa ng on short-term gains or bea ng benchmarks, you should place greater emphasis on becoming shock
resistant, avoiding ruin, and staying in the game.
Ÿ Fourth, beware of overconfidence and complacency.
Ÿ Fi h, as informed realists, you should be keenly aware of your exposure to risk and should always require a margin of safety.

Lessons from Joel Greenbla

When it comes to inves ng, the number of choices available can make your head spin. Thus, in prac cal terms, the ability to
reduce complexity is immensely valuable. This means that simplifica on is a very important strategy. It is best to have a simple
way of looking at things – this will help you s ck to your strategy during market ups and downs.
The most important thing that you as an investor can do is to value businesses and then pay much less for them than they're
worth. Always remember that while buying cheap is great, buying good businesses cheap is even be er. Further, it is not enough
to find a smart strategy that stacks the odds in your favor over the long-term. You also need the discipline and tenacity to apply
that strategy consistently, especially when it's most uncomfortable.

Lessons from Will Danoff

The bo omline is that “stocks follow earnings.” With that principle in mind, you should relentlessly search for the “best-of-
breed businesses” that are expected to “grow to be bigger in five years.” The principle behind this is simple. If a company can
double its earnings per share in the next five years, then the stock price is also likely to more or less double.
In their own way, Greenbla , Buffe , Bogle, Danoff, and Miller have all been seekers of simplicity. They believe that all you need
is a simple and consistent investment strategy that works well over me—one that you understand and believe in strongly
enough that you will adhere to it faithfully through good mes and bad.

Lessons from Nick Sleep and Qais “Zak” Zakaria

Quality trumps everything. To become a successful investor all you need to do is deep research and create a concentrated
por olio of really high-quality companies. Some of their core commandments include:
Ÿ Extraordinary advantages can accrue to investors with the discipline and pa ence to resist the tempta ons of instant
gra fica on. In a high-speed era dominated by short-term thinking, this capacity to defer rewards is one of the most
powerful contributors to success, not only in markets, but in business and life.
Ÿ It is not necessary to behave unethically or unscrupulously to achieve spectacular success.
Ÿ In a world that's increasingly geared toward short-termism and instant gra fica on, a tremendous advantage can be gained
by those who move consistently in the opposite direc on.

Lessons from Tom Gayner

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Richer, Wiser, Happier:
How the World's Greatest Investors
Win in Markets and Life
Author: William Green Book Summary
Great success tends to come from small, incremental advances and improvements sustained over long stretches of me. It is
important to accept that you cannot control the outcome. However, you can control the effort and the dedica on and the giving
of one hundred percent of yourself to the task at hand. Some of his core commandments include:
Ÿ You do not need a secret sauce or a super high IQ to become a success. What you need is a selec on of sensible habits that
are direc onally correct and sustainable—habits that give you a marginal advantage that will compound over me.
Ÿ Always look for profitable businesses with good returns on capital and not too much leverage.
Ÿ The management team of a company must have “equal measures of talent and integrity.”
Ÿ The company should have ample opportunity to reinvest its profits at handsome rates of return.
Ÿ The stock must be available at a reasonable price.

Lessons from Jeff Vinik, Paul Lountzis, and Laura Geritz

Vink has used the same consistent approach to inves ng throughout his career, which is to focus on individual companies with
good earnings outlooks that are selling at very reasonable valua ons. He also believes that there is no subs tute for hard work.
Paul Lountzis too, is a consummate prac oner of con nuous learning. Lountzis is a ravenous consumer of insights from the
tans of business and inves ng. He adores books about entrepreneurs. As he listens, he keeps pondering the same underlying
ques ons: “What am I missing? Who's doing something that no one else is doing? How can I get be er?” His aim is never to
replicate other investors' behavior. “You can't mimic them because you're not them,” he says. “Learn it and adapt it and modify
it into your own process.” Similarly, Laura Geritz also believes that it is important to build an informa onal advantage. The gap
between reality and percep on offers an ideal opportunity to invest for the long haul.

Lessons from Charlie Munger

He strives consistently to reduce his capacity for “foolish thinking,” “idio c behavior,” “unoriginal error,” and “standard
stupidi es.” This can be achieved by looking at a problem backwards. Iden fy the disaster areas and then try to figure out what
went wrong. Once you know what went wrong you can ac vely take steps to avoid the same errors.

Lessons from Ed Thorp, Jason Karp, Bill Miller, and Arnold Van Den Berg

Ed Thorps believes that beyond inves ng, it is important to realise that problems tend to arise when you become so consumed
by the pursuit of money and possessions that you lose sight of what ma ers more. Thus, you should always behave decently and
avoid harming others. Both Jason Karp and Bill Miller are of the opinion that resilience is a prerequisite for success in markets
and life. Thus, it is important to focus on what you can control and try to let go of the rest. Arnold Van Den Berg sums it perfectly
well with his philosophy - if your life is more important than your principles, you sacrifice your principles. If your principles are
more important than your life, you sacrifice your life. Van Den Berg developed a consistent investment methodology that was
infused with common sense. Among other things, he analyzed hundreds of acquisi ons to construct a record of what
sophis cated private buyers would pay for various types of business. He then formulated a few prac cal rules of thumb that he
refused to violate. For example, he wouldn't invest in any stock unless it traded for at least 50 percent less than its private market
value. And whenever a stock rose to 80 percent of its private market value, he insisted on selling. His unswerving discipline and
rigorous focus on valua ons kept him on the right track.

The book undoubtedly packs endless investment wisdom and tells us how to become be er investors. Many of the prac ces
highlighted can be easily followed by individual investors. On the other hand, there are many which would simply prove to be
challenging to follow. The good thing is that in addi on to prac cing the principles highlighted in the book you can also choose
to invest via vehicles that prac ce these principles. An ideal investment vehicle would be mutual funds. These funds pool
investor money and invest it in different asset classes based on a pre-determined investment criteria. Since they follow a certain
investment strategy, they are less prone to behavioural biases. Further, there are certain long-term mutual fund schemes that
invest in quality companies at cheap valua ons and then stay invested pa ently to reap the benefits of the investment. So,
through a mutual fund investment, you get to minimise behavioural biases, you get pa ent and disciplined long-term inves ng,

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 Richer, Wiser, Happier:
How the World's Greatest Investors
Win in Markets and Life
Author: William Green Book Summary
and you get to buy investments at a reasonable price. In that regard, mutual fund investments can help you follow most of the
principles highlighted in the book.

An investor education initiative

All Mutual Fund Investors have to go through a onetime KYC process. Investor should deal only with
Registered Mutual Fund (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints –
please visit on https://www.edelweissmf.com/kyc-norms

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