The Journal no. 2 – December 31, ​2017

Welcome to the second issue of The Journal. My goal with The Journal is to post once a week a list of everything that I found interesting. Here is what I found interesting this week:

Articles

Ten years in, nobody has come up with a use for blockchain By Kai Stinchcombe -Hackernoon

How Southeast Asia’s ride-hailing apps are outmaneuvering Uber. By 13D Research

We’re Going to Need More Lithium By Jessica Shankleman, Tom Biesheuvel, Joe Ryan, and Dave Merrill – Bloomberg

The Year in Money By Laurie Meisler – Bloomberg

The future of grocery shopping has arrived in China By Karen Hao – Quartz

Who is Marcus Aurelius? The Last Great Stoic of Rome – Farnam Street

How to Remember What You Read – Farnam Street

The Buffett Formula: Going to Bed Smarter Than you Woke Up– Farnam Street

Cool sh*t

cocoon modules + coco-mat envision nomadic dwelling with a container house prototype – Designboom

yuan architects elevates housing in taiwan to provide privacy and outdoor activity space – Designboom

RIGI design renews a single family building in shanghai and lights it up – Designboom

All-Electric Morgan EV3 Will Go Into Production in 2018  -HypeBeast

Yamazaki USA Tower Magazine Rack – Cool Material

Kahn Design Flying Huntsman 6×6 Soft Top – Cool Material

Lift Standing Desk – opendesk

Videos

Mark Cuban In Conversation With Kyle Bass | Real Vision Video – 55 min

How Machines Learn – 9 min

Charlie Munger Commencement Address – USC – 33 min

Podcasts

Live Episode! The Home Depot: Arthur Blank – 33 min

Lessons from Bozoma Saint John — From Spike Lee to Uber, From Ghana to Silicon Valley – 106 min

Principles: Life and Work

I am currently reading Principles by Ray Dalio. I heard about Ray Dalio a couple of years ago by watching How The Economic Machine Works, a fascinating video. Since He is a private person, I was very excited when I heard that he has a book coming this year. Principles is a three-part book. The first part talks about Ray Dalio’s Career and what it took him to overcome his failure. The second part is Ray Dalio’s Life Principles, which is what I am currently reading, and the final part is Ray Dalio’s Work Principles.

Here are some interviews about the book with Ray Dalio:

Ray Dalio, Principles, The Evolution of Bridgewater Associates, & Meditation | #AskGaryVee 275 – 63 min

Tony Robbins interviews billionaire Ray Dalio – author of Principles – 66 min

Life Lessons from a Self-Made Billionaire: My Conversation with Ray Dalio – Farnam Street

Ray Dalio, The Steve Jobs of Investing – Tim Fessis – 128 min

How The Economic Machine Works by Ray Dalio – 31 min

Here is an excerpt from the book that made me think about the size of the universe :

“Through our own eyes, we are everything – e.g., when we die, the whole world disappears. So to most people (and to other species) dying is the worst thing possible, and it is of paramount importance that we have the best life possible. However, when we look down on ourselves through the eyes of nature we are of absolutely no significance. It is a reality that each one of us is only one of about seven billion of our species alive today and that our species is only one of about ten million species on our planet. Earth is just one of about 100 billion planets in our galaxy, which is just one of about two trillion galaxies in the universe. And our lifetimes are only about 1/3,000 of humanity’s existence, which itself is only 1/20,000 of the Earth’s existence. In other words, we are unbelievably tiny and short-lived and no matter what we accomplish, our impact will be insignificant.”  – p. 149

Thanks for reading, happy new year and see you next week!

Balal Rasool

Advertisement

The biggest mistake to avoid if you are investing in a different country.

Since I started investing, most of my investments were domestic investments. To diversify and reduce risks, I wanted to be more exposed to the rest of the world. Especially the US stock market, which is the biggest market. In the rush to diversify my portfolio, I made a big mistake. This mistake was that I purchased US stock in CAD instead of USD. It may seem that this is not a big deal, but it is. I bought shares in Solar City long before its acquisition by Tesla. The process did not go like I was expecting. I thought if I bought the shares in the currency which are being sold ( USD). I would have that amount in my investment account in USD. It went in a whole different way. My SolarCity shares were both in CAD than transferred to USD and then back to CAD.  Not only I paid the commission fees, I also paid a premium for the exchange of currency, which brought my average cost higher than the stock bought. If I had converted the amount in USD and it would’ve stayed in that amount. After the premium by average transferred was 44.08$ instead of 43.44$.  0.64$ doesn’t seem a lot but when you multiplied by the number of shares you can clearly see the difference. Not only the problem with this is that I had a higher average cost I had to worry about the currency rate. There are two things to worry about and the volatility is transferred. There is a simple solution for this I wish I found it before but if I had you wouldn’t know the mistake and prevent form. The solution I found,  is to open a brokerage account in USD. From that account to buy companies from the US stock market. Like this, you don’t have to worry about the exchange rate because the money will only be converted once.

Book reviewed: Learn to Earn by John Rothchild and Peter Lynch

“Learn to Earn” by John Rothchild and Peter Lynch is a book for any investor and anyone interning to learn how a company earns money.

The book accomplishes on what it sets out to accomplish by showcasing that capitalism is the best economic system.

The author, John Rothchild, is most know for his work as the former editor of Washington Monthly as well as a former columnist for Time and Fortune.

The co-author, Peter Lynch, is an investor know the As the manager of the Magellan Fund at Fidelity Investments between the years 1977 and 1990. Peter Lynch averaged a 29.2% annual return with is mindblowing.

I enjoyed reading the book. The book helps me confirm my thought that the best economic system is capitalism for the company, the consumer and the investor.

I enjoyed the first chapter where the author briefs a quick history lesson of capitalism and explain without a capitalist country like the United-stade would it prosper as it did. I also like the appendix two where the author helps ride a company balance sheet.

The only thing the I did like is that the book isn’t updated and the references are old. Unless this I enjoyed reading the book.

I would recommend this book to anyone interning to learn how a company earn money and to learn about the stocks.

 

A beginner’s guide to investing – best resources – Infographic

A lot of my friends and family members ask what are the best resources for a person who’s starting to invest. So I decided to make this infographic. These are the best resources that I have found.

What I have learn during​ 1 year of investing

This is what I learned after one year and a couple of months investing on the stock market. I have learned a lot from my first, second experience until now on the market.

The biggest mistake that I made when purchasing ownership in a company was buying stock without learning about the company, especially for my first investment. I bought the stock hoping it will go up and I failed terribly. The stock crumbled down. In fact, I lost 48% of my book value. Regardless of my loss, now when I find an interesting company, I research about the company even if I don’t buy the stock.

“The dumbest reason in the world to buy a stock is because it’s going up.”
-Warrant Buffet

I have learned only to invest in an excellent company and for the long-term. Why in the long-term? Because an excellent company will always go up, from the technology industry to the waste industry.

I find it hard to be informed about a company announcement, what the market is saying about the company. To be more informed, I use stock apps as a news feed for the company I follow. This is very useful for me, I personally use Yahoo! Finance.

I have acknowledged being patient because there will be days and even weeks where you are losing money. The key is just to be patient and it will eventually go up. Of course, it applies only if you invest in an excellent company.

I have been able to learn if the market will react in a way that I will be losing or gaining money on a day. For example, during the election day, when Trump was winning, the market went down because of the news that Trump was winning. On the other hand, when Trump has been elected president, the market went up and nowadays is high almost at all time. During the quarter earning, if analyst expects that a company will not perform as the predicted, there will most likely have a sellout. This is a good time to buy a stock at discount prices before it gets back up if you believe that the company will perform in the long-term.

When one of my companies was being acquired, I have learned that a company acquisition is a long process. Indeed, it takes months for the acquisition and any news can affect the company stock prices. In my case, I had to vote for the acquisition.

I learned that I can reinvest dividend every quarter even though the number of shares will not be a lot, in the long run, it will grow. That’s the beauty of compounding.

I have learned utilizing fundamental analysis is better that technical analysis. This is if you want to own a company because technical analysis is entirely unconcerned about the companies from which they are buying stock.

For next year, what I want to do is to diversify more my portfolio. I would like to own 15 to 25 companies, both grown and income companies. I want to read more books about the stock market and especially The intelligent investor by Benjamin Graham, the father of value investing.

If you are willing to learn about investing, I recommend Investment 101 by Michelle Chang. I have written a review about the book just click on this.

Book Review: Investment 101 by Michele Cagan​

Investing 101 by Michelle Cagan is a book for the newcomer in the vast world of investing.

The book accomplishes on what it sets out to accomplish by giving a good overview of every branch in investment such as stock, bonds, ETFs, Mutual funds, currency commodity trading and real estate.

The author, Michele Cagan, has worked in several fields involving money such as financial planner, accountant, and tax advisor. She also wrote several books on personal finance and business.

I very much liked the book. I had some knowledge about investing prior but reading the book probably gave me a better understanding than the average person. I was still able to learn a lot which is never a bad thing. I have expanded my knowledge about the stock market and learned about new ways to invest especially in the bonds market.

The book has a dry and academic tone but is very easy to understand and not boring at least for me and the author doesn’t implement fancy words. It is written for the new learner with no or very little knowledge about personal finance.

I enjoyed the last two chapter where the author writes about how a person can build a profitable portfolio built according to the person’s needs. I also loved the chapter where the author introduces successful investors and gives their advice to the reader. Finally, I loved the part where the author gives an exercise where you can learn about your risk tolerance which is an important aspect of investing.

I did not enjoy parts where the author talked about mutual funds, currency, and commodity trading because I have no interest in this type of investment.

Event though I did not enjoy some parts of the book, I would change nothing about it. I believe that every part is important because every person has different ways to invest and all of them are important even if all these branches are not meant for everyone.

I would recommend this book to everyone because I truly believe everyone should learn the basics of investing.