#7: It's all about common sense.
And that's not common.
People often ask how I gain insights into new developments. To that, I almost never have a certain reply, it just seems like common sense. And I find so many people are better at it than me.
Just yesterday, as I was analyzing the cost details of running a solar power plant, and I went deeper and deeper into the research (getting to the science of solar electricity generation and the elements used in a solar plant), a certain thought crossed my mind answering this question -
Common sense is the only true knowledge, but it is reared and developed or diminished with our everyday actions and habits.
Common sense is how we understand the world. It is this common sense that we apply to everything we come across, like perhaps you making sense of this newsletter, or analyzing a particular asset for investment. It is this understanding of the world that we apply to all our decisions.
Yet, we forget that the world we’ve been exposed to (which forms part of our understanding) has been limited by the geography we are born in, the culture we have been brought up into, the syllabus we studied at school, the people we’ve met, the experiences we’ve had. Though it might seem like a lot of understanding, especially if you’ve met a lot of people and traveled to many places, it’s not enough.
It’s so little compared to all the systems and businesses and cultures and trade and relations out there, that from a global perspective it is insignificant. What makes this even more so is the fact that most people have been exposed to only a similar amount of understanding of the world as the average common man! That means there is nothing special about most people’s understanding.
So, if we can work towards inching up our horizons of viewing things even marginally, our thoughts can become so much more profound. But how do you do that? How do you improve the framework on which the entire thought process is built?
That is what I discovered during the solar project research. It’s reading. About everything. Economics, history, business, science, technology, tax, international relations. My usual day consists of reading 5 newspapers, 15-20 articles, a handful of research reports, and catching up on the most recent book I’ve begun.
Most ‘intelligent’ people I know read much more. And I see a trend here - the more information and perspectives we take in, the more ‘intelligent’ we become. Warren Buffet, when addressing a group of students, picked up a bunch of papers and said “Read 500 pages like this every day.”
Imagine that. 500 pages 🤯. And it did work for him. He is the greatest investor of all time. And the same is true for his partner in Berkshire Hathaway, Charlie Munger. And for Bill Gates, Barack Obama, Elon Musk, and countless more. Elon Musk was once asked how he learned rocket-building, and he responded that he did so by reading books!
I understand we all want to be better investors. So, let us take a page from their books and make a decision to scale up our readings beginning today and expand our horizons.
Maybe we all get some better version of common sense. That should be helpful in areas other than investing too.
While today’s piece may not have been directly about investment analysis, yet somehow I believe it was more than that. Anyhow, that’s all for today. Tweet your thoughts to us @advthinktank, or write one in reply to this email.
Surbhi Singhal is a Chartered Accountant and a Company Secretary; and the founder of Advance Thinktank. The company specializes in preparing custom research reports regarding investment opportunities in India, tailored to the client's needs.