Tamohara Quarterly Newsletter - Best Books I Read in 2023

  • December 2023

Dear Investor,

Year endings are a time for reflections and traditions. One of the traditions for me has been to reflect upon the best books that I read in the year and what they taught me about investing.

The lessons I learnt from 2022’s reads were sobering. They spoke of how little we know, and how we must learn to adapt in the face of new knowledge. Wisdom therefore lies in knowing when to react and when to simply absorb.

2023 has been a year of many lessons for me. Tugging on the lead of the past year, I understood more on what to react to, when to change and evolve my way of thinking and when to stand my ground. But perhaps more than anything else, it taught me the power of integrity and how a lack of it can be a slippery slope that there is no climbing out of.

Hope you enjoy reading my takeaways from the best books I have read this year.

Akbar: The Great Mughal by Ira Mukhoty

This is a biography that I would highly recommend. The author manages the impossible; to spend such toil over a specific personality, and not write an opinionated piece on it.

Akbar would have made a great investor. Consider the following excerpt from the book:

“But perhaps the secret of his enduring appeal, that which made him ‘the Great Mughal’, and one of only two Indian monarchs to be considered ‘Great’, was his determination, in a complex and complicated land, to negotiate a place of dignity for each person and every creed through the idea of sulh kul.”

And now consider the following observation made by Scott Fitzgerald:

“The test of first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.”

The predominant trait I have seen in every good investor is the ability to change their mind when the facts change or simply when they know better. The classic example of this would be that of Warren Buffet practicing Graham’s cigar butt investing philosophy, until his partnership with Charlie Munger came about. His philosophy evolved to finding good quality companies with a significant competitive advantage run by great managers, and then letting his winners run.

Raised by the Ulema, Akbar was brought up a devout Muslim with a view of his belief system being superior to those of others. Yet he hosted Hiravijaya (a Jain monk of the Tapagach sect) at his court in Fatehpur Sikhri for three years and had philosophical debates with him to learn better. A product of these conversations was his ability to appreciate the Jain festival of Paryushan and honoring the same by being the first ruler of India to ban all animal slaughter during the eight day long celebration. In another example, he entrusted the philosophical education of his son Murad, to Monteserrat, a Jesuit priest from Portugal.

Limit Up by Russ Crawford

This book was a fictionalized retelling of the Great Grain Robbery of 1972; a major story in the commodity markets that led to the complete deregulation of major grain prices (supported until then by US export subsidies for wheat in particular).

A standout learning from the book was when something is too good to be true, it typically is. At that point of time, it is important to remember Munger’s adage of ‘Invert, always invert’ before proceeding again. When the Russian government sent in their people to place big purchase orders from the US trading companies, promising to exclusively deal with the said partner, all the while showing their demand to only be 25% of what it turned out to be- there were enough red flags waved. Yet in greed, the grain traders in the US chose to ignore.

In the investing world too- if the returns promised are too good, they probably are too good to be true. An insurance company seeing a flood of inbound inquiries is possibly a sign of poor underwriting taking place (take the case of surge in demand for medical insurance during the pandemic). A retail company growing faster than its return on equity, will have to dilute their balance sheet very quickly to fund the additional growth all the while losing sight on delivery of consistently positive same store sales growth.

And this brings us to the point on integrity.

Empire of Pain by Patrick Keefe

This book was a unique take on the opioid crisis prevalent in the US. It narrates the story of a family that over three generations perpetuated the Opioid crisis. The rapacity of the family forces them to think of ring-fencing their profits and themselves in light of regulatory or ethical qualms.

The story of the family didn’t start there though. It started with the medical journal business and pharma companies sponsoring research articles therein. They were the founders of IMS, the organization that tracks prescription data and trends across the US; an invention that -

created the modern day Medical Representative practice that we see prevalent in the pharma industry today. It finally cascaded into them lying about both the efficacy and safety of Oxycontin but most importantly hiding the addictive nature of the harmful drug.

Time and again, we face temptation to go down the quality curve in a euphoric bull run. We are tempted to excuse the moral lapses of the past as a one off. Gravity is an extremely powerful force at play in the absence of integrity. And it remains a physical truth for eternity. A change in morality therefore quite literally would require an orbital shift, which happens rarely. A lack of integrity is a trait that snowballs into bigger crimes being committed and made excuses for down the line. It never ends well for anyone, let alone minority investors. That is not how wealth is made.

I hope you enjoy reading these books, as much as I did.

As always, we thank you for your continued support and faith in choosing us to be your partners in your wealth creation journey. Wish you and your loved ones a very happy new year!

Harini Dedhia
Head of Research