A slighlty dated yet appropriate piece for the times we live in. Morgan Housel one of the most original thinkers and writers to have emerged in recent years highlights how ‘there are a million ways to get rich, but there is only way to stay rich – humility’. Whilst we all know people in real life who have gone through the experiences of Livermore in investing, Housel extends the phenomenon to companies as well. Businesses, no matter how deep the moats are, remain susceptible to disruption. Only those with a healthy dose of paranoia are able to withstand these forces and deliver excess returns over cost of capital over long periods of time.
“Andy Grove, Intel’s founder, put it this way: “Business success contains the seeds of its own destruction.” Scrappiness and the ability to think differently turns into complacency and the desire to keep things the same. Harvard Business Review wrote about Grove’s management philosophy in 1996:
Grove believes that at least some fear is healthy—especially in organizations that have had a history of success. Fear can be a healthy antidote to the complacency that success often breeds. A touch of paranoia—a suspicion that the world is changing against you—is what Grove prescribes.”
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