The Wisdom of 40 Years+: Lessons Learned from Water and Investing - 2021-04-18

I've come to realize that much of what I thought I knew before 40 was just that – thought. Life, especially when it comes to understanding complex systems like nature and the market, requires time and observation. My 40 years+ have been a fascinating education, and water, surprisingly, has been one of my greatest teachers.

Growing up in the tropics of Malaysia, I initially oversimplified the origins of rivers. I pictured them fueled solely by tropical downpours. But I learned that the reality is far more nuanced. Water's journey begins high in the mountains for country with winter, often as snow. Winter's chill transforms water vapor into frozen crystals, which then melt in the spring, feeding the rivers. This explained why river flow often diminishes in the summer – the snow has already melted.

Mountains like Kota Kinabalu taught me another lesson. Their height creates cooler temperatures, causing water vapor in the air to condense, forming waterfalls seemingly out of thin air. This principle is beautifully illustrated by a glass of ice water: the condensation on the outside mirrors the way mountains create their own water source. Even my old house in Sabah, nestled in a shaded valley, used this principle to collect water from the air. The cool, shaded valley acted like a natural condenser.

These observations revealed a fundamental truth: different environments create different ways for water to flow. To understand them, we must observe, experiment, and learn. This same principle applies to the world of investing. Different companies, like different ecosystems, have unique ways of generating profits. Only time and careful observation can reveal their secrets.

My experience has led me to favor strong, branded consumer stocks with light assets. These companies, unlike commodity-driven businesses, tend to weather economic storms more effectively. While commodity companies might boost a nation's GDP, their profits can fluctuate wildly, impacting shareholders. I prefer companies that consistently generate revenue, building a compounding effect over time. Warren Buffett's advice to invest in companies with a competitive edge, especially in essential sectors like food, resonates deeply. These businesses continue to thrive even during downturns, their profits may dip but they inevitably recover.

Even our air conditioners offer a miniature example of water condensation! And human ingenuity constantly expands our options, from desalinating seawater to recycling wastewater.

These "water lessons," gleaned over 40 years, highlight the importance of patient learning. Without these observations, I wouldn't have arrived at these conclusions. Just as understanding water requires time, so does mastering investing. Charlie Munger's observation that it's difficult to excel in investing before 40 speaks to this very point. Experience, accumulated over decades, provides the context and insights necessary for success.

My explorations to innovative water solutions and bump at the WaterBoxx, which uses nighttime condensation to irrigate dry soil through capillary action – the same principle that allows plant roots to draw water from deep underground. I even dream of applying my water knowledge to address challenges in a place like Australia.

These "water lessons," gleaned over 40 years+, highlight the importance of patient learning. Time is a precious resource, and I hope my kids won't need to spend as much of it as I did to acquire this knowledge. That's why I'm sharing these reflections – to offer a shortcut, of sorts, to understanding the world around us, from the intricacies of water cycles to the dynamics of the market. I hope these insights, gathered over decades of observation, can help you learn and grow more efficiently.