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If you can compound your knowledge, eventually you can compound your capital as well. And the basic idea of compounding is you don't lose what you already have. Yeah. And that's a profound idea. You've been such a successful investor for such a long period of time. What have you learned in the last 10 years that you think are the most important lessons that make you a better investor today than uh you were 10 years ago?
Okay, one more that we last ones. Yeah. here all the way back. When when you are underwriting an investment, how do you uh ensure you have an adequate margin of safety and downside protection? Well, I think that one of the distinguishing characters that differs a a value investor than most other investor is this enormous attention they paid on the downside protection.
Um investing obviously is is is predicting the future that is inherently unpredictable. So what you do is really investing in the things you do know. What you know actually could be limited. [clears throat] Everybody started with a very limited known knowledge. That's how I started when I was in my 20s.
I don't know much. So I go with the things that really I I know is there. So balance sheet obviously as Ben Graham preaches really works because is something's easier to understand and then I gradually slowly progress into something that is simple to more less simple and more complex. It's a natural progression in term of the circle of competence.
So the about the circle of competence one thing is to really understand the edge of it. The other thing is a consciously to gradually expanding that over time and I always say look if you can compound your knowledge in [clears throat] a sustainable fashion eventually you can compound your capital as well.
So that's really back to your question that really what I've learned over 10 years. Every 10 years I find I learned so much of it you almost have to almost a different somewhat of a different person and in a way that you do want to have that renewed sense that over a long period of time if you do [clears throat] the right thing in the right way you'll be remarkable to find you actually compound.
This is another reason I would say like if you want to choose to go to a win-win situation rather there are some that you actually will compound your [clears throat] ability and your knowledge and perhaps your health too. Maybe not quite, but you could prolong that at least your productive spend, health spend.
Maybe not lifespan, but your health spend because you keep it engaging, is interesting, you know, is helpful to society and you're not taking away from society. On the zero sum game, the trouble is there is a lot of human nature goes to zero sum to the short term. Whatever you learn today is useless tomorrow.
you don't accumulate and so you rely more and more into impersonal you got a bigger computers and now you use AI and of course you'll be replaced at some point and so what is the value of that as a human and so I of course I like the uh the human in the loop of course I advocate really learning and have engaged uh improved life over time and compound your knowledge as well the capital of the people in the trusting way and what my uh mentor partner teacher Charlie Mer always always advocate is the relationship he could discover the highest order of a relationship is the simileless web of deserved trust a simileless web of deserved trust there lies a whole philosophy of approaching life in a productive way that is a win-win [clears throat] to society as well.
And so I recommend anyone starting your career to lean towards that way of life. Yeah, you could really take years, could be slow, [clears throat] but slow surely you wouldn't really get where you deserve to go. And that is just a better way of living in a sense. Of course, some people have a little bit more luck and then the others you know along the way our life and our success and failure sometimes also a combination of lucky or unlucky breaks in life.
We got a fair share of all of it. And I for one never felt our record was completely our genius or anything. We we got a so many lucky breaks along the way and but if you choose the right partner, you choose the right approach and you choose the right people to bet, choose the right things to do, you know, over time, it's just remarkable how compound return work.
And the basic idea of compounding is you don't lose what you already have. Yeah. And that's a profound idea. You don't lose what you already have. That's include your knowledge. That's include your trusting relationship. That's including the wisdom and even your health. That's really amazingly powerful things to have in life.
But there are always changes in life. You know, this is a one constant that we're always going to have to deal with. And you will always have your shares of a luck and unluck. And you will always a share of your great opportunities no matter which way you naturally lean to. But finding something you're naturally leaning to and build on it over a period of time in a compound and accumulative fashion is just a better way of living a productive life.
So with that, thank you so much Lilo. This has been wonderful. Leelu's Himalayan capital portfolio has reportedly delivered impressive long-term returns with estimates suggesting annualized return of around 20% to 25% since its early years. Its reported trailing performance is equally remarkable. 18% over 1 year, 86% over 3 years, 55% over 5 years, and 201% over the last 10 years.
But what is the secret behind Lilu's investing success? Much like his mentor Charlie Mer, Leelu is known for his intellectual curiosity and emphasis on continuous learning. He believes that investing in your knowledge is essential because as your knowledge compounds, your capital has the potential to compound alongside it because investing is ultimately about making decisions under uncertainty and trying to predict the future.
But when you invest within your circle of competence, businesses you genuinely understand, you can make better informed decisions and improve your chances of success. At the same time, you should continuously expand that circle by learning about new businesses and industries. And this is what Lilu has been doing since his initial days.
He has been continuously learning and adapting to the changes. Leelu's own journey is fascinating. In another video, Monish Babra explains how Leelu turned his scholarship money into milliondoll fortune. It's an incredible story with valuable lessons for every investor. The link is in the description also in the comment section. Do watch it.
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