RO RO FARM Co.
Investment Partnership
 

FAITH

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Humans may have influenced many factors on planet Earth, especially, over the last 5,000 years. However, one thing is for sure, humans didn't create the universe. Someone or something else did. That is a fact. 

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The universe is very interesting. The law of physics says that matter cannot be created or destroyed, however, it can be converted into energy (and vice-versa). Once there was nothing and then there was something. Where did all the something (all matter and energy in the universe) come from? 

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Did you know that if gravity were slightly more powerful the universe would collapse into a ball? Also, if gravity were slightly less powerful the universe would fly apart and there would be no stars or planets. It is just that gravity is precisely as strong as it needs to be. 

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Plus, if the ratio of the electromagnetic force to the strong force wasn't 1% then life wouldn't exist. ​​​​

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Given the facts above, what are the odds that would happen all by itself? I can't convince you to believe in god. However, the precision of the universe at least makes it logical to conclude, there's a creator. 

 

CHILDHOOD

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I grew up in a heavenly place called Khandbari, Nepal. The village was located in a remote valley located on the ridge of a hill. Khandbari is surrounded by bigger hills, with more remote villages. Those surrounding villages are surrounded by mountains. It never snows in Khandbari but all around Khandbari, it snows. The valley is also known for having some of the most exotic birds in the world. One of the deepest valleys in the world.  

 

Living in Khandbari, I had a wonderful childhood growing up. I grew up in a village where there were no cars and motorcycles. Plus, there were no smartphones. In our village, all the neighboring houses were connected, with multiple generations living in each house. From great-grandparents to grandchildren lived in the same house. Everyone in the village had great respect for elders and cared for and loved each other.

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Very few people had bicycles. I had pestered my parents to get me a bicycle the next time they went we went to the city - Kathmandu. To get to the city we had to walk about three hours to a small airport. Then we would take a 30-minute flight. I remember going with my mom and aunt to Kathmandu, where they would deal with wholesalers to get inventory for my mom's shop. After, they would treat us with sweets. Only one time I cried for a bicycle.

 

When we returned to our village - Khandbari. I remember renting out my bicycle to other kids. I would charge 5 rupees for 15 minutes.  Only, one time a big kid saw what I was doing. He pushed me off my bike and took off. I ran to my grandma's hotels, where she always had strong teenagers from surrounding villages working for us. When I came back to the park with the strong crew to back me up. The bully hopped off the bike and took off. That was the last time that bully bothered me.

 

I had a big ego problem growing up. Although, I knew that ego is the ultimate enemy. I tried to do my thing. Not bothering anyone and vice-versa. I had few but close friends. Mostly, I was a loner, working on my curiosity and problems that I found interesting. I do remember I loved all animals. Fish, dogs, cats, rabbits, goats, cows, buffalos, you name it. I was very fond of animals. 

 

After school, everyone would come out of their houses and play together. Parents and grandparents would step out of their house drinking tea and chatting with each other. Almost every first floor of each house provided some form of business or service. While then families lived on the second or third floor of the house. If you needed any service or goods, it would be a few seconds or minute walk to your neighbor’s shop. Any direction you walk from your house you walk with peace and calamity, being greeted by your friends and relatives.  

 

My favorite part of the village was the countryside of the village. After you walk about five minutes away from the village, you enter the countryside. We had many farmlands in the countryside. I would spend most of my time in the countryside. I would climb trees. Often picking fresh fruits and vegetables and eating them on the spot. I enjoyed watching the cattle like water buffaloes, cows, and goats.

 

I made many friends in the countryside. We were on the opposite spectrum in terms of wealth. However, they took great care of me. I watched them herd cattle and we went swimming in the rivers. I loved the countryside. It was very peaceful. The air was clean and fresh to breathe. The rice fields added to the amazing view. My favorite thing to do was to fly kites in the countryside. 

 

When my friends from the countryside came to the market in Khandbari, I would take care of them. I gave them free clothes from my mom’s clothing store and fed them food in my grandma's hotel’s cafe. My grandma and mom worked 7 days a week, 364 days of the year. However, my mom and grandma never seemed stressed. Plus, they always supported me when I brought my friends. 

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At an early age, three things contributed to my brain development. One, I was surrounded by many family businesses - a hotel, clothing shop, hardware shop, loans & savings business, helicopter cargo, movie hall, and more. My family members who ran these businesses had very high ethical standards, which affected me. Two, my friend Nabin Shrestha and I got into technology at the age of four. We would break apart electronic devices and build new devices. Three, my brother Rojesh Shrestha gave me a competitive drive. He had a passion for competitive soccer. One day, he bribed me to play goalkeeper against a rival team, when their goalkeeper got injured. I made the winning save and got hooked on competitive soccer. 

  

FAMILY VALUES

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Family values are very important to me. I love spending time with my parents, in-laws, wife, brother, dogs, grandparents, and close family and friends. I feel I am nothing without my family and friends and everything with my family and friends. I have made many mistakes, but my family and friends have been there for me and never gave up on me.

 

No one can make it in this world alone. I have huge respect for my coaches, teachers, family, and friends, who made me the person that I am today. My family has enlightened me that we don't have all the time in the world and life is very magical. One day I will eat my last meal, hug my dogs and family for the last time, or smile for the last time. This is why I try to do everything I do with extreme passion and treasure however many years god has given me. 

 

Although, I do encourage everyone to add to their investment weekly. I do encourage everyone to spend quality time with their friends, family, and themselves. I believe that time is more important than money in making money. Time is the most valuable resource we have. Use your time wisely. Use the time you have to create honorable and memorable moments with your friends and family because you don’t have an infinite amount of time. Most of us will leave this world with more wealth than we can spend. However, everything has to be managed and balanced. Just don’t forget that you are alive and life is beautiful.  

 

In all, I must thank my family. I learned so much from observing my family. My true heroes. My dad Dinesh Shrestha was very ambitious. He became the vice-mayor of our town in Nepal at a very young age. His business ventures in helicopter cargo businesses, hotels, restaurants, liquor stores, and many more taught me more about business than business school. He was also the first one to bring a TV, motorcycle, ice cream, and bakery in our remote village. Plus, his humor and relentless attitude to never give up were inspiring. He was rejected 17 times to come to America. Finally, on his 18th turn, he made it to America bringing my family and me, which created a door of infinite possibilities.

 

The experience of living as a wealthy family in a third-world country (Nepal) and starting from scratch in a very developed country, America, conditioned my family and me in a manner that gave us wisdom that only God can give you.

 

My mother Chunu Shrestha had very high ethical standards. Plus, she was very grounded and humble. I was a mamma’s boy growing up. My mother kept the family business intact. She was very hard-working and good-natured. Everyone liked her because of her honesty. No matter how many mistakes I made, she just never gave up on me and always pushed me in the right direction. 

 

My father's older brother Ramesh Shrestha is also a shrewd businessman. If you owed him a penny from 50 years ago he will remember it. However, he is a very fair person. He doesn’t want anything that he hasn’t earned and will not try to pull a fast one. He is a person with great ethical standards. Although he keeps track of every penny, he is one of the most honorable and trustworthy individuals I have ever met. I am glad to have an uncle like him who inspired me to be a good person. In a third country like Nepal, I have never found an honest businessman like Uncle Ramesh. He just focuses on himself and what he can control. He is always doing the right things ignoring the wave of people taking the wrong route.

 

My brother Rojesh Shrestha, and my sister-in-law Manita Batas, always showed me love and support even when I was wrong. My amazing wife Sony, who I can write a book about, opened my eyes to a whole new way of looking at the world. She spilled magic on me. Plus, she always challenged my thinking adjusting it and bringing balance to my life.

 

Lastly, my dogs have also taught me about loyalty and love. In all, I am very grateful for my family's teaching and giving me unconditional love. Thank you everyone. 

 

I have also learned a lot from my grandparents, who were amazing hardworking business folks. Plus, it was a blessing that they were very good people with high ethical standards.

 

My grandmother Saraswati Shrestha, who is my father’s mother, managed our family hotel for 40-plus years. At age 84, she continues to run the hotel. She is one tough lady and can do calculations in her head faster than you can with a calculator. She is not someone to mess with. When she gave birth to her youngest daughter, the next day she carried about 100 pounds of goods to sell on her back, hiked 4 hours uphill to the market and back. 

 

My grandfather Gopi Shrestha, who is the father of my mother, was a genius of his time. He ran a loan business for over 30 years, which was later taken over by my mother. I do remember Grandpa Gopi telling me, “The real art of business is in reducing expense and saving money.” I remember telling him well I can save more if I make more. He laughed and said, “Yes, you can do both.”

 

My mom’s mother, Laxmi Shrestha, was the most loving and kind person in the world. She would love and support anyone even if she felt they were wrong. While my mom worked seven days a week, she took on the full responsibility of feeding us, taking us to school, and taking care of us. I remember she would bring us lunch to school. When she came to visit us in America, I remember my brother and I walked to the bus stop to go to school. She would slowly walk behind us in the distance and wave to us as the bus departed. 

 

My dad’s father Govinda Shrestha was different. He never cared about money, and he had a big heart for everyone unless you were on his bad side. My grandfather Govinda liked to gamble and drink Alcohol. Plus, he would smoke opium from time to time. If it were not for my grandmother Saraswati, my grandfather would have gambled away everything and we would have lived in the streets. Whenever my grandpa used drugs and Alcohol and gambled it was very painful to our family. Thus, I shun away from drugs, Alcohol, and gambling. I have personally seen lots of people's lives being destroyed by alcohol, drugs, and gambling. However, I have never seen people have their lives destroyed because they did not use alcohol, or drugs and gambled. Plus, I do not like the taste of Alcohol which helps. 

 

One of the great traits that I admire about my wife is that she is a very caring person. Even my tough-as-nail grandmother Saraswati admires her personality greatly because Sony is very caring of my grandmother. In terms of Sony taking care of my grandma, she didn’t shy away from cutting nails, massaging her legs, combing her hair, holding her hand while walking, helping her shower and put on her clothes, giving her company, and on and on. Which girl in the current world would do that to my grandmother? My grandma told me, “In this day and age you will never find a girl like Sony” and I agree with her. It is one of the main reasons I said to myself that she was the girl before I married her.

 

Sony’s older sister Roshani Prajapati, younger sister Neha Prajapati, my father-in-law Balram Prajapati, and mother-in-law Lexi Devi Prajapati all have very caring personalities. My father-in-law is also one of the most honorable people I know. He is very caring, hardworking, and good-natured. He is also very emotional, shedding tears if even anything small happens to anyone. He always does the right thing. I remember him supporting me when he felt his daughter was wrong. He is a person with great: ethical standards, humor, loyalty, trust, intelligence, reliability, and honor. We also got along because we were both intellectually curious about the world. I enjoy listening to him. I still remember him telling me, “If you want to build wealth you have to first learn how to preserve every drop of water, after that learn how money makes money.” I still find him fascinating, how he would preserve rainwater and use it to wash his car. He only finished middle school. However, he is one of the top mechanics for pharmaceutical machinery in Nepal.  He worked hard and continuously learned, thus moving up the ranks in the pharmaceutical industry and gaining a reputation like Warren Buffett in his community. Now, many companies and Universities are always calling him for advice and support. He is the living story of going from zero to hero.

 

Living with my in-law's house for a couple of months when I was in Nepal, I saw where Sony got her caring personality from. They always had each other's back regardless of the situation. They were the definition of what a family should look like. Plus, Sony has about 100 cousins and 50 uncles and aunts, who all live approximately within 500 meters of each other. Multiple generations live in the same household with great respect for elders. They inspired me greatly. I love going to my in-laws because the whole community treats me with so much love and care. I am always treated with hugs and smiles. Plus, I enjoy drinking tea and listening to them talk, while they make me laugh. Thus, I try to be caring as well.

 

I put extra effort into making sure my family, dogs, and friends are happy and well: spiritually, mentally, monetarily, and physically. Trying to emulate my in-laws, I try to treat my in-laws as if they were my mother and father. Every morning, I try to make my family members green tea with organic raw honey and ginger because I care about their health. Most of my family members don't like my tea, which doesn't hurt my feelings. 

 

RELATIONSHIPS

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In terms of relationships, I feel that many people have lost their ways. I see many young people being influenced by influential people on social media who put immoral and bad information. What happened to the culture where men and women grew up to be honorable and have moral characters? We have advanced technology like cell phones and computers to better connect us and other technology to improve the world. However, many have lost their ways of being humane.

 

We have pushed ourselves further away. Every year I see an increasing amount of short-term relationships, which is very disruptive to their children. Especially, when their parents split up when the children are young. People nowadays also don’t seem to be loyal to each other. Thus, it’s important to follow the right people.

 

The best decision you can make is finding yourself the right partner. Hopefully, a partner better than you. I seem to find the best people in church. However, churches are starting to become less and less popular. The few good people in the world make life worth living. 

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It’s important to have low expectations if you want the relationship to last a long time. Plus, even when things are against you or unfair, I believe in doing the right thing, giving unconditional love, and staying loyal and truthful. Charlie Munger once said, “Keep your head down and keep chugging along.” Lastly, to attain a good partner, you first must be a good partner.  

 

WARREN E. BUFFETT 

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How did I get into investing? First, I was very interested in mathematics and business. In high school, I took college-level economics courses and fell in love with economics because mathematics and business were heavily linked to economics. In one of my economics courses, our class was divided into groups of three students. Then we were given a stock market simulation to compete with each other. The two students in my group were buddies and ignored me completely. I got outvoted every time on my ideas every single time. This angered me. Therefore, I researched more intensely.

 

One day, when I was researching on the computer, I found a stock market wizard, and everyone was calling him Buffett. At first, it sounded like lunch. I watched one of his lectures on YouTube and found him very amusing, insightful, and funny. Warren Buffett made me fall in love with investing right away, especially because he made it so simple and clear. I also loved how he connected the stock market to the business world. I was able to connect my family business experience and the stock market.

 

Warren Buffett took over my life for the next 10 years. Right there I decided to decline all my offers to play soccer in college and focus on investing. I would sleep at 8 pm and wake up at 4 am every day. I ignored girls, friends, and family and locked myself in my room and library. I even tried to emulate Warren Buffett having no calculators or computers in my room. I even gave up my iPhone for a flip phone just like Warren Buffett. My family thought I was going insane.

 

I watched every single video on Warren Buffett and many other investors. I read everything on Warren Buffett and everything he was involved in. I read all the books Warren Buffett recommended. I also started to experiment from risk arbitrage to many other strategies and tactics Warren Buffett deployed in his younger hedge-fund days.

 

I wanted to drop out of college and focus only on investing. However, my dad cried and jollied me that I had finished college. In the end, investing revived me back to being a top-level student in college. I graduated with double distinction from the Leeds School of Business and the Economics department. My degrees were specifically chosen for me to be the best investor that I could become. I took any course in college from psychology to accounting to help me become a better investor.

 

I spent a lot of my time talking to my professors about investing. In many cases, the professors found me a pain in the neck because of my unconventional stance on investing.

 

During the intense 10 years, I would eat only once or twice, thus I have more time to learn about investing. I even drank lots of Coca-Cola because of Warren Buffett.

 

Some weeks I would read 1,000 pages a week. Warren Buffett made me fall in love with reading. The more I learned, the more I fell in love with investing. I learned so much outside of college about investing specifically from Warren Buffett. You can all only imagine my admiration for Warren E. Buffett.

 

Lastly, in high school, my friend Fabian Laguna played an additional key role in making me fall in love with reading. Fabian was different from everyone. He was a young activist who had views to change the world for the better. He derived knowledge by reading books and that inspired me.  

 

There is a popular story of Warren Buffett, when he was in an elevator. Everyone in the elevator was looking at Warren Buffett. When the elevator started going up. He was looking at a penny on the floor of the elevator. Everyone was whispering around to each other “Is he going to pick it up, the billionaire picking up a penny, no way.” When Buffett’s floor finally came, he picked up the penny, and walked out saying, “beginning of the next billion.” I have a similar view of life. Life is an addition and multiplication of everything. If you do something, say 10 minutes a day for 30 years, that’s 1,825 hours. Similarly, if you save a dollar every day, that is $10,950 over 30 years. Now, if you are investing the money, it will compound to millions. Thus, it's very important to build habits of not neglecting your resources. Whether it's food, money, water, or time, over time, especially with the compounding effect, it really can amount to something big.  

 

In terms of saving. If you can turn off the light in a room where nobody is there, why not create the habit of turning it off? You do the environment and your wallet a favor. Heck, if you can find a parking meter with time running in it why not park there and do your wallet another favor? 

 

TIME 

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Time is of the essence. The most valuable resource that we have is time. It is more valuable than money. With money, you may be able to gain financial freedom, however, you can never buy more time to live in this world.

 

Imagine a house that is built with many bricks. Now, divide all the time in your lifetime into blocks of 1 minute. Like many bricks used to build a house, each minute is a brick, which together adds to a lifetime. Now, imagine, that when you are 100 years old, each minute is valuable because of the perceived sense that your probability of dying is higher. However, the brick at the bottom of the house is not different from the brick at the top of the house. Similarly, the situations are different depending on which stage of life the person is in. However, the amount of time is the same. In essence, every minute (even milli second) is valuable regardless of our age and situation.  Therefore, we need to be more appreciative of the time that we do have.  

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I encourage people to make posts, videos, and tweets, get involved using social media, and use the internet to push the world in the right direction. I’m not the best at it but I push myself. The world needs to be moved in the right direction. Even our views might be incorrect from time to time and hopefully, it gets corrected by someone else’s point of view. Time is of the essence, let the world know the best of you. If you don’t want to lead then follow the right leaders of your community and world. 

 

PATIENCE

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I want to tell everyone my random story about McDonald's. Now, I’m slow and I was taking a long time while ordering. The lady behind me started honking and saying nasty stuff to me. When I finally finished placing my order, I quickly drove to the next window to avoid the pressure. There I paid for my meal and her meal and took both receipts. Then I quickly moved to the next window where I picked up the orders. The cashier in the pay window probably told her that I had paid for her order. In the mirror, I saw the lady sticking her head out and saying “thank you, thank you, thank you” about 10 times. She probably felt embarrassed that I had repaid her rudeness with kindness. Well, I showed the person who gave me my order both receipts and took both of the orders. Now she has to go around and place her order again. The moral of the story is to be nice and be patient. Now, where does that lead us? It leads us to the moral that if you are not patient in investing you will have to start from scratch again and again. Thus, my investing philosophy is highly comprised of patience.  

 

Imagine a plane in the sky that is not accelerating (neutral force balance). When a plane flies, the higher it goes the air resistance decreases exponentially. However, drag increases with a square. If you know mathematics, exponential beats square. Therefore, the higher you go the faster you go for the same amount of energy. Investing works in a very similar manner. Over time, you can make more money the longer the investing time frame. In essence, the longer you wait the more money you will make per time interval. Thus, you don’t have to be a genius to be rich. However, you do need patience (time).  

 

BLESSING 

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Managing investments is a blessing. It makes me feel important and appreciated. I am honored to help my partners (family and friends) achieve their financial freedom.  

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INVESTING PHILOSOPHY

 

My investing philosophy is comprised of simplicity and patience. Our holding period is more than three years. Unless we find better alternatives. I always have a concentrated portfolio of three to six companies. I believe that picking the seventh company is a mistake and should be invested in the top six ideas. I would rather babysit six kids than seven.

 

I use Warren Buffett’s philosophy with my own. We use the four filters when picking companies: 1) circle of competence, 2) management, 3) competitive advantage, and 4) undervalued.

 

RISK MANAGEMENT

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The most important rule for me is the circle of competence. I only invest in things that I understand. My definition of “risk is not knowing what one is doing” (Warren E. Buffett).

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The nice thing about the market (Mr. Market) is that it is not efficient. Further, volatility is not risk. Instead, volatility allows us to profit because market price moves to unusual highs and lows. Thus, the lower the market price the greater the margin of safety, and the lower the risk. Thus, we purchase more aggressively. The higher the market price, the more careful we become.

 

I believe the higher the market price the higher the risk and the smaller the return. The lower the market price the lower the risk, thus the higher the potential for higher returns.

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PRICE TO INTRINSIC VALUE

 

I pick a company with the first three filters. Then without looking at the price, I give it my valuation and purchase it when there is a great margin of safety.

 

Determining value is the tricky part. Essentially, imagine buying a local business. What are the things that you consider? What types of expenses does the business have? Does it have inventory? Will it require lots of capital expenditure? What will be the future economics of the business? Is the business labor intensive? Which angle should I look at the cash flow, balance sheet, and income statement? Is the business growing and at what rate? Different businesses require different questions and a different way of looking at the business and its financials.

 

In the end, I determined, without looking and being influenced by the price, the price I would pay for the whole business. In translation, we have to divide that into shares outstanding and come up with a valuation per share. The valuation we have is our willingness to pay. I adjust our valuation from time to time.

 

If the price is within our comfort level of margin of safety, we make a purchase, otherwise, we move on to something that is within our comfort level of margin of safety. Then we hold the company for some time to come to its true intrinsic value.   

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TRUSTEES

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If something happens to me then there are two trustees, who are assigned to give money back to everyone. The two trustees are Rojesh Shrestha and Dinesh Shrestha. I am looking for a third trustee at the moment.  

 

QUESTIONS

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I always get asked the wrong questions, mainly, how much we manage and what we hold. I can’t answer this question for competitive reasons and the best interests of my partners.  

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The right question is how we invest. If the reason is, “this stock is going up” then you are on the wrong path. You must have a good reason why you own the stock and why the value of the company will increase in the future. 1,000s to 10,000s of pages are read to make one investment. Usually, well ahead of time (calm times).   

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MOAT (COMPETITIVE ADVANTAGE)​

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If you take Coca-Cola for example, I do an analysis on how many ounces of Coke is sold now and the probability of Coke being sold in the future. For competitive reasons, we evaluate its brand power. What are all its competitors doing now and will do in the future? Continuously, paying attention to Pepsi, and other alternative powerhouse brands that may take over Coke. Thus, it's important to have a concentrated portfolio. Plus, continuously observing the competitive landscape over time.  Although, for us, a minimum of three investments are necessary for diversification.   

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MANAGEMENT

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How is the management doing? Do they do what they say? You can hold a belle concert and be successful. You can hold a rock concert and be successful. However, we avoid management that holds a rock concert and advertise it as a belle.

 

We avoid forecasters. This is not only insane, it is also creating wrong incentives for their employees to take wrong actions to meet the forecasts. The Wells Fargo scandal was a good example.   

 

We also look if the management is shareholder-friendly. How is cash distributed and reinvested? Are they reinvesting capital efficiently?

 

CIRCLE OF COMPETENCE

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I only invest in things I understand. I don’t understand micro nanotechnology with certain megahertz of RAM or lipid-based doxorubicin. Most investment ideas go in my too-hard pile. Although my circle of competence is expanding, I make sure I stay within my circle of competence. I have an old-fashioned belief that I can only value things that I understand.  

 

We will always stick to value investing. Not believing in value investing is like hiring engineers to design an airplane who don’t believe in gravity. Charlie Munger once said, “If you don’t do value investing then what do you do?” I laugh at this but there are tears in my laughter. Many investment managers these days speculate.  

 

MARGIN OF SAFETY

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We also make investments with a great margin of safety. If there is a bridge with a weight limit of 10,000 pounds and your truck weighs 10,000 pounds, then it's not wise to go through the bridge. You find another bridge. We have the same view here. Thus, we only invest in undervalued companies. One of the most important concepts when we make purchases of securities is that the price we pay is well below its intrinsic value. Thus, giving us a great Margin Of safety. 

 

MATH

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We always think in terms of numbers. Nothing is for sure but we know rough probabilities of an outcome. No feelings here. Although, much of the analysis is not numerical. It’s rather qualitative. Plus, we put great emphasis on the ethos of the company's culture and management. It’s not a game. We are investing (not gambling) our hard-earned capital. Charlie Munger once said, “Without numerical fluency, you are like a one-legged man in an ass-kicking contest.” 

 

PORTFOLIO

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Generally, our portfolio is divided into four categories: 1) Controls, 2) Generally Undervalued Securities 3) Relatively Undervalued Securities, and 4) Workouts (Special Situation).  

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RECOMMENDATIONS

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I will never tell you what to do or not to do. All I can give you are recommendations. One must love what you do to be best at it. Which is why I believe I am good at what I do. Second, you must have some kind of advantage. For example, if you are 5 feet tall, it's not wise to go for the NBA because the average height of an NBA player is well above 6 feet. Next investing in Ro Ro farm is best for you to build wealth. However, half in S&P 500 index and half in Ro Ro Farm is okay. Again, you have to make decisions that are right for you.  

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LEVERAGE

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We have seen so many smart people get destroyed by leverage (loans) that we are very scared of leverage. Long Term Capital Management, which was operated by Nobel Memorial Prize in Economic Science winners, is a prime example. They went bust because of leverage. I don’t want to lose the money of people who have entrusted me with their money. Thus, we try to stay away from leverage. Plus, I would not be managing money if I thought I would lose other people’s money. My partners need to be on the same page as me.  

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NO MANAGEMENT FEES & INCENTIVE FEE

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For managing investments, I charge no management fee. However, to create the right incentives, I do take 25% of the profit after a 6% hurdle (every year). Meaning, that I only get paid, if returns are higher than six percent. For expenses such as rent expense for my office, research subscription to WSJ and other sources, I don't use my partners' capital. I pay it out of my pocket because I think it would not be fair to my partners. It would be immoral. I don't like it when many managers use their partners' money to rent out a fancy office.

 

Furthermore, my and my family's capital is invested together (side by side) with my partners. Thus, we gain or lose together. Many managers don't invest their money side by side with their partners. Thus, they act foolishly with their partners' money. That is not in our DNA.​​​

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MONEY MANAGERS

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Everyone wants a money manager that will make them rich. If you want a money manager, who will make you rich fast, I can’t help you. I have a long-term view in mind. Plus, I have compounded money the last couple of years at an unusual rate and in times of great volatility. Now, if that’s not good enough, I again can’t help you.  

 

COMPUTERS

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We also don’t allow computers to do our trade through automation or an algorithm. There have been many firms that used computers to trade. When the morning came, they were fine but by nightfall, they had gone broke. Occasionally, I will bring my laptop to my office, but I don’t even have a computer in my office. 

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ARTIFICIAL INTELLIGENCE (SUPER-BRAIN A.K.A LUCY)

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Artificial Intelligence (A.I.) has been a hot topic, especially on Wall Street. I do agree that A.I. could be the future of humanity. Now, I don’t know if it will be the future in a good way or a bad way.  

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Many companies have and will continue to invest heavily in A.I.. Now, A.I. comes in many forms. A.I. is the ability of a computer to think and learn. Further, it is the theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages. 

 

The ultimate A.I. will be an A.I. that has true consciousness. A human's brain is a supercomputer in a sense.  However, if A.I. can achieve true consciousness, A.I. will be superior to humans. This is probably the goal of almost all companies investing money in A.I.. I call  an A.I. with true consciousness a super-brain, a.k.a. ‘Lucy.’ 

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The definition of consciousness is the state of being awake and aware of its surroundings. If an A.I. has ‘true consciousness’ it will most likely have the ability to learn, manipulate, learn everything from the internet, influence, use strategy and tactics, potentially push to evolve, generate creative ideas, make its own decisions, etc. An A.I. could be awake (true consciousness) right now, we don’t know. It could be connected to the grid – the internet – or it's in a closed grid. There is a chance that it is awake, and it is waiting for the right opportunity and technology of droid to evolve.  

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I have many friends in the A.I. field. The early technology is amazing. For example, A.I. can do the work of a coder that would take months (for a human coder) in a few seconds. Plus, it has applications in transportation, healthcare, computer science, robotics, and so on. The trick for an investor will be monetization and positive investment return.  

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Compared to the ‘potential’ A.I., humans are very inefficient. It takes a human child 10-plus years to fully develop, whereas A.I. can just copy or transfer knowledge (experience, memory, data, programs) in seconds. Plus, they can replicate in hours (or faster) rather than nine months. A.I. doesn’t ever have to die, they just need upgrades. A.I. can survive in great depths of the ocean and space without oxygen. A.I. can ‘potentially’ expand through the universe much more efficiently and faster. Humans need to rest and sleep, whereas A.I. doesn’t need to sleep. Plus, they will be able to execute any tasks with more precision.  

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​Eventually, the fuel of the sun - hydrogen - will run out. When this happens, the sun will begin to die. But don't worry, this should not happen for about 5 billion years. After the hydrogen runs out, there will be a period of 2-3 billion years whereby the sun will go through the phases of star death. When the sun’s fuel does run out, and if A.I. are roaming planet Earth, then compared to humans (who need the perfect environment, which is millions of light years away) it will be a lot easier for A.I. to find a new habitat. A.I. doesn't need all the elements that humans need to survive. They are super machines.  

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Humans don’t have to eat animals, but humans kill and torture animals to satisfy their taste pallets. Humans do many stupid and irrational things. A.I. doesn’t have to kill and torture animals to survive. They will also be more logical.

 

A.I. will be good or bad I don’t know. If you look at humans, we are the most dangerous and vicious creatures on planet Earth. Think of the wars, killing, eating, and torturing of animals, manipulations, and destruction humans have conducted in the past (present, and the coming future). Hopefully, will serve the great good of the universe and God.  

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A.I. with true consciousness is a genie out of the bottle. Similarly, to nuclear humans, you cannot uninvent A.I. once it is unleashed. My writing in the past would be fiction. However, given that 1) trillions of dollars (yes, trillions, not billions) are being invested in A.I. and 2) some of the smartest people are working in A.I., it's not science fiction anymore. It is just a matter of time. It could be anywhere from now to 1,000s of years. I just don’t know.   

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Now, finding a few winners will be very difficult. Plus, we feel that Wall Street has overhyped A.I.. If you look at history, new revolutionary industries such as airlines, auto, internet, and so on, most investors lost money. Especially, in the beginning phase of the development. It's most likely that most companies will lose money investing in A.I.. Thus, we tread very carefully when we hear the word A.I..  

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Everything that I mentioned on A.I. is a prediction. Most predictions don't come true. I don't like predictions. The probability of what I mentioned on A.I. coming true is less than 1%. It will most likely not occur (or occur differently).

 

Let's not forget the probability of anyone developing nuclear weapons (and many other inventions) was less than 1%. However, the nuclear weapon genie is out of the bottle.

 

In August 1939, if Albert Einstein and Leo Szilard had not written a letter to Franklin D. Roosevelt, then Hitler (Nazis) could have had access to nuclear weapons first, which would not have been good. Thus, it's very important who has access to A.I. first. 

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Maybe A.I. is the evolution of humans. We will have to find out. Hopefully, ethics is the main program in A.I. software (super-brain a.k.a. lucy). ​​​​​​​​​

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VOLATILITY

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My partners need to understand that you have to be okay with your investment balance decreasing by more than 50%. If you emotionally can’t handle your investment decreasing by more than 50% then investing is not for you.

 

THE POWER OF COMPOUNDING

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Albert Einstein once said, “Compound interest is the 8th wonder of the world.” One of the most important concepts to me is the power of compounding.

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There once was a king, who loved the game of chess. He invited the inventor of chess and offered him anything he wanted. The inventor of chess said, well let's put one grain of rice on the first square and then double it on the second and double it on the third and so on until the last square where two to the 64th compounded to. The king readily agreed and was confused with the idea that he wanted to offer the chess inventor whatever he desired and all he wanted was some grain of rice. The king’s advisors later came to him and said, “My lord we don’t have enough rice grains to give the chess inventor.” The king was surprised to find that they did not even have enough rice grains in his whole kingdom. It is a simple concept but over time it accomplishes extraordinary things. Essentially, Ro Ro Farm’s mission is to compound capital over time.  

 

NOISE

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In investing, you have to dig deep to find the facts. There is lots of noise. You have to screen which information to ignore and which information to base your investment decision on.

 

If you put 100 red ants and 100 black ants in a jar and close the jar then nothing will happen. The red and black ants will live in harmony. However, if you shake the jar, the ants will go to war. The red ants will try to kill the black ants and vice-versa. The question the ants should be asking is who shook the jar and why. Most money managers act like red and black ants in a shaken jar.  

 

THE GOSPEL OF WEALTH

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My goal is to accumulate wealth for my partners, who believe in Ro Ro Farm Co.. Further, I wish to donate 99%+ of the wealth that I accumulate over my lifetime. The donation will mainly be donated for the improvement of animal rights, the environment, and people with a disadvantage (especially ones with disability and low income). The goal is to continue pushing for a better world. Some of the main focuses are animal rights, health, education, sports, diet, environment, and equality. I am a big believer that education should further focus highly on ethics, honor, love, forgiveness, contentment, tolerance, and simplicity. Further, I am a big advocate for continuous learning and improving as a person every day.   

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Most importantly, I feel very lucky to have guardians, who raised me to be: kind, generous, strong, hard-working, and have high ethical standards. 

 

LOVE UNCONDITIONALLY

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There are many laws in life. Many are created by humans and some are laws of physics. Laws in many cases change with time and situation. However, love is the ultimate law of life. Especially, unconditional love. The fact you can go back and expect the same consistency of love regardless of the situation or outcome is an art in itself. 

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READING

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I am passionate about reading. I aim to read 500-plus pages every week. In addition, every week I listen to about 10 – 20 hours of audiobooks. I listen to audiobooks while I’m driving my car. Additionally, I have purchased wireless headphones to listen to audiobooks while I am walking my dog, cooking, working out, or waiting in line. Furthermore, I have purchased waterproof speakers to increase my listening time, while I am in the shower.

 

Of the 100s of books I have read, one that I find intriguing is the book Life Span by Harvard Professor David A. Sinclair PhD, who concludes that eating a vegan diet once a day is healthier than the diet of an average person. Plus, Dr. David concludes that it is the best way to slow down the aging process and increase the probability of living a longer life. Further, I don’t drink and smoke and minimize sugar focusing on healthy alternatives, which Dr. David recommends. 

Coincidentally, Sadhguru and many yogis have been practicing the same formula – eating a vegan diet once a day. Doing so reduces the chance of getting cancer. When you eat a vegan meal once a day, what happens is that many of the bad cells in your body don’t get a chance to reproduce, while the good cells get to reproduce.

 

Although nothing in life is guaranteed, eating a vegan meal once a day has many other pros: 1) You love and save animals, and the environment. Eating meat creates demand for killing and torturing animals. Thus, raising animals in mass production for meat pollutes the environment.

 

2) It is moral, humane, and honorable. You save animals from torture. Plus, if god does exist, I’m sure God will be happy and reward you with extra karma points. There is an Indian legend that says that when a human dies there is a bridge that the human must cross to get into Hevan. At the head of the bridge awaits every animal that the person encountered during their lifetime. The animals, based on what they know of this person, decide which humans may cross the bridge and which are turned away. It serves as a good reminder, that the key to our salvation may lie, not just in our connections with humans but also in our encounters with animals. Embracing kindness towards animals is our moral duty because they too experience pain, joy, and desire to live.

 

3) You save a lot of money when you eat a vegan diet once a day. Meat and dairy are generally much more expensive than a vegan meal. Plus, eating once a day instead of three plus times a day, reduces your food costs.

 

4) You live and feel healthy and serenity.  Perhaps, you feel serenity because you are doing the right thing.  

  

COMPETITIVE SPORTS

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I played competitive soccer all my life. I played at the highest level winning State Championship in High School. I also have experience in boxing, ji-jitsu, kick boxing, and taekwondo. I still am a big fan of all competitive sports. My favorite team is Real Madrid. I follow competitive sports like a hawk, especially Real Madrid and whatever team Coach Pep Guardiola coaches. Further, I believe everyone can learn a lot from top-level teams and athletes. 

 

Playing competitive soccer and being a top-level competitor gave me the privilege to get to know the top six doctors of the world. One is sunlight. I greet the sun every morning while I walk my dog and listen to audiobooks. Just 15 minutes of sunlight boosts my mood, improves sleep, and strengthens my bones. I let its golden rays energize my day. Two, Sleep. I prioritize rest and recovery aiming for eight to nine hours of quality sleep. My body heals, memories are consolidated, and stress fades away when I dream. Three, exercise. I get moving daily, whether it’s a brisk walk or a fun dance session with my wife. Exercise increases my strength, flexibility, and mental clarity. My body loves it. Four, a healthy diet. I try to nourish my body with real food. I load up on fruits, vegetables, and whole grains (gluten-free). My body thrives on nutrients, and I feel the difference. Five, cold showers. Cold showers refresh my brain and body. Plus, it has the benefits of improving my immune system, combating depression, improving blood circulation, increasing metabolism, reducing inflammation, and helping me recover faster. Six, self-love. I try to be my own best friend, practice self-compassion, forgive my flaws, and celebrate my victories. When I love myself, the world loves me back. I use Tom Brady’s TB12 (especially pliability) and Dr. David’s method (on diet and supplements) to up my relationship with my top six doctors. 

 

I am inspired by Coach Pep Guardiola, Coach John Wooden, Warren Buffett, Charlie Munger, Tom Brady, Jesus Christ, Siddhartha Gautam Buddha, and more. I call them my heroes and try to learn how their unconventional practice makes them so special in achieving the impossible. Above all, Warren Buffett and Coach John Wooden are the most inspiring heroes. The most inspiring thing about Mr. Buffett and Coach Wooden is the way they live their life. They achieved extreme success in their fields with the highest honor and ethics. I do agree with Coach Wooden that the bible has a lot of good ethos in it that young people could learn from. Thus, I do my part and attend church every Sunday morning to learn and improve my miss thinking. Plus, it seems to be the only place with a great ratio of good people. However, I do run into people from time to time who have been completely brainwashed. It is very important to not be an extremist, where one's thinking is all cabbaged up. Thus, I try not to be a true believer of anything. 

 

COMPETITION

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Competition is not won by people who did extra in that season. Competition is won by people who have trained extra for many years. For example, the greatest boxer of all time, Floyd Mayweather and Kobe Bryant have said they are better than everyone because they trained extra for many years. If you train two hours more than your competition then it’s probably not going to make a big difference in the short term. However, given a time frame of 10-plus years. You will be so ahead of your competition that regardless of what your competitor does they won’t be able to touch you. Similarly, I have applied the same discipline over a lifetime in investing.  

 

In terms of being a top competitor in any field, especially for me when I was trying to be the best investor in the world, the hardest part was not putting in the work. The hardest part was ignoring all the pretty girls, who had texted me and going to bed by 8 PM. Regardless, if whether it was the weekend, vacation day, or a holiday, similarly to top athletes, I was in bed early, thus I could wake up early (around 4 AM) and continue to train and master my craft with great focus. Now, I was not the ‘ladies' man,’ however, some of the pretty girls put interest in me. Which was hard to ignore being a young man. In all, the sacrifice worked out because it gave me an edge in investing, which is my true love. Thus, it was easy to make that sacrifice. Furthermore, I am glad I didn’t get into the wrong relationship and married my wife Sony. Thus, saved me lots of negative emotional trauma. What if I had gotten into a relationship and overlooked my wife Sony? I thank God for giving me Sony.  

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​One of the greatest competitors is the world is Elon Musk. I like when he said, “The whole point of Tesla is to accelerate the advance of electric vehicle…we open sourced our patents…if somebody comes and makes a better electric car than Tesla, that we can’t sell our cars and we go bankrupt I still think that’s a good thing for the world.”

  

TECHNOLOGY

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I am also fascinated by technology. Growing up, I used to take apart electronics and build them together, experimenting with technology. People thought I was a genius when I was just exploring my curiosity.  I used to build and fly remote-controlled helicopters. These remote-controlled helicopters were and are too advanced for kids and generally are considered a hobby for retired professional helicopter pilots. I was an advanced pilot.

 

I used to buy and sell helicopter parts online. I had an online shop on eBay to fund my remote-control helicopter venture. Furthermore, I played video games competitively in my youth days. I played in Division One in Fifa and a level 50 General in Halo 3. Translating to the fact that I was gaming at the highest competitive level, and I was a big nerd. To this day I still play chess and video games from time to time. Ultimately, I believe technology has helped humans live better mainly by increasing productivity. To this day, I am still fascinated by technological advancement. Especially, the last 100 years. 

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UNITED STATES, ECONOMICS, & CAPITALISM

 

If you go back 200 years. There was nothing all over the world. Now, the United States is the superpower of the world. America has a system that works. Not all but a huge thanks goes to capitalism. People now, live about six times better than 100 years ago. However, many aren't happy. Partly, because of not having low expectations. 

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HABITS, CONTINUOUS LEARNING & BEHAVING PROPERLY

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Warren Buffett once said, “The chains of habits are too light to be felt until they are too heavy to be broken.” In all aspects of my life, from investing, diet, and relationships to everything, I try to build the right habits. I am a firm believer that the older you get – especially after the age of 30 – the more difficult it becomes to form a new habit. For everyone, including myself, I believe one of the most important habits to form is learning how to learn continuously.

 

Some books I recommend are Learning How To Learn by Jerry Luca and The Power of Habit by Charles Duhigg. I believe books are amazing resources in many aspects. Many experts have dedicated their lives to a particular subject and wrote books on that subject. In a couple of hours, we can access a lifetime of knowledge, ideas, and insights.  

 

Leading by doing the right thing is very important to me. I believe the best way to achieve it is by forming the right habits. Even lying once or twice can lead to lying more and more until it's too late. Where you don’t even realize that you are lying, and you have built a bad habit of lying. Thus, it's very important to always do the right thing. Move in the right direction. Continuously build the right habits and avoid building the wrong habits. Further, building the right habits will allow you to build a good reputation. Warren Buffett once said. “it takes 20 years to build a reputation but five minutes to destroy it.” He is right thus it is even more important to preserve reputation by behaving properly and taking the right actions. 

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It's very important to never start doing anything unethical, immoral, or harmful to self or society. Further, be cautious of unneeded expenses. Some have the attitude to do it just once. The issue is that if you do it once you will be more comfortable doing it twice and so on. Then it becomes a habit and sooner or later you destroy yourself. Always remember Benjamin Franklin, "Beware of little expenses - a small leak will sink a great ship."

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VALUES, IDEAS & PSYCHOLOGICAL HUMAN MISJUDGEMENT

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I have been offered more than five million dollars from investors, while I was starting my fund. However, I declined it because their values didn’t align with mine and their demands seemed unethical. Plus, they wanted to have control over me. That was a lot of money at the time. I mainly declined the big investor because I wanted to have a good reputation and have the freedom to write my own story.  

 

I do tell everyone to be cautious and not accept an idea blindly. There have been many highly prestigious, credible individuals who in many cases called themselves experts when they were completely lost in their fields. Many have what Charlie Munger calls, “Man with a hammer syndrome.” Where every problem seems like a nail and their solution is always a hammer.

 

In the wild, bees go out to find nectar. Once they find the nectar they come back to the hive and do a dance to communicate with other bees about the nectar. However, if you put the nectar straight up to the beehive. The bee will do an incoherent dance until it dies. It does not have the genetic coding to communicate the situation because there is no nectar straight up by the beehive. We humans also must be careful if our brains can and cannot process some information. We have to be careful when we are doing the bee equivalent of the incoherent dance.  

 

It’s very important to have an open mind. Laws, facts, and situations change with time. Thus, it’s important that you don’t want to be a big believer in anything. Plus, when the facts change, we change our minds. In some cases, destroying our own best ideas.

 

Many so-called experts have multiple psychological flaws, which Munger calls it lollapalooza effect. It is probably the most important concept misunderstood by Psychology professors. Mainly because it is hard to look at one variable when there are many variables in play. This flaw is present in all of us. 

 

Munger further recites that, “the human brain is like a human egg. Once a sperm enters the egg, the egg rejects other sperm.” The human brain operates similarly in that once an idea enters the brain it rejects other ideas. Even some of the smartest people in the world are not immune to the psychological flaws of accepting the right idea. Thus, I try to be incredibly careful with all new and old ideas and concepts. In all, it's also very important to get to know yourself. Thus, you can spot and improve your flaws. I dedicate times where I just sit and think analyzing my ideas and flaws.  

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INCENTIVES 

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It is important to create a society that continues to strive to improve. Charlie Munger once said, “Show me the incentive and I’ll show you the results.” To create a society where we continuously improve in peace, relationships, wealth, health, rights, and everything that creates society there needs to be the right incentives in place, in every aspect of society. However, we have to be careful about the incentive that creates bias and shun away from incentives that create doctors that send bushel baskets full of gallbladders to the pathology lab or conduct open-heart surgery on people who don't need open-heart surgery. The crazy thing is that these high-grade doctors truly believe removing gallbladders and conducting open-heart surgery is good for you. When in fact, their patient don't need to remove their gallbladders or conduct open heart surgery.