Nalanda’s approach to investing comprises three straightforward, sequential steps: 1. Avoid big risks. 2. Buy high quality at a fair price. 3. Don’t be lazy—be very lazy.
- Pulak Prasad
I try to avoid making definitive judgments, like calling something “the best” or “the worst” because I think these labels can close one’s mind to the rich variety and complexity of the world. For instance, there isn’t a single “best” coffee; each type of bean brings its own unique characteristics and aroma. This flavor could either be a revelation or a complete letdown, depending on the drinker, the pairing, or the setting. But after reading What I Learned About Investing from Darwin by legendary value investor and Nalanda Capital founder Pulak Prasad, I must admit that I have to make an exception. This is the most insightful book I’ve read this year—perhaps even in the last two years. The wisdom Prasad shares, distilled from over 25 years of investing experience, is captivating. I savoured every single word.
At first glance, the title, What I Learned About Investing from Darwin, might seem confusing. How in the world could Charles Darwin, a naturalist, and geologist, have anything to do with investing? This question certainly crossed my mind. But as Pulak illustrates, Darwin’s principles of evolution and the methodology behind value investing share remarkable parallels. This connection, or rather convergence, between the natural and financial worlds is the core theme of the book, in which Pulak uses the evolution theory to explain Nalanda Capital’s investment strategies, showing that the same laws governing survival in nature apply to building a successful value investing strategy.
I enjoyed the seamless combination of scientific and investment concepts runs throughout the book. One powerful example is how nature’s key to survival is avoiding big risks—a fundamental principle at Nalanda Capital. Just as species survive by evading catastrophic Type II errors (failing to avoid danger), Nalanda’s approach centers on managing downside risks in investments. Prasad draws insightful parallels between the Caribbean Anoles (lizards that independently evolved similar traits across islands) and Nalanda’s method of benchmarking investments and identifying recurring patterns. His reference to the renowned Russian silver fox experiment, where Lyudmila Trut and her team selectively bred tame foxes that eventually developed dog-like behaviours, further illustrates the point. In both science and business, focusing on one strong trait, such as return on capital employed (ROCE), can foster other desirable qualities.
The modern world is cluttered with noise—news cycles, analyst reports, and endless trends pulling people in every direction. Many investors chase the latest fad, often neglecting fundamentals and losing patience with the slow, compounding effect of owning a great business for the long term. Pulak’s approach for example, at times seem counterintuitive: “Don’t be lazy—be very lazy” or “rely on historical data.” These ideas seem simple on the surface, yet they demand careful analysis of a company, its market, and its industry, and they go against the grain of a hyperactive investment culture. While everyone knows about Warren Buffett and the principles of value investing, only a few manage to stick with these ideas long enough to see meaningful returns. Why? Perhaps it is because of the psychological challenge in adhering to these principles consistently, especially in the face of external pressure and doubt as explained in the book Psychology of Money.
Setting aside the knowledge and wisdom, what I loved most is Pulak’s writing style. His tone is practical, witty, and humble. Rather than trying to convince or preach, he simply shares his insights as a seasoned investor. Reading his words feels like sitting down and having a conversation with him. His view of parallel between evolution theories with investment insights also resonates with me deeply. Indeed, everything in this world is interconnected, and seemingly unrelated fields often share common ground. Valuable insights can emerge if we observe them together with an open mind.
I hope I have done justice to explain why What I Learned About Investing from Darwin deserves a top spot on my bookshelf this year. Not only did it teach me the lesson on the interconnectedness between natural world and investing world, but also reignited my curiosity about the evolution of the natural world (so The Selfish Gene is now on my next reading ). Pulak’s understanding of investment strategy is nothing short of inspiration. It is an must read for the fans of value investing or simply those who wonder how Darwin and investment could possibly get along!