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For nearly all athletes, there’s a gear that is extremely crucial.

If you’re a batsman, your bat is crucial.

If you’re a tennis player, your racket might be crucial.

But nearly all athletes that play a sport standing up agree on one gear being extremely crucial: shoes.

(Just in case you’re wondering which sport isn’t played standing up: it’s swimming, cycling, and a few more).

Great shoes haven’t been around for more than a century.

One of the biggest problems with shoes is that the bottom foam gets compressed over time.

It affects the performance of athletes.

This was a problem, but it wasn’t a super big problem.

Big athletes could just buy new shoes every single day.

Frank Rudy was an aerospace engineer in the US.

He was drafted into the army in 1945 and later worked in the aerospace industry.

Frank was an avid inventor. He had over 250 patents to his name.

The engineer had an idea – an idea that would solve the shoe problem mentioned above.

He approached a couple of companies with this idea.

His idea would prevent the sole of the shoes from deforming.

They all turned him down.

He kept pursuing different companies until one of them agreed.

Frank’s idea was to get rid of the foam.

Balloons don’t deform when stressed. Footballs don’t deform.

Car tires don’t deform.Air, doesn’t deform.

Instead of foam that deforms over time, he wanted to use a small bag of air in the shoes.

And thus was born, Nike Air.

Nike makes many shoes.

The Nike Air line has a cult-like following that many other shoe lines of Nike don’t enjoy.

This was the mid-1970s.

A couple of years later, a designer had the grand idea to make the airbag visible from the side of the shoe.

It added to the cool factor immensely.

Pretty fast, Nike Air became a shoe tech widely accepted and greatly praised.

Nike’s bet on air cushioning tech had paid off.

This was something Nike’s rivals had failed to capitalize on even though Frank had approached many of them before reaching Nike.

What did Nike see in Frank’s tech that the other companies didn’t?Well, we don’t know what Nike saw.

What Nike does is something nearly all great investors do as well.

Have you heard of Nike Shox? These are shoes that have a spring-like mechanism in them.

They sort of caught on. But not much. Not all investments catch on. If you go down Nike’s history, you’ll find tons of lines of shoes.Very few of them become super successful.

Some are absolute failures. Many are somewhere in between.

And it’s anyone’s guess, they all would cost similar to develop. If a shoe line fails, Nike loses the money it spent on development. And then it moves on. If the shoe line does average, it recoups its initial cost and moves on. If the shoe line succeeds, they print money by the bucketloads. Experimentation costs them a small amount.

Success brings a ton of money.

The highest possible loss they can suffer is whatever amount they invested. That’s it.

The highest gain they could make is multiple times their investment.

That’s how you should plan your investment.

No matter how good things are, certain investments will only give you so much in return.

But some will climb up like there was no upper limit.

Of all your investments, which are likely to go to zero and stop? All of them?

But which are likely to go up to a certain limit and stop? Some of them are. But not all.

Make sure you invest in such investments too.

Finance news

The Supreme Court has given the mandate of overseeing the winding up of 6 debt funds of Franklin to SBI Mutual Fund.

The cap on the number of domestic flights that airlines are permitted to operate in India will remain at 80% of their pre-COVID levels.

A proposed bill plans to establish a Govt backed digital currency in India and make all private digital currencies illegal in India.

No virus-related deaths in 7 states and UTs in 3 weeks.

Quote of the Week

“I can calculate the motions of the heavenly bodies, but not the madness of people.” – Isaac Newton.

The man who discovered gravity had lost money in the stock markets. He was extremely smart, no doubt. But he wasn’t able to crack the markets. And this was because, in physics, there’s a clear cause and effect.

It is rational. You push an object, it will move in the direction you’re pushing it. Such clear cause and effect relations are not seen in human behavior. And understanding this very trait is essential to invest. Sometimes, things happen and it seems obvious. Sometimes, things happen and nobody can truly explain. Great investors realize that to be a good investor, they must learn techniques to survive in this environment. This is another reason why they’re very open to accepting their own mistakes – in a messy world, mistakes are unavoidable.

The information contained in this weekly Digest is purely for knowledge. This weekly Digest does not contain any recommendations or advice.

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