Wisdom
- Over-indexing on your personal experience is to be avoided
- Your experience is 0.000001% of what’s happened in the world
- a lot of how you invest and think about money depends on how markets were when you first started investing
- Nothing is as good or bad as it seems
- Luck & Risk are two sides of the same coin
- You can’t be lucky if you don’t take risks
- When learning from others, focus less on individuals, focus more on broad patterns
- Survivorship Bias - keep this in mind and ignore a lot of advise you get
- Forbes Magazine covers don’t show folks who made good decisions but were unlucky
- There is simply no one way or one right advise
- Vanderbilt vs Enron
- scrappy visionary who didn’t get outdated laws get in the way of innovation &
- example of a white collar criminal
- Customer is always right vs Customers don’t know what they want
- Vanderbilt vs Enron
- Learning from your own experience
- Success is a lousy teacher - it makes people think they’re invincible
- Failure is also terrible teacher - it makes smart people into thinking they’re dumb
Wealth
- Know when enough is enough
- Rajat Gupta & Bernie Madoff had everything but they wanted more
- Every level you reach you get exposed to the next circle
- The hardest financial skill is to get the goalpost to stop moving
- Abhor social comparison - it can confuse you
- Know the truly invaluable things
- Relationships - Friends & Family
- Reputation
- Happiness
- Feeling like you have control over your time & your fate is a major contributor to happiness
- Having free time
- Material possessions are over-rated
- What you own doesn’t impress people about you most of the time
- Instead they aspire to acquire those things
- You’re judging wealth incorrectly
- Wealth is that which is not spent - cars not bought, diamonds not bought, first class upgrades declined
- Wealth is that which is not seen
Money
- Keeping Money & Earning Money are different skills
- Earning Money requires risk, ambition, optimism
- Keeping Money involves humility, fear and paranoia
- Keep this in mind and barbell your wealth into that you’re willing to risk and that you’re looking to protect
Investing
- Long term planning is hard because your goals & needs are going to change in ways you’d not anticipated
- Accept the reality of possibly changing your mind
- Investing & Responding to results
- Survival first, growing capital next - first rule is don’t screw up
- Compounding only works over really long time horizons
- 99.9% of Buffet’s wealth came after he was 60 years old
- As far as possible do not get in the way of compounding
- Don’t expect to be right all the time
- If you’re a kick-ass CEO maybe half of all your ideas will work (if you’re lucky)
- CEO Jeff Bezos said shortly after the disastrous launch of the company’s Fire Phone: If you think that’s a big failure, we’re working on much bigger failures right now. I am not kidding. Some of them are going to make the Fire Phone look like a tiny little blip.
- Aim to be reasonable with your investing
- You’re going to miss some big positive moves and not avoid some big negative moves
- Don’t over-rely on historic data because the world is constantly structurally changing
- Not every market participant is playing the same game
- There are short term investors who need to be right for 5 mins
- There are those who need to be right for 1 quarter or 2-3 years
- If you’re a long term investor you need to be right over 30 years - remember this because the world is constantly structurally changing
- Barbell - keep one portion in safe assets and take risk with the rest
- Long term planning is hard because your goals & needs are going to change in ways you’d not anticipated
- Accept the reality of possibly changing your mind