Notes to Self

This is a page that I intend to update with stuff that I want to remind myself of. It is meant as a collection of wisdom, guiding principles, and timeless knowledge.

General

  • Both money and knowledge follow the laws of compounding.
  • Learn from your mistakes (you paid for it), learn from other peoples mistakes (these are for free)
  • Read, A LOT
    • Books to learn from smart people, and from history.
    • Annual reports to learn about businesses.
    • Investor letters to learn from other investors.
  • Work with, and surround yourself with people you like, admire, and trust. Don’t be the smartest person in the room, learn from people wiser than you are.
  • Keep It Simple Stupid.
    • The simplest answer is frequently the correct one (Occam’s Razor)
    • Love the 80/20 rule (Pareto Principle). 80% of the result usually comes from 20% of the effort. Identify those 20%!
  • Accept that we can’t control everything that happens to us, only how we choose to react.
    • Play the hand you were dealt, and no good has ever come from self pity.
  • Luck and skill are both very important for success.
    • Put yourself in situations where you can be lucky (you miss 100% of the shots you don’t take)
    • When weighing two decisions, one tiebreaker can be “select the active decision”.
  • Learn to think. Learn how YOU think, what your biases are, and how to overcome them.
    • Some great tools I like are: sleeping on it, writing, and asking others opinion.
  • Beware of decision fatigue , waste as little time and energy as possible on all the small unimportant decisions in your life.

Investing

  • Diversification protects wealth, concentration builds it.
  • Swing big at fat pitches, when gold rains from the sky bring a washtub, not a teaspoon.
  • Buy great companies at good prices and do nothing.
    • No matter how good the company is, it isn’t worth an infinite price.
    • Too high a price can and will make a great company a poor investment. The inverse is not always true.
  • Look for mispriced bets: “Heads I win, Tails I don’t lose much”
  • Patience is the most important characteristic for an investor
    • The big money is not in the buying and selling, but in the waiting
    • Time is the friend of a good business, and the enemy of a bad one
  • Investing is not like Olympic diving. No extra points awarded for difficulty.
  • Figure out what to do with your cash while looking for your next stock.
  • In every deal there is somebody taking the other side. Understand them and their motivations.
  • The market (Mr. Market) is there to serve YOU, not the other way around.
  • Overcome the anchoring bias and the sunk const fallacy. Always look forward and ignore whatever price you paid yesterday.
  • Never ever bet the farm. Don’t ever risk getting knocked out.
    • Be VERY careful with leverage, both in the portfolio and in the underlying businesses.
  • Probably don’t sell on valuation alone. Preferably only sell to move into a position with better risk-reward. Or when the fundamental case materially changes for the worse.
  • Always be an independent thinker.
    • Ask questions, lots of questions. Why, how, and what, might be some of the best questions.
    • Don’t fall for social proof / group-think or the wisdom of the crowd.
  • Don’t judge your decisions purely based on the outcome.
  • Don’t get fooled by randomness. Don’t be a lucky fool, and don’t bet on other lucky fools.
    • With all signals (information) comes noise, sometimes there is way much more noise than there is actual signal.