- You cannot predict but you can prepare.
- Shared values and complementary skills
It’s important to not have a clone. Find a partner who helps you by being different or at the very least original thought. There are people who are essentially cautious or aggressive, that’s an inborn trait. Some are natural born, emotionless beings — some think slow, others think fast. You just need to recognize who you are. - Have disagreements but not an argument. The key is respect. Even if we disagree, the great thing is we sit down, we agree or disagree — that leads to productive discussions which we both benefit from.
- The future is not determined but it is a probability distribution. Life is a distribution of possibilities. You have likely and less likely scenarios so behave that way. The surest way to trouble and to losing money is the man who knows nothing and the man who knows everything. Arrogant people should be avoided.
- Mark Twain said what gets you into trouble is not what you don’t know, it is what you know for certain.
- Not everything that can be counted counts, and not everything that counts can be counted. — William Cameron
- Memento Mori — Literally means Remember Death. This means you’re human. It is important to avoid hubris and know your limitations.
- Price is what you pay for, value is what you get — Warren Buffett. No asset will ever be so good that it cannot be overpriced, neither will an asset be so bad that it should be liquidated to zero. Intrinsic Value — know it.
- Never say never, you might eat your words.
- Handcuffed volunteers- this refers to people who normally won’t enter the stock markets but due to the fact that cash is zero yield, they will buy stocks.
- Balance risk. Always two sides — losing money and missing the opportunity.
*****Chosen insights from Buffett’s shareholder letters ****
1.) From Buffett’s perspective, buying a stock should follow the same kind of rigorous analysis as buying a business. “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes,” he wrote in his 1996 letter.
Rather than getting too caught up in the price or recent movement of a stock, Buffett says, instead think about buying into a company that makes great products, that has strong competitive advantages, and can provide you with consistent returns over the long-term.
In short, buy stock in businesses that you would like to own yourself.
2.) For Buffett, GEICO represented everything he was looking for as an investor. It had a great brand. It had a strong management team that he trusted. And when he first visited the company’s headquarters in 1951, he saw “the huge cost advantage the company enjoyed over the giants of the industry.” The combination of all these factors “set his heart afire.”
In 1951, Buffett made the decision to invest more half of his net worth in GEICO. He increased his holdings dramatically during the bear market of the mid-70s when GEICO was struggling. By 1995, he owned half of the company — and later that year, he arranged to buy the rest.
3.) He prefers to invest in companies that are already successful (even if that success is undervalued by the market) and that have a strong chance of continuing success over the long term.
4.) With his owner mentality, however, Buffett used the downturn as an opportunity to amass an even greater share of the company.
In 2013, Buffett reported that GEICO had generated $73B for Berkshire Hathaway in one year — a significant single year return for a company that it cost Buffett just $2.3B to buy half of.
5.) The Washington Post’s stock suffered too, even after Buffett’s acquisition. After the end of 1974, the Post had officially been a loser for Berkshire Hathaway, falling from a value of $10.6M to $8M. But Buffett had a conviction the company’s fortunes would turn, and he knew he had picked up the company at a great price, despite the fact that it had fallen even more.
By the time Jeff Bezos acquired the paper in 2013, Buffett’s 1.7M share stake was worth about $1.01B — a more than 9,000% return.
“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold,” Buffett wrote in 2016. “When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.”
6.) “Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten, and twenty years from now.”
7.) “‘Buy commodities, sell brands has long been a formula for business success. It has produced enormous and sustained profits for Coca-Cola since 1886,” he wrote in his 2011 letter.
Just as Coca-Cola built an empire buying syrup and selling a lifestyle, Buffett has made Berkshire Hathaway an empire by buying boring companies and selling their ever-returning dividends.
8.) Never invest because you think a company is a bargain; Buffett’s distrust of bargains comes mostly from a series of poor acquisitions and investments he made early on in the life of Berkshire Hathaway. Ultimately, Buffett’s distaste for cheap companies and their problems means that while some investors argue the merits of taking large positions in companies, Buffett and Berkshire Hathaway are comfortable taking relatively small positions in more expensive firms.
9.) “At Berkshire, we much prefer owning a non-controlling but substantial portion of a wonderful company to owning 100% of a so-so business. It’s better to have a partial interest in the Hope Diamond than to own all of a rhinestone
10.) Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive
11.) “By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business — one now valued at $220 billion — to buy a worthless business.”
Buying Dexter Shoe would have been a mistake either way, but using Berkshire stock to buy the company made the problem even worse. Instead of spending cash, Buffett spent a percentage of a business that proceeded to dramatically outperform the S&P 500 for the next decade. Each year that followed, his acquisition of Dexter Shoe became more and more expensive in retrospect, rubbing the salt in the wound.
(THIS IS AN IMPORTANT MESSAGE> SELLING A WINNER TO REPLACE to a LOSER is a LOSING game) — Think about this. you will compound losses in this manner. Not only was it a mistake to buy the loser. It is an equal and compounding mistake to sell the winner.
Move with purpose but not in haste
Pick battles where you know you have Informational advantage , extrapolate better Levels of access
Public market investing is a Single deck blackjack than roulette. But It doesn’t matter how good your analysis is because nobody holds the future.
There’s a likelihood that shit always happens when you least think of it.
Remember “how to say no”
It’s as important or even more important to saying yes.
You win when you say no.
More people win when they do their due diligence, they decide rationally in an irrational world and they explicitly admit that their decisions at best can still be wrong which means they have targeted plans to mitigate mistakes if they are wrong.
It is more effective to be surgical than spraying and praying.
We have to say no to many so that we can say yes to a few.
Be willing to go outside of your confirmation bias
Check the facts but as much as possible
If you don’t understand and it doesn’t fit your belief system, then it is what it is.
Go back to first principles
When you are hitting a wall, when doors don’t open, when things aren’t going your way ; it’s just a challenge.
Just know life teaches you thru challenges and you learn through them.
****
The risk of being out of the market is greater than being in as long as you have great value bets. What I believe in is to collect good companies. We’ve already pointed out what we think are good names. They eventually go up but worse case if they don’t , we do know that they’re cheap so we won’t suffer permanent loss. We just need to really wait. The opportunity of buying properties stocks tell me that diversifying into them while they’re generally alpha bets is that by being extremely disciplined and owning good companies will reduce your risk because you know what you bought
We know we didn’t buy a scam
We know the industry of properties is strongly earning
The market risk we only have is we can be early and we have no idea when the market will see the way we see
Owning real estate stocks should correlate with properties prices
It’s an investment approach
Even though they’re different asset classes (real estate and stocks) they should have high correlation
Not every investor who made money can actually chart. Either they are blissfully ignorant on charts but they’re very aware of all these things about picking the right stock instead of being super strong on the timing side. I think 2 or 5 over a 100 can really time the markets but 95% of the people cannot time the market so it’s more important to just choose the right names for you. Of course they use moving averages and technicals but they are not ultra obsessive about each tick and saving every single percent.
Also shit happens
Everything can change quickly too.
It’s also important to learn this
You’re trading or investing in stocks to make money and enjoy life
If you cannot sleep
You’re making a mistake
I want you to choose companies that you really like
You should really enjoy the portfolio you have
When you see your holdings
You should like what you see and what you have
The perspective is important
Coz if you like the company and it falls, you wouldn’t be stressed
You have to enjoy this
Also learn this very well
Say no very often
You cannot say yes to everything
Prioritise what is important
Many disclosures will try to get you to buy
Say no often
Develop criteria
Develop rules
Look at deals only with evaluation
Set the kinds of things you’re willing to support
A certain rule makes it easy to say no to everything else
Ask “is it worth it?” Before you buy
Does it fit me
Don’t get sucked in by getting everything
Just find what you want and align your rules with these
You’d have more cash if you’re only dealing with what’s important to you
On Holy Grails
to me you can be as basic as only knowing how to trade via moving averages
Or basic as in only trade what you really like such as all time highs, breakouts with earnings
To be honest
The most basic setup with great results are spectacular earnings, pullbacks on moving averages and just ride the trend
Yun lang and that’s why we are using that basic setup in USA names
I didn’t even put RSI or many technical stock indicators
I just tried to find the best secular trends ; strong bias on funda and ride
the stock market is not a proud type of business.
It doesn’t reward someone just coz someone was earlier on buying
As long as you’re in a trend , you just make money from that trend
The guy who got in earlier price than you is not necessarily smarter or better. It’s how you make the most of the situation that matters,
