My Investing Principles

Notes

• Investing is a marathon not a sprint. Ability to generate over a lifetime matters vs in a short time. Compounding is returns over time. In this equation, time is the exponential factor and is far more important than the return.

• To make money you have to take risks, to keep money you have to be conservative.

• Economists can’t forecast a complex mechanism like the economy. The Signal and the Noise

• You need to make only 20 good bets in a lifetime.
  20 Punch Cards
  15 uncorrelated investments

• Do not take debt to make investments.

• Do not invest other people's money.

• Have enough liquidity 10-30%

• Diversification

  • don't diversify for the sake of it
  • invest only in what you understand Peter Lynch

• Every asset goes through market cycles.

  • It's important to buy any asset at a good price.
  • Wait for corrections rather than chasing returns.

• Risk

  • Volatility is not risk.
  • Risk is the possibility of a permanent loss of capital - make sure to avoid such situations can arise for you.
  • To get back from a loss of capital is a big setback which should be avoided at all costs.

• Opportunity Cost of investments should be compared with Bitcoin.

• Think in probabilities (Bayesian Thinking)

  • Review and update probabilities when major events happen.

• When to sell - Warren Buffet

  • To buy something better
  • Economics change fundamentally
  • Goes above 40% of total assets

• Look at First principles in investing

  • Identify fundamental truths
  • Challenge assumptions
  • Look for transformative technologies with exponential growth

• Buy businesses, not stocks.

Links

Investment Checklist
Investing
Principles
Chamath Investing Principles