Intelligent Investing
What is true in investing over the long term?
Jeff Bezos, Founder & CEO of Amazon.com, Inc once said:
"I frequently get the question "What's going to change in the next 10 years?" I almost never get the question "What's not going to change in the next 10 years?"...that 2nd question is actually the more important of the two because you can build a business strategy around the things that are stable in time. In our retail business, we know that customers want low prices, and I know that's going to be true 10 years from now. They want fast delivery; they want vast selection. It's impossible to imagine a future 10 years from now where a customer comes up and says, "Jeff I love Amazon; I just wish the prices were a little higher", or "I love Amazon; I just wish you'd deliver a little more slowly." Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it."
What is true in investing over the long term?
Companies are constantly evolving to adapt to their environment; competition always rise up from the most unlikely places. Distruptive technology is constantly eroding the durable advantage most companies have. But one thing that will remain unchanged is the participant of this game: Homo Sapiens.
If you ancestor escaped from a lion chase 500 years ago, thanks to our amygdala & hippocampus complex, your grand kids will do the same thing 100 years from now, or for that matter, anything that trigger fear. And euphoria.
The madness of the market and the fallibility of human is the truth in investing. And it will always be. So it is one of the investment well worth your time to invest in: Yourself. Put your energy into understanding the psychology of investing and guard yourself against human folly. Learn how to think. Think for yourself before asking for opinions. You can have good valuation skill but without a strong psychological makeup you're not going to last. Right temperament is your backbone. Strengthen that. You don't need to be the brightest to win; you just need to make less mistakes. Where do you start? Grab some self-help books. Even better, read philosophy books. Plenty in my Google Drive. Ask me.
What else is true? Many investors think that money brings happiness. You might want to rethink that. The what causes what.
What else? Majority of people are not willing to do the hard thing. That is another truth. It is easy to create the most perfect cut loss strategy, or look at the share price all day long, yes they are hard to do, but they are not hard things. Hard things are learning how to think well. It is knowing what you are doing, many don't know they don't know. It is sit there, do nothing but think while the market goes crazy. It is asking the questions that matters. It is accepting opposite opinions. It is finding contradictory information. It is stopping your cocaine brain from telling you how much you'll make on that quick trade.
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6 people like this. Showing 6 of 6 comments
Always love your view Ricky, I don't see many philosophical investors here like you. Pls write more :)
2016-10-21 09:50
Imagine yourself in a water Polo Pool. And you are standing right beside the goal post measuring the level of water relative to a fixed horizontal line connecting the two poles..when the water is calm - lets designate the level as zero.
When there's disturbance in the water...it creates waves..every wave created has positive & negative amplitude moving in a direction...at times its a positive or negative water level relative to the horizontal line depending on (1) the timing you are measuring the approaching waves.
the sum of the sinusoidal wave amplitude is always zero...this is what we call zero sum game.
Now...it is not totally a zero sum game...if water is continuously fed to the pool...and the level of water in the pool is rising..even if stays calm without any disturbance.
GDP = rise in the level of water in the Polo Pool.
So..if you are to experience a level rise higher than the GDP rate....you need to be in either the right (1) time or (2) position to experience the level rise above zero...
all these 'waves' are basically 'informations'...it could be the rise in earnings, fantastic qtrly results, erratic emotions of the investors, TA, some good news in etc...name it whatever you want.... but all these are just waves...whats important is the timing and position...not which wave that matters.
When we say timing & position...we are talking about your "competence relative to others"...its not about your strategy (i.e which type of wave)....that is all that matters...so its really meaningless to say that there is a type of wave which can give you an assured good return.
they are just a sinusoidal wave of zero net amplitude.
Now...only you can know about your competence relative to others in the wave of your expertise...no one else can teach you that.
2016-10-21 11:03
just to give more analogy - insights...
there are many type of waves....high amplitude with low propagation speed...(perhaps value investing falls under this)...some with small amplitudes at high speed...
you can assume different regions of the pool has different fluid & different viscosity to imagine that..
some waves appears like a big splash after a fat person jumps in & big vacuum after someone jumps out...
2016-10-21 11:44
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
feimah
Hi Ricky,
Pls share the books title that inspire you that you mention in your article.
2016-10-21 09:07