Thread by @aaronbush100

20 semi-controversial investing beliefs [THREAD]:

1) Companies with deep competitive advantages are less interesting than companies whose advantages are only starting to shape up.

Similarly, companies with strong cash flows are less interesting than companies whose cash flows are held back by high-returning reinvestment.

2) There’s no prescription to becoming a masterful investor. No regiment of books, filings, podcasts, or checklists will bring greatness. They may help as tools but true greatness is found by pairing the right DNA with an internal battle for clarity and truth.

3) Study great investors’ ideas but rarely the people themselves. Why? You’ll never be like them so don’t try.

You have your own genes, environment, knowledge, and starting point in history.

4) One or two incredible pros can make up for a long list of cons... and one or two brutal cons can make a long list of pros meaningless. Either way, usually only a couple key points determine 99% of an outcome. Don’t overanalyze.

5) "Gut instinct" is more important than most people want to admit, because it permeates not just a final decision but every step along the way — where to look, what content to consume, who to listen to, what questions to ask, when to wait, when to move fast, etc.

6) I know the market cap of every company I own and watch but know the stock price of nothing. Most investors do the opposite even though market caps give you perspective and stock prices tell you nothing.

7) Sticky note valuations are more useful than spreadsheet valuations. Stick to what’s obvious. Besides, the most successful companies are the ones that will break your models anyway.

8) Contrarianism isn’t always binary. It’s often more useful when disagreement is about the magnitude of upside, not whether the idea is fundamentally good or bad.

9) “Mental models” is a meme. Follow your curiosity and seek out ideas, but don’t get caught in the web of pseudo-intellectualism.

10) In the same way The Intelligent Investor is mostly useless 70 years later, much of what’s written & believed today will be useless decades from now.

What will change? How software complements how we learn and make decisions across a wider range of digitized asset classes.

11) Build, sell, and play — not just study. Do more interesting things. Whenever you can try something instead of read about it, bias toward action. Your insights will grow deeper.

12) Aim to be wrong more often if the size of your wins grows exponentially as a result.

Related, focus less on the accuracy of individual stock picks & more on the accuracy of bundles of stock picks. Then add to winners over time to improve your weighted accuracy and % returns.

13) With notable exceptions, pay less attention to other investors / analysts and more attention to successful industry insiders. Cut straight to primary sources.

14) Don't pretend risk and reward are always correlated. High risk, low reward scenarios abound... and low risk, high reward scenarios occasionally pop up.

15) Leaders/investors who don’t look the part are often who you should pay the most attention to.

16) Spotting — and reacting to — patterns in human behavior is just as useful as spotting patterns in what makes a great investment.

Not only will it help you make better decisions, but it will help you build an audience/business so that those decisions get you paid!

17) Most investing workplaces are poorly designed. The more “this is the way we do things” is established — set hours, research templates, reporting structures, cubicles, institutional incentives, content obligations, etc. — the more it’ll stifle the best performers.

18) Collaboration can go too far. Surrounding yourself with a great team or community is critical, but the moment decision-making authority veers democratic your returns will begin to mean-revert.

19) Don’t waste time on ideas that bore you. The world’s a big place and opportunities abound, so you might as well spend time looking at what you enjoy. You’ll probably do better too.

20) Most public market investors should optimize for laziness:
- Stop caring why a stock is up/down any given day.
- Ask questions instead of researching for hours.
- Watch author interviews instead of reading their books.
- Invest in companies you don’t have to closely watch.

Beautifully, there are no rules, many ways to win, and countless exceptions. I have my fair share of biases. If alternative paths work for you, great!

What semi-controversial investing beliefs do you have?