Investing 101: Successful investing is all about behavior and psychology.

You can have the best model or analysis in the world but if you panic, you lose.

Said differently, everybody has a plan until they get punched in the face.

Let's begin...
The most important thing you can do to maximize the odds of success is figure out what, if any, behavioral advantages you have or can create for yourself.

What rules can you live by that will prevent you from doing something stupid especially when everyone is losing their mind?
Here are my behavioral decisions:

1. I don't trade stocks. I buy companies.

Buying a company is like hiring a great CEO to work for you and your family. You can rest well knowing that Bezos, Musk etc. are on the job. That's not true for all CEOs so decide accordingly.
2. I try to buy companies that I think can potentially 10x in 10 years.

If I'm not willing to do that, I don't buy it. This doesn't mean that I will bat 100% but that isn't the goal. The goal is to become disciplined in a process, repeat this process and don't deviate.
3. It's all about the annual report vs quarterly earnings.

If I become too short-term focused, I am my worst enemy and will overthink, overreact and underperform my potential.

Once you've bought a company, the hardest decision is no decision...patiently waiting to be right.
4. I try not to look at prices every day.

The market has an amazing way of giving you great opportunities to see the truth. You just need to realize that the price and the truth aren't always the same. Looking at daily prices makes it harder for me to see the difference...
5. I don’t play with derivatives.

Options seem fun but they are like allowing a toddler to play with a loaded gun. You can have a few close calls but it eventually catches up with you.
In short, I have come to believe that the markets are the summation of everyone's collective consciousness in any given moment.

What this means, to me, is that I see the markets constantly over-reacting and under-reacting in any given moment based on people's psychology.
But I have also seen that over time, as you zoom out, sanity always prevails.

By creating some rules and living by them, you give yourself the best chance of not losing momentum in moments of chaos, finding and sticking to your truth and letting prices catch up.

Good luck!!

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More from @chamath

8 Sep
A secret hiding in plain sight:

When people have periods of peak nostalgia, it’s often because things around them are changing really fast.

The mind subconsciously uses “remembering oldness” to anchor themselves. It helps to be less insecure and adjust to “newness”.

So what?
Well, if you think honestly about yourself, you’ve probably done it, your friends and colleagues do it. We all do it because it’s a completely normal coping strategy.

And some of us do it much more than others because it applies not just to life but also business and markets.
I’ve made a habit of observing which of my friends, colleagues, Twitter people I follow have a sensitivity to nostalgia as they process information.

I pay close attention to them and have learned a lot in these moments - all through their communication.
Read 5 tweets
3 Sep
Some people scratch their heads when they see valuations of stocks justified by 2024E or 2025E numbers. Their instinctive reaction is to be dismissive but that’s lazy thinking.

Here’s a secret hiding in plain sight...
Everything in the public markets are valued against a “risk free rate”. This risk-free rate is the safest way to make money and is what the government pays you via US bonds or other securities that have “zero default risk”. This is in quotes for a reason...
When you buy something (a stock, a bond, a house) you are implicitly or explicitly deciding to sign up for the return that it will give you vs the risk free rate which you could otherwise get.

Ie do I buy $AAPL? Or buy a US 10-yr bond?
Read 13 tweets
31 Aug
@DesktopMetal - a leader in Manufacturing 2.0 - is going public and I helped lead their $275M PIPE. I wrote a 1-pager on the key things I liked about DM.
There is going to be a shift from traditional additive manufacturing to 3D printing as the technology matures from prototyping to hi-volume production.
This method has value not just to the company (better margins) but also downstream customers (higher quality, lower prices) and society (less energy consumption and less waste).
Read 5 tweets
21 Jul
Last week I co-led a $200M PIPE into $FVAC. My first big bet on climate change.

This will allow $FVAC to scale the largest rare earth metals mine outside of China - based in California.

Because it was $200M, I decided to write a 1-pager which you can find below...
My belief is that rare earths are a highly assymetric way to bet on a multi-decade trend of electrification and climate change tech.

Demand can easily outstrip supply when you factor all the things that will run on electricity vs fossil fuels: EVs, turbines, drones etc
In many ways, rare earths are to electrification what Intel was to the PC Boom of the 1980s and 1990s: a common component in every solution.

Being long Intel in those days was equivalent to being long the PC revolution. In my mind, this is the same point in time.
Read 5 tweets
18 Jul
Are you interested in decarbonization, sustainability and climate change and want to do something about it?

I need help allocating a few into these areas over the next 2-3 years so...I am turning to you for help.

In return, you can work with me to implement it.

Read on...
In 7 pages (or less) of single spaced prose, propose a framework we can use to buy and build technologies/companies/products that result in a holding company which can more meaningfully advance the efforts of decarbonization/climate change/sustainability.
The framework and process are more important than any one company or technology you may believe in *today* as I want this to be a strategy we can implement for decades.

Here is an example of a framework I would use if I were to write a proposal:
Read 8 tweets
10 Jul
The growing short case on $FB and $GOOG:

1. New product experiences
2. Regulation
3. Taxes
4. Anti-trust

If you have the capital/stomach for a 5yr+ bet, here’s how I’d build the short case...
BigTech’s long term success is no longer about better products.

They are incumbents and their success is now a multi-variate/multi-dimensional problem of competition, anti-trust, tax and regulatory multiplied by EVERY city, state, country and jurisdiction in which the operate.
1. New product experiences - BigTech has a huge yearly R&D budget. In fact, with two years’ worth of R&D, BigTech could recreate the Apollo program.

But they haven’t. Why?

Incumbency’s biggest drawbacks are lack of creativity, sloth, internecine politics and waste.
Read 13 tweets

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