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10-K Diver Profile picture
@10kdiver
Sep 24, 2020 • 5 tweets • 2 min read • Read on X
1/
Yesterday, I called out someone on Twitter.

This guy had a blog.

On this blog, he was plagiarizing my threads — and also posts from top financial writers like @morganhousel and @dollarsanddata.
2/
After seeing my tweet, many of you came together and voiced your distaste for this kind of behavior.

Facing all this pressure, this person has since taken down the posts he plagiarized, and also apologized on his blog.

He also apologized to me via DM. Image
3/
This person clearly made a mistake.

But after getting caught, he’s tried to make amends and do the right thing.

Plus, being called out on Twitter by so many people can’t have been much fun for him.

So, I’m inclined to let this matter rest.
4/
Some of you called for more aggressive action — like reporting him to higher ups who have real power over him.

I understand this urge — it was my first “gut reaction” as well.

But we don’t want to ruin someone’s life over one mistake.
5/
We’ve all done things we’re not proud of.

Let’s not harbor grudges.

Now back to more pleasant topics like finance and investing!

/End

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More from @10kdiver

10-K Diver Profile picture
Jan 1, 2023
1/
Get a cup of coffee.

In this thread, I'll walk you through "Gambler's Ruin".

This is a classic exercise in probability theory.

But going beyond the math, this exercise can teach us a lot about life, business, and investing.
2/
In my mind, Gambler's Ruin is the math of "David vs Goliath" ("Skill vs Size") type situations.

Here, David is a "small" player. He only has limited resources. But he's very skilled.

Pitted against David is Goliath -- a "big" player who has MORE resources but LESS skill.
3/
The battle between David and Goliath rages on for several "rounds".

Each round has a "winner" -- either David or Goliath.

David -- because of his superior skill -- has a higher probability of winning any individual round. That's David's advantage over Goliath.
Read 32 tweets
10-K Diver Profile picture
Dec 11, 2022
1/
Get a cup of coffee.

In this thread, we'll explore the question:

As investors, how often should we check stock prices?

To answer this, we'll draw on key ideas and concepts from many different fields -- probability, information theory, psychology, etc.
2/
Imagine we have a stock: ABC, Inc.

Every day that the market is open, our stock either:

- Goes UP 1%, or
- Goes DOWN 1%.

For simplicity, let's say these are the only 2 possible outcomes on any given trading day.
3/
Suppose we think ABC is a "good" investment.

That is, the company has a wide moat, good returns on capital, decent growth prospects, etc. And the stock trades at a reasonable price.

So, we buy the stock -- expecting to make a very good return on it. Say, ~15% per year.
Read 40 tweets
10-K Diver Profile picture
Oct 23, 2022
1/
Get a cup of coffee.

In this thread, I'll walk you through 2 key portfolio diversification principles:

(i) Minimizing correlations, and
(ii) Re-balancing intelligently.

You don't need Markowitz's portfolio theory or the Kelly Criterion to understand these concepts. Image
2/
Imagine we have a stock: ABC Inc. Ticker: $ABC.

The good thing about ABC is: in 4 out of 5 years (ie, with probability 80%), the stock goes UP 30%.

But the *rest* of the time -- ie, with probability 20%, or in 1 out of 5 years -- the stock goes DOWN 50%.
3/
We have no way to predict in advance which years will be good and which will be bad.

So, let's say we just buy and hold ABC stock for a long time -- like 25 years.

The question is: what return are we most likely to get from ABC over these 25 years?
Read 23 tweets
10-K Diver Profile picture
Sep 11, 2022
1/
Get a cup of coffee.

In this thread, I'll walk you through the P/E Ratio.

Why do some companies trade at 5x earnings and others trade at 50x earnings?

When I first started investing, this was hard for me to understand.

So, let me break it down for you.
2/
Imagine we have 2 companies, A and B.

Let's say both companies will earn $1 per share next year.

And both companies will also GROW their earnings at the SAME rate: 10% per year. Every year. Forever.
3/
Suppose A trades at a (forward) P/E Ratio of 10. So, each share of A costs $10.

And B trades at a P/E Ratio of 15. So, each share of B costs $15.

Which is the better long term investment: A or B?
Read 31 tweets
10-K Diver Profile picture
Sep 4, 2022
1/
Get a cup of coffee.

In this thread, I'll walk you through a fundamental business concept that may be counter-intuitive to some of you:

Just because a business has made $1 of PROFIT, it does NOT mean the business's owners have $1 of CASH to pocket.
2/
To understand why, let's start with how PROFIT is defined.

PROFIT = SALES - COSTS

That is, we take all sales (or revenues) the company made during a quarter or year.

We back out all costs incurred during this period.

That leaves us with profits.

Seems straightforward.
3/
Here's the problem:

The way a "lay person" understands words like SALES and COSTS is completely different from the way an *accountant* uses these same words.

These discrepancies can create enormous confusion.
Read 20 tweets
10-K Diver Profile picture
Aug 28, 2022
1/
Get a cup of coffee.

In this thread, I'll walk you through a framework that I call "Lindy vs Turkey".

This is a super-useful set of ideas for investors.

Time and again, these ideas have helped me think more clearly about the LONGEVITY of the companies in my portfolio.
2/
Imagine we're buying shares in a company -- ABC Inc.

ABC is a very simple company. It earns $1 per share every year. These earnings don't grow over time.

And ABC returns all its earnings back to its owners -- by issuing a $1/share dividend at the end of each year.
3/
Suppose we buy ABC shares for $5 a share.

That's a P/E ratio of 5.

We know we get back $1/year as a dividend.

So, for us to NOT lose money, ABC should survive AT LEAST 5 more years.

If something happens and ABC DIES before then, we'll likely lose money.
Read 32 tweets

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