Peter Lynch on the biggest mistake investors make:
"They don't know what they own. They do more research on a microwave oven and buy based on a tip they heard on the bus. They buy into the potential of something. They hear a terrific story."
"I find when you hear that [story], you just have to black out. You have to think of a movie you went to recently because the stories are very appealing."
"The public is very careful with their money when they buy a dishwasher or a TV set, when they rent an apartment. When it comes to the stock market, for some reason they just don't do any work."
What would they find out with 30 minutes of research?
"They would first of all see if the company has sales and profits. A lot of times they buy companies and there's nothing there. There's literally nothing there."
"There are people that own electronic stocks that don't know the difference between an EPROM and the senior prom. And they're trying to buy stocks."
EPROM = erasable programmable read-only memory, had to google that one.
"Wal-Mart started as a public company with 37 stores in October of 1970. 10 years later you can tune into Wal-Mart. Their profits are up 20x. And the stock was up 20x. It still had another 10 years left. Profits went up 25x in the last 10 years. You can make 25x your money again"
"You have plenty of time. My best stocks have been the third year, the fourth year, the fifth year. Not the third week the fourth week. People want to make the money very rapidly."
Munger Partnership
"Munger at one point had almost 84% of his assets in two stocks, Blue Chip Stamps and New America Fund. By employing leverage, Charlie was able to vastly amplify the potential gains if the prices of these two businesses went up." helpforthemiddleclass.com/charlie-munger…
"Munger did enormous trades like B.C. Power, which was being taken over. He put all the money he had and all that he could borrow into an arbitrage on this single stock-but only because there was almost no chance that this deal would fall apart." yahoo.com/entertainment/…
Avoiding the "stupid zone" of decision-making: "I define stupidity as overlooking or dismissing conspicuously crucial information"
Seven factors:
-Being outside your normal environment or changing your routines
-Being in the presence of a group
- Being in the presence of an expert (authority) - or being an expert
- Doing any task that requires intense focus
- Information overload
- Physical or emotional stress, fatigue
Carl Icahn famously said: “If you want a friend on Wall Street, get a dog.”
He's a tough negotiator and built a fortune for himself.
When he rose to fame in the 1980's, it was him against the world. Him and his analyst - Al Kingsley.
This is Kingsley, drowning in paper. He was responsible for the details.
“Carl and Kingsley operate like a couple of rag merchants. Carl is always yelling at Kingsley, but it all bounces off Al. Al has a great mind."
"He puts things in a language Carl can relate to. I used to explain things from a cash-flow standpoint but Kingsley would recast it into a ‘put money and here’s what you get for it’ approach. The Carl-like way.'”
Loved this conversation from 2019 @briankoppelman and @pmarca. Riffing on entrepreneurs vs. artists, finding a scene, showmen, betting on people, pivoting.
"The world is busy. People don't wake up and say, 'I can't wait to find out what this person that I've never of has invented.' You have to inject yourself in the world. In our world, the successful people are the ones that are able to create and are able to push into the world."
Why @a16z doesn't invest in cold pitches aka "the test":
"If you can't get one inbound referral, that indicates you're going to have a hell of a time as an entrepreneur. Once you raise money from us, the pain begins. The pain of trying to get other people to say yes to you."
“Ego is the single most destructive force you can confront in business. I treat every trade as a business decision. You have to be sure you have the discipline to get out of a losing trade.”