The *Ishmael* series by Daniel Quinn (@Read_Ishmael)
* We were optimized for hunting/gathering
* The way we live is evolutionarily odd
* Every culture has a story, but few identify the story they're enacting.
* Randomness over power of stories (Fooled by Randomness)
* 1% of inputs = 99% of output (Black Swan)
* How to be thrive in uncertainty (Antifragile)
* No opinions without risk of loss (Skin in The Game)
1) Ishmael 2) Incerto 3) Braving Wilderness 4) Tao of Pooh 5) Bible 6) Snowball 7) 4 Hr Work Week 8) Animal, Vegetable, Miracle & Poisonwood Bible 9) Original Wisdom 10) Untamed 11) To Kill a Mockingbird 12) Wild 13) Coddling American Mind 14) Up From Nothing
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Focusing on valuation is one of them. But you have to be really:
* Smart
* Willing to put in lots of work
* Aware of what market is doing daily
My approach:
I PAY ZERO ATTENTION TO VALUATION.
It's worked. The proof & thinking 👇
What I look for are ANTIFRAGILE companies.
They all:
* Use the Barbell Method (Mission, Moat, Optionality)
* Have Financial Fortitude (Balance Sheet, no Concentration)
* Have Skin in the Game (Founder, Ownership, Glassdoor)
If they have these 3, I don't worry about valuation
The basic idea:
When chaos hits, ppl in real world don't care about valuation of a stock.
* Schools: $ZM will help us with COVID (no one cares about stock price)
* Citizens: Our police need to use $AXON (no one cares about stock price).
Last week, I talked about the Antifragile Framework for investing.
The biggest question, by far: What about VALUATION?
It's not in the framework.
But before I explain why, there are 6 things you need to know about ANTIFRAGILITY and PREDICTING the future. A 🧵
1/
We often take what's recently happened, and project that into the future without end.
That makes sense. 99.9% of the time, you'll be right.
The same was true for our ancestors. NOT doing this would have led to extinction as hunter-gatherers
2/
But 0.1% of the time, you'll be wrong. (Black Swans)
Imagine how WRONG your predictions would've been on:
* October 23, 1929 (Black Thursday)
* December 6, 1945 (Pearl Harbor)
* Summer 1990 (Fall of USSR)
* September 10, 2001 (9/11)
* New Year's Day 2020 (COVID)
1/ This is a stretch, but it's something I keep coming back to when brilliant (@nntaleb) and popular (@sapinker) collide. The recent @WSJ piece does a brilliant job of highlighting the difference between *Skepticism* and *Enlightenment*.
2/ In the end, @yhazony isn't saying we should shun all "progress", but that we need to move slowly, and locally, to make sure that we don't cause *more* damage in our pursuit of *progress* because we don't fully understand the benefits of traditions.
3/ Reminds me of re-telling of Adam and Eve in @_Daniel_Quinn's Ishmael.
The context: Narrator believes agriculture ushered in a new way of living. It pitted Modern (Agricultural) humans against indigenous peoples.
In effect: The Bible = Story to justify agriculture