One of the most underappreciated attributes of certain stocks is they are *very unlikely to lose you money*. Investors are often too preoccupied with *looking up*, worrying about catalysts & growth/re-rate potential, & forget to *look down* and ask, how likely am I to lose money?
It is striking the number of times I see people dismiss certain cheap stocks because they are unexciting, lack a catalyst & lack multibag potential, and totally ignore the fact that the likelihood of losing money over a decent holding period in such stocks is essentially zero.
Meanwhile, I routinely see people touting stocks for their growth potential, blue sky upside scenarios, etc, and totally failing to consider *how much could I lose if my bullish assumptions/expectations don't pan out*.
If you make a habit of buying things with an extremely low probability of losing you money, you will get rich over time - slowly, yes, but inevitably. A lack of risk is one of the most important attributes of an attractive investment, but is widely neglected.

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More from @LT3000Lyall

16 Jul
There is a problem in the medical field with people considering randomized controlled trials the *only* source of evidence. It is the *gold standard* of evidence, but that does not mean other inferior sources of evidence have no value. It is an excessively binary way of thinking.
Randomized controlled trials should, as a generalization, trump other inferior forms of evidence (although RCTs are not 100% infallible). But in the absence of RCT data, *the best alternative sources of evidence should be used*, and it should not be assumed to be useless.
An analogy: In a murder trial, the gold standard of evidence might be video footage of the murder occurring. However, we don't say that because we often lack the very best form of evidence, that it is impossible to infer by any other means/evidence what is likely to have happened
Read 9 tweets
16 Jul
Excess mortality in Sweden in 2020 was below long term averages, despite a lack of lockdowns. This is a data point worth chewing on for those that believe authoritarian government control of people's personal choices/behaviour is the only way to get people to behave "sensibly".
Here is the reality: people care a lot about their own health. Given accurate information, they can generally be expected/trusted to make decisions that reflect a fairly rational assessment of the personal risk/benefits associated with their behaviour.
The left wing/authoritarian minded implicitly believe people are stupid; don't know what's best for them; and need to be corralled and treated like children. They need be told what to do; what decisions to make; & what risks they are allowed to take, for their own benefit.
Read 4 tweets
15 Jul
Re US long rates, I think a key thing to watch (beside Fed purchases) will be the cost of USD hedging. A lot of the bid is coming from EU/Jap institos buying em and hedging out currency, generating better yields than available domestically. This will bust if cost of hedging rises
A recent WSJ article pointed out the cost of 12mth USD hedging to Euro/Yen was some 50bp. 1.3% long rates hedge out to 0.8%, better than 0.0% domestically. But what happens when those hedges roll off if the cost of hedging has risen to 200-300bp+?
If inflation continues to print above 5% in the US eventually this is going to have an impact on the USD. If a sense develops the Fed is not serious about tackling inflation, USD depreciation expectations will rise and the cost of hedging will skyrocket.
Read 4 tweets
14 Jul
To a hammer, everything looks like a nail, and everything except nails is unimportant.

One also suspects that many epidemiologists have come to rather enjoy their elevation in status and relevance during the pandemic, and are reluctant to let it go.
Dentists will tell you you shouldn't ever drink soft drink or eat sugar. In their world, optimizing dental hygiene is the most important aspiration a human being should ever pursue. But humans value lots of other things too.

Epidemiologists are the same.
There is more to life than minimizing risk at any cost, and there is also more to life than maximizing life expectancy at any cost. Life is about taking calculated risks, and quality matters as much as quantity. I would rather have 70 happy years than 80 miserable ones.
Read 5 tweets
14 Jul
A lot of people mistake for conspiracy theories dynamics that are actually caused by incentives and people being unwilling to risk their jobs/incomes. It leads to self-censorship and people saying and behaving in ways they perceive as necessary to not attract unwanted scrutiny.
Being able to freely speak your mind is a position of privilege most people lack. You need to be financially independent and not beholden to the whims of your employer. Most people need to be sensitive to politics in what they say & do and are not in a position to risk their job.
Journalists need to worry about what their boss will think, how their story/view will be perceived and the potential reputational impact. Academics have to worry about how their institution & peers will react & the implications of their views on their opportunity for tenure.
Read 10 tweets
14 Jul
Great thread.

There is an amazing degree of commonality between the political dynamics & ultimate effects of race merchants in places like SA and what is occurring in US - albeit in a diluted form. Greater "race" consciousness invariably ends up harming those it claims to help.
One of the great tragedies of the second half of the 20th C is that while many Asians studied STEM in the US, and brought that knowledge back to Asia to drive economic development, African expat students tended to study the humanities & onboard left wing/identity political ideas.
They took that knowledge back and went into politics, and these imported ideologies amplified already tense ethnic and religious divisions and in many instances contributed to the emergence of decades of civil war, economic turmoil, and in some cases even genocide.
Read 7 tweets

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