1/9 Thread: Why I don't care about 10 or 100 baggers
When I first came across the book "100 baggers", I found it quite intriguing. I wish I could find the future 100 baggers. I still wish to find them, but I care lot less about 10 or 100 baggers today.
Let me explain why.
When I first came across the book "100 baggers", I found it quite intriguing. I wish I could find the future 100 baggers. I still wish to find them, but I care lot less about 10 or 100 baggers today.
Let me explain why.
2/9 The most important thing for individual investors like me is to survive in the market for as long as I live.
Survival means not to blow up. Investing is such a fun and engaging pursuit that the most terrible thing that I could do to myself is to take myself out of the game.
Survival means not to blow up. Investing is such a fun and engaging pursuit that the most terrible thing that I could do to myself is to take myself out of the game.
3/9 Given my modest lifestyle, income and age, I've run the numbers and found that a high single digit CAGR would make my family comfortable.
What if I can compound at 15-20%? When I look at the number, I can sense it's a pointless number that would add almost no extra value.
What if I can compound at 15-20%? When I look at the number, I can sense it's a pointless number that would add almost no extra value.
4/9 Of course, if I were professionally managing other people's money, I would perhaps focus a little more on generating better than high single digit IRR.
If I were to give my money to a professional manager, I would certainly want to give it to someone who can compound faster.
If I were to give my money to a professional manager, I would certainly want to give it to someone who can compound faster.
5/9 Of course, it is not easy to determine ex-ante who is going to compound faster and at what risk.
Individual investors don't have this problem. It beats me why somewhat well-off individual investors care so much about exceptional return when they are managing their own money.
Individual investors don't have this problem. It beats me why somewhat well-off individual investors care so much about exceptional return when they are managing their own money.
6/9 They won't receive the applause from the crowd that a professional manager would receive since practically almost nobody knows about them.
Most individual investors have an enormous capacity to be long-term oriented.
Most individual investors have an enormous capacity to be long-term oriented.
7/9 Unfortunately, in the pursuit of market beating returns all the time, they underutilize this hidden but deep strength.
I feel no pressure or obligation to go after 10/100 baggers.
I feel no pressure or obligation to go after 10/100 baggers.
8/9 Winning in investing is not to generate the highest compounding rate. There is almost always someone better.
Winning to me is to still find myself playing the great game of investing at age 70, 80, and 90 (one can hope). Not retiring ever is considered winning to me.
Winning to me is to still find myself playing the great game of investing at age 70, 80, and 90 (one can hope). Not retiring ever is considered winning to me.
9/9 A decade of bull market can make it feel a high single digit IRR a peasant like return. Maybe it is, and if others do much better, it certainly does not harm me.
And if I somehow do much better, that will indeed be a beautiful bonus!
And if I somehow do much better, that will indeed be a beautiful bonus!
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