Thread by @heymaxkoh

21 simple lessons on investing and money that changed my life.

I hope they do the same for you:

1. Only the best will do.

Have unreasonable standards for every company in your portfolio.

They must earn their keep.

2. If you lack the time or interest to research companies, you’re better off buying the index.

You'll sleep better at night.

3. Frugality: live way below your means.

You’ll enjoy a level of freedom that people busy upgrading their lifestyles can’t imagine.

4. Don't be a cheapskate.

The best companies usually hover between high to nosebleed valuations.

Be willing to pay up for quality.

Don't try to scrimp on a few dollars if you believe the company can be ten times bigger from here.

5. It’s not about whether something is over or undervalued.

Instead, it’s about your expected return over a period of time.

6. Average up.

Don't be afraid to add more to a position at a much higher price than your initial entry.

Reward the winners, cut the losers.

7. Monitor the companies you own, rather than the stocks.

Stop looking at the stock price 20 times a day.

It’s more productive to spend your time keeping up on the updates surrounding your companies and their industries.

8. Understand the clear difference between money, income, and wealth.

Money = a medium of exchange and nothing more.

Income = what you get in return for trading your time.

Wealth = what buys your freedom and gives you the power to choose how to spend your life.

9. When facts change, I change my mind.

When in doubt, I get the hell out, regardless of how much I’ve made or lost on the position.

Price anchoring is dangerous to long term wealth creation.

10. Never be afraid to buy a company that just doubled in 3 months.

It’s what the company will do from here that matters.

Once again, price anchoring is dangerous.

11. It’s not about how much I make or lose on individual stocks.

It’s about my total portfolio allocation and overall returns.

12. This is not a popularity contest.

I’m investing purely to grow my wealth.

Not to show that I was right or prove how smart I am.

The size of my ego is inversely correlated to the size of my returns.

13. My only loyalty lies with my capital.

Not with any specific company.

Never get married to my positions or opinions, no matter how much I love the business.

14. On desires and wants:

Being content in life and having fewer wants enables you to be happy in any situation.

It is not the man who has too little, but the man who craves more, that is poor.

15. On jealousy and envy:

There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich.

Play your own game and mind your own business.

16. Read less financial news.

Read more 10-Ks.

17. Listen to less financial youtubers.

Listen to more earnings calls.

18. Only invest in businesses that excite you personally.

If you're not enthused by it after the initial study, pass.

Your portfolio should reflect your ideal vision of the future world.

19. On selling stocks:

Never exit just because the stock you bought tripled in 6 months.

I sell only if the facts change, or if I found a better use for my capital.

20. Don't talk about your positions publicly.

It adds unnecessary pressure and commitment.

Also makes it much harder for you to change your mind in future.

21. Pick an investment vehicle that suits your personality and lifestyle.

The best investing strategy is not the one that brings you highest returns.

It’s the one you can stick with consistently.

If you found this useful, then follow me here at: @heymaxkoh

I share how I attained financial freedom before age 30, by buying and owning great businesses.

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