Max Koh Profile picture
11 Oct, 26 tweets, 6 min read
Richer, Wiser, Happier.

This has been my favourite investing book of 2021.

Here's 20 of my favourite quotes and lessons:

Thank you @williamgreen72
1. Bet big but infrequently

You have to be like a man standing with a spear next to a stream. Most of the time he’s doing nothing.

When a fat juicy salmon swims by, the man spears it. Then he goes back to doing nothing. It may be six months before the next salmon goes by.
2. Read a lot + Patience

How long can he go without buying? “Oh, I can wait ten years—even longer,” Chou replied.

In the meantime, he studies stocks that aren’t cheap enough to buy, hits balls at a golf range, and reads two hundred to four hundred pages a day.
3. Optimize for peace of mind, not just profits

Buffett made it clear that Berkshire’s decentralized structure was never designed to maximize profits.

It simply suited his character to oversee many businesses in a hands-off manner, trusting his CEOs to use their freedom wisely.
4. Wealth buys you control over your schedule

On a typical day, Pabrai sleeps late and arrives at his office after 10am. Like Buffett and Munger, Pabrai spends most of the day reading.

He takes a guiltless nap most afternoons, then resumes reading until late in the evening.
5. Struggle gives our lives meaning

I’ve never thought it wise to pursue pleasure.

There must have been some deeper reason why God created human beings. And one of the fairly obvious things is that the people who are busy with useful work are happier than the ones who are idle
6. Narrow down the key variables that matter.

"I don’t build models anymore. It’s stupid." Instead, he concentrates on three or four critical issues he believes will drive the business.

“For every company, there are a few key investment variables. The rest is noise"
7. Find good management teams, and let them compound wealth for you.

“If they’re thinking rationally and thinking about the long term,” says Sleep, “you can subcontract the capital allocation decisions to them.

You don’t have to be buying and selling shares.”
8. Risk is not knowing what you own

It was less risky for them to own a small number of stocks than to own hundreds.

“We knew that we didn’t know many things. So it made sense to only have a few shares because those were the only things we understood and ever really knew.”
9. Know what amount of $$ is enough for you

“Once we had proved what we wanted to do running Nomad, it was very obvious to both of us that the job at hand was to give the money back to society"

“It lowers the risk of us being bent out of shape by having too much money.”
10. Think long term

“It’s all about deferred gratification".

"When you look at all the mistakes you make in life, private and professional, it’s almost always because you reached for some short-term fix. And that’s the overwhelming habit of people in the stock market.”
11. Environment influences your behaviour

Sleep and Zakaria set themselves up in a peaceful office above a Chinese herbal medicine store, far removed from the frenetic action.

They were so detached from all the excitement that they likened themselves to hermits or monks.
12. Buy for keeps. Not to flip. Think like an owner.

“It’s been my experience that the richest people were those who found something good and held on to it.

The people who seemed the least happy and the most frenzied are those that are always chasing the next hot thing.”
13. Develop pattern recognition

"The more companies you can analyze, the more cash-flow statements you can go through—and go through every line of—the more good ideas you’re going to find and the better the performance is going to be.

There’s no substitute for hard work.”
14. Fall in love with boredom

“I try to read four, five, six, seven hours a day, seven days a week,” he says.

“I have no hobbies. I have never golfed in my life.… It’s just my personality—always trying to get smarter, to learn.”
15. Financial statements only tell you about the past. Look beyond the numbers. Quality matters.

“The problem,” says Lountzis, is that qualitative factors such as adaptability or courage “are not measurable” in financial statements, which offer a quantitative record of the past.
16. Exercise restraint in your emotions

Munger has also learned to control certain toxic emotions that would corrode his enjoyment of life.

“Crazy anger. Crazy resentment. Avoid all that stuff. I don’t let it run. I don’t let it start.”
17. Pick unfair fights

“You have to play in a game where you’ve got some unusual talents.

If you’re five foot one, you don’t want to play basketball against some guy who’s eight foot three. It’s just too hard.

So you’ve got to figure out a game where you have an advantage"
18. Wealth buys independence

“You build capital and then you can do whatever you want.”

For many of the successful investors, that freedom to construct a life that aligns with their passions and peculiarities may be the single greatest luxury that money can buy.
19. Specialize

They focus almost exclusively on what they’re best at.

Their success derives from this fierce insistence on concentrating deeply in a relatively narrow area while disregarding countless distractions that could interfere with their pursuit of excellence.
20. Compounding works in all areas of life

Resounding victories tend to be the result of small, incremental improvements sustained over long stretches.

“If you want the secret to great success, it’s just to make each day a little bit better than the day before” says Gayner.
Those are my 20 favourite quotes and lessons from the book.

But they're the tip of the iceberg.

Go buy and read the actual book.

William Green deserves full credit for everything I wrote above.

All text and quotes mentioned belong to him and the investors he interviewed.
Recap of the 20 lessons:

1. Bet big but infrequently
2. Read a lot + patience
3. Optimize for peace of mind
4. Wealth buys control over your schedule
5. Struggle gives our lives meaning
6. Narrow down key variables
7. Find good management teams
8. Risk is not knowing what you own
9. Know how much $$ is enough
10. Think long term
11. Environment influences your behaviuor
12. Buy for keeps. Think like an owner
13. Develop pattern recognition
14. Fall in love with boredom
15. Look beyond the numbers
16. Exercise restraint in emotions
17. Pick unfair fights
18. Wealth buys independence
19. Specialize
20. Compounding works in all areas of life
If you enjoyed this summary, then follow me at @heymaxkoh

I tweet about my journey of how I attained financial freedom before age 30, by investing in great businesses.

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More from @heymaxkoh

13 Oct
15 Investing Lessons from Yen Liow:

Based off his recent presentation at the MicroCap Leadership Summit 2021.

*Hint: You do NOT need to find 100 baggers to create great wealth.

Thanks to @yliownyc for the value bombs.

And to @iancassel for organizing this.
1. True compounders are rare. Hold on tight when you find one

Over last 20 years, of all the US listed companies with market cap over $2B:

Only 14% of them have have compounded at more than 20% for 5 years.

And only a tiny 3% have compounded at more than 20% for 10 years.
2. Strategy - find horses

Horses are monopolies and oligopolies that compound EPS at 2-3x the broader market for long periods of time.

True north: Over time, stock price and intrinsic value will converge.

So find businesses that can show durable growth in FCF or earnings.
Read 21 tweets
13 Oct
Will you feel happy when you finally quit your 9-5 job and never have to work again?

Here's why that may NOT happen:
3 reasons:

1. Rich is about finding fulfilling work

2. We need to "struggle" for something

3. The same traits that helped you retire early will make you unhappy when you actually do retire early.

Here's my story...
I recall that day mid of 2020, when I hit my own version of financial freedom.

It's been a day I've been waiting for my whole career.

When my portfolio crossed a certain amount of net worth.
Read 16 tweets
12 Oct
This is Bill Walsh.

He was the head coach of the San Francisco 49ers.

He was famous for teaching the team's receptionists how to answer the phone properly.

Here's 12 leadership lessons I learnt from him:

Thanks to @rabois for recommending it in many of his podcasts.
1. Sweat the little things

How the players dressed and the appearance they gave to others when taking the field was very important.

I wanted our football team to look truly professional—impeccable.

Thus, shirttails tucked in, socks up tight, and more were requirements.
2. Respect the team

Players were told their practice helmets, which carried our emblem, should never be tossed around, sat on, or thrown in the bottom of their lockers:

“Wear it, hold it, or put it on the shelf in your locker.”

It represents who you are and what you value.
Read 17 tweets
12 Oct
Why do people get stuck in the rat race with a job they can't quit?

The answer has to do with the "Fear and Greed" cycle:
I recently had a chat with a friend over dinner...

She was telling me how she goes to work everyday out of fear.

Because she's worried if she stops working, she won't have money to pay the bills and put food on the table.

She's driven by fear of not having enough money.
So that forces her to wake up everyday and go to work at a job she doesn't like.

But it doesn't stop there.

It only gets worse because of this other emotion known as "Greed".

How does that come about?
Read 10 tweets
10 Oct
Investing & Meditation. My true short story:

I come from a Buddhist family. 2 of my aunts were ordained as Nuns in their early 20s. That's how deep and serious this runs in my home.

I was taught how to meditate at age 4. Focus on breathing. Watch my thoughts.

I hated it.
As a kid, I couldn't sit still. I had a "monkey mind" as they called it.

The adults kept encouraging me to meditate. But I was a rebellious teen.

Fast forward to today, I have been meditating without fail for almost 15 mins every morning. Since Jan 2019.

What changed?
I started investing more seriously.

Started putting more of my money into high growth stocks, and the volatility and draw downs made me realize how weak and frantic my mind was.

Out of panic, I started meditating seriously to learn how to center myself.

What's the lesson?
Read 4 tweets
9 Oct
Friend of mine borrowed a fair sum of $$ from the banks in the march 2020 covid crash. Even took on leverage.

Best time to buy stocks, he said.

He even built a financial model on excel to understand his downside.

No issue.

But a few weeks later, he sold them all.

He told me:

“When the 2nd circuit breaker hit and the market fell further, I took a double look at my excel model.

I could still take further drawdowns and be ok.

But when I picked my 5 year old daughter up from school that day, I started to panic...
“Am I making the right decision, I wondered?

What if something happens that I didn’t expect?

I wouldn’t be able to give her the life I promised I would. “

Few days later, he sold all his stocks.
Read 4 tweets

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