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Value Theory Profile picture
@ValueInvestorAc
Apr 7, 2023 • 14 tweets • 3 min read • Read on X
Ray Dalio is the Founder of the World's Largest Hedge Fund at $150 billion

And a NYT best selling author.

Here are the 12 investing principles he lives by:

🧵 Image
1/
"Cash is trash. Hold assets that appreciate over time."

- Ray Dalio
2/
"Don't let your emotions dominate your decisions. Use your head."

- Ray Dalio
3/
"Diversify well. You never know what's going to happen."

- Ray Dalio
4/
"Timing is everything. Be patient and wait for the right opportunity."

- Ray Dalio
5/
"Understand that no one can predict the future with certainty."

- Ray Dalio
6/
"Success in investing doesn't correlate with IQ. What you need is the temperament to control the urges that get other people into trouble."

- Ray Dalio

7/
"Don't confuse a bull market with genius."

- Ray Dalio
8/
"It's important to have a strategy and stick to it, but it's equally important to be willing to change that strategy when circumstances demand it."

- Ray Dalio
9/
"The biggest mistake investors make is to believe that what happened in the recent past is likely to persist."

- Ray Dalio
10/:

"It's not about being right, it's about making money."

- Ray Dalio
11/
"If you're not failing, you're not pushing your limits, and if you're not pushing your limits, you're not maximizing your potential."

- Ray Dalio
12/
"The greatest mistake of the individual investor is to think that a market that did well is a good market rather than a more expensive market."

- Ray Dalio
I dissect the:

- Stories
- Stock holdings
- Investing techniques

of the world's greatest investors.

Follow for more:

@ValueInvestorAc

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We built a free "Toolkit For The Value Investor".

With all our favorite resources for finding great companies.

One of the tools lets you see what stocks Buffett, Munger or Howard Marks are buying.

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More from @ValueInvestorAc

Value Theory Profile picture
Mar 31
In 1976, Benjamin Graham published an article with a bold title:

"The Simplest Way to Select Bargain Stocks."

Inside, he revealed a formula most investors have never heard of.

It’s simple.

And backtests show it could return 15%+ per year — before dividends.👇 Image
Rule 1:

The maximum P/E you should pay for a stock is the inverse of 2 times the current AAA corporate bond yield.

To get this divide 100 by double the AAA corporate bond. Image
If the AAA corporate bond yield is 6%. Divide 100 by 12 to get our target P/E of 8.33 or 8.

You can find the AAA corporate bond yield on sites such as YCHARTS. Image
Read 11 tweets
Value Theory Profile picture
Mar 15
Charlie Munger on picking stocks that outperform:

He focuses on ONE key metric (hint: it's NOT valuation).

From his legendary speech: 'A Lesson on Elementary, Worldly Wisdom as it Relates to Investment Management.'

🧵 Image
1/
Over the long term, a stock will generate investing returns inline with what the business which underlies it earns.

So, how do you measure this?
2/
It's Return on Invested Capital (ROC):

For example:

If the business earns 6% on capital over 40 years and you hold it for 40 years, you're not going to make much different than a 6% return.

Even if you originally buy it at a huge discount.
Read 10 tweets
Value Theory Profile picture
Nov 23, 2024
Howard Marks is the co-founder and co-chairman of Oaktree Capital Management, the largest investor in distressed securities worldwide.

His investment philosophy in 6 simple points Image
1. Risk control

It's easy to make money in the market. That's especially true in the good years, and most years are good.

The challenge, the real skill is to make money with the risk under control so that if it turns out to be a bad year instead you won't do too badly.
2. Consistency

My clients don't want results that are all over the lot, at the top one year and at the bottom the next. So, we try to be just consistently a little bit above the middle but then thanks to risk control in the really bad years we do bounce up to the top.
Read 8 tweets
Value Theory Profile picture
Jun 13, 2024
"The Psychology of Money" uncovers the ways our brains play tricks on us with money, showing how we're all just one impulse buy away from financial chaos.

6 things I learned from Chapter 3 Image
1/
Crime committed by those who are desperate is understandable, but crime committed by those who already have everything is a mystery. Image
2/
You shouldn’t risk what you need for something you don’t. Image
Read 8 tweets
Value Theory Profile picture
May 11, 2024
Sadly, Jim Simon Passed Away Today.

He is considered the most successful hedge fund manager of all time.

Using mathematics he changed the world of securities trading.

This is his story:

🧵 Image
1/
As a child, Simons’ family doctor suggested he pursue a career in medicine.

But Simons’ path was always on the road to mathematics.

He insisted on becoming a mathematician.

Despite not actually knowing what mathematicians did.
2/
In 1958, he received his bachelor’s degree in mathematics from MIT.

Then, in 1961, he received his PhD in mathematics from Berkeley.

He also developed an interest in share trading. Image
Read 25 tweets
Value Theory Profile picture
Mar 20, 2024
David Tepper Made a 120% Return After the 2008 SMC

A master contrarian thinker specializing in distressed debt.

With a net worth of over $20 billion.

His top 20 investing principles:

🧵 Image
1/
“There is a time to make money and a time to not lose money.”
2/
“This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing.”
Read 23 tweets

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