A few simple realizations have changed the way I operate my life.

First, I don’t know everything.

(This took a shockingly long time to admit).

Second, I won’t know everything.

(Feeling exasperated seeing my pile of unread books).

Is our capacity to learn from experience and illusion?

Worth revisiting March 2020 in a non-reactive, non-judgmental way, simply a moment by moment reflection on events.

It started like any other year. Wall Street strategists published their bullish forecasts with expectations for a market melt-up.

Morgan Stanley’s Mike Wilson, the most bearish strategist, increased his target for the S&P 500 to as high as 3,500 in the first half of 2020.

1) There are some truths that are so obvious that we never question them. The virtues of value investing is one of them.

Time to renovate demonstrably false old truths. 🤓stray-reflections.com/article/166

2) Value investing has held a structural advantage when considered over multiple market cycles.

From 1927 through 2019, value stocks outperformed growth stocks 93 percent of the time over rolling 15-year time periods.

3) Value's worst-ever performance when compared to growth stocks last decade is vexing.

Should investors adjust to the changing landscape or side with a truism that has stood the test of time?

Come, seek

For seeking is the foundation of fortune;
Every success depends on focusing the heart,

Unconcerned with the business of the world,
Keep saying with all your soul, “Ku,ku,” like the dove

Even though you’re not equipped, Keep searching
Whoever you see engaged in search,

Become her friend and cast your head in front of her,
For choosing to be a neighbor of seekers,
You become one yourself

Day and night you are a traveller in a ship,
You are under the protection of a life-giving spirit

1) As we try to unscramble the complexity of markets, we are always seeking a measure of order from the apparent randomness.

It is interesting to us how markets (mis)behave. As Benoit Mandelbrot said, the chaos and irregularity of the world is something to be celebrated.

2) A self-described “wandering scientist,” pursuing what he called “unpredictable interests,” Benoit Mandelbrot moved across many disciplines at once to find new insights.

3) He spent much of his life as an outsider, seeking to extract an element of order in physical, mathematical, or social phenomena characterized by wild variability.

1) Since the Second World War, there have been three secular bull cycles with numerous cyclical trends occurring in between.

Thinking through them, we can guess what might be coming next. 🤔
stray-reflections.com/article/145/On…

2) The first was from 1950 to 1968.

The S&P 500 rose from 20 to 109 for a gain of 440 percent.

But twelve years into the secular bull market, there was a violent correction.

3) In 1961, stocks had risen 27 percent, with leading technology stocks like Texas Instruments and Polaroid trading at up to 115 times earnings.

And then, stocks “broke,” as The Wall Street Journal described it, seemingly out of the blue.

1) Five years ago, Ken Langone asked Stan Druckenmiller, "What is the biggest mistake you made and what did you learn from it?"

2) Druck said in 1999, after Yahoo and AOL had already gone up ten-fold, he decided to short internet stocks.

He placed a $200 million bet in February and was down $600 million by mid-March.

3) He was very proud of the fact that he never had a down year but now his fund was down 15%.

"I'm finished," he thought.

1) The way we breathe is inextricably linked to the way we live.

I’m embarrassed how long it took me to figure this out.

Given my sinus I’ve been breathing poorly my whole life.

What I’ve learned 👇🏼👇🏼👇🏼

stray-reflections.com/article/170

2) Breathing, with awareness and intention, sits at the heart of spiritual practice.

To let one breath go, say the Sufis, without being conscious of it is a sin.

3) Breathing usually happens without us, of course.

Even if we try to stop, some force overpowers our efforts.

1) If you review all the big declines in bond yields since the beginning of the secular downturn in interest rates in 1981, you find something very interesting.

Thread 👇

stray-reflections.com/article/92/The…

2) From each historic low, the 10-year Treasury yield retraced 50 to 61.8 percent of the drop over a span ranging from 2 months to 14 months.

The fundamental reasoning almost did not matter, this curious pattern held every time.

3) 1981-84: The 10-year yield fell from a high of 15.8 percent in September 1981 to a low of 10.1 percent in May 1983.

Then rose to 13.9 percent over 12 months and retraced 61.8 percent of the decline.

1) I’ve noticed that I increasingly forget things.

It started with people’s names, then I'd forget plans, even early memories with my wife and children.

I began to worry what if my absent-mindedness affects my ability to think and write?

2) Once I was driving with my wife and she said excitedly, “Remember when...”

I wrack my mind, but I’m at a loss. She looks over at me and sees a blank face.

3) I quote Nietzsche to her, “The advantage of a bad memory is that one enjoys several times the same good things for the first time.”

1) Stray Reflections is now 7 years old.

But I *almost* gave up multiple times on the journey.

This is that story. 👇🏼

2) By 2017, I had been writing for nearly three years and the business was generating no more than $40,000 in revenue.

My savings had run out. We were living month to month.

3) Mark Twain’s guidance for writers felt to me like a condemnation:

“Write without pay until somebody offers pay; if nobody offers within three years, sawing wood is what you were intended for.”

1) Do you ever find yourself striving for perfection, and then being disappointed because it always eludes you?

THREAD 👇

2) As a young student in Hamburg, Peter Drucker went to see the opera every week.

He had very little money, but showing up an hour before the performance meant scoring any of the unsold cheap seats allocated to university students for free.

3) Upon one evening, he sat for Falstaff.

“I have never forgotten the impression that evening made on me,” he said, totally overwhelmed by Giuseppe Verdi’s comic opera.

1) It is our lot to see things differently.

Bystanders look for a long time—free of constraints, unobscured by their own judgments, waiting patiently to grasp the essential truth.
stray-reflections.com/article/177/Th…

2) What we see is that the ICT revolution is far from complete and that rather than a dystopian, divisive future, what lies ahead is a green socially sustainable golden age.
stray-reflections.com/article/173/Fu…

3) We also see through the mist of the pandemic. The outlook is uninspiring, even with the vaccine breakthroughs.
stray-reflections.com/article/175/Th…

1) If you're not reflecting on risk management after this week's events then what are you even doing?

Here's a thread on some basic thoughts on how to better manage risk and mistakes going forward:

2) First of all, given where we are in the investment cycle, focus more intently on the downside than the upside.

3) Slow down if you see a loss of money on any position. That should put you on high alert.

Keep looking for disconfirming evidence.

"What important truth do very few people agree with you on?"

My heretical answer to Peter Thiel's favorite interview question. 🔥

1) If you want to be successful, surrender.

2) Before you ask me what I mean by surrender, ask yourself what it means to be successful.

1) This year has been difficult for many investors, whether you are a novice or an experienced risk taker.

It would be useful to revisit today's money masters and see how they dealt with gut-wrenching loss.

It always helps renew my ambition. THREAD 👇

2) Paul Tudor Jones lost $10,000 when he was 22, and when he was 25 he lost about $50,000, which was all he had to his name.

3) In 1979, PTJ's fourth year in the business, he lost over 60% of the equity in his clients’ accounts on a single cotton trade that went horribly wrong.

“I am not cut out for this business," he said. "I don’t think I can hack it much longer.”

1) Shortly after I graduated from university, I landed a job as a bank teller in Toronto.

It was, surprisingly enough, one of the best things that happened to me.

2) I was shy growing up. I was always the quiet one among friends.

But as a bank teller I was forced to interact with everyone. This helped me break out of my shell.

3) lt was a small neighbourhood branch with a sociable atmosphere.

The branch manager was Italian, the two personal bankers were Indian and Spanish, the financial advisor was Greek, and my two side-kicks at the till were Irish and Canadian.

1) Working correctly, the brain represents highest form of “instinctual wisdom,” Alan Watts once said.

But just thinking rigorously or applying more knowledge isn’t what he meant.

THREAD 👇

2) The brain can only assume its proper function when the mind is in a state of harmony and our consciousness is not trying to control and grasp.

3) When we are completely engaged with what we are doing in the here and now—and instead of calling it work, we realize it is play.

1) On a long enough timeline, history repeats.

This much is clear reading Will and Ariel Durant’s The Lessons of History (1968).

As they write, “The past is the present unrolled for understanding.”

Here are some lessons that stuck with me. 👇

2) The first lesson is modesty.

Human history is a brief spot in space. Man is a moment in astronomic time.

Generations of men establish a growing mastery over the earth, but they are destined to become fossils in its soil.

3) Life is competition. Even cooperation is a tool and form of competition.

We cooperate in our group—our family, community, party, race, or nation—in order to strengthen our group in its competition with other groups.

The earth will unite only if here is interplanetary war.

1) Investing in a bull market is hard enough; hearing it trivialized makes it unnecessarily harder.

In our latest issue, we discuss the far more powerful underlying forces, some outside of common understanding, that are at play.

2) The pandemic is a major displacement that will go down in history as setting new trends and social forces that spark a major bull market and mania.

We are still early in this uptrend.

stray-reflections.com/article/168/Th…

3) While the world balks at America’s failed response to a coronavirus pandemic, their economic management may yet prove to be superior.

stray-reflections.com/article/167/Am…

1) The ancient Greek philosopher Epictetus said, “Be silent for the most part.”

What did he mean? Allow me to explain.

Thread. 👇

2) On August 29, 1952, the piano virtuoso David Tudor walked onto the stage of the barn-like Maverick Concert Hall on the outskirts of Woodstock in New York.

He sat at the piano, propped up six pages of blank sheet music, closed the keyboard lid, and clicked a stopwatch.

3) Thirty seconds passed.

The audience, a broad cross-section of the city’s classical musical community, waited for something to happen.