The biggest myth about market crashes? That they bottom when the economy improves.

LT3000 wrote a great article explaining the psychology of market bottoms and why markets always seem to recover "too early" and catch most investors off guard.

A thread on the 4 key takeaways: 1. Unknown unknowns drive crashes, not known risks

COVID, 9/11, the GFC. Each time, people say "this time really is different"

Market crashes happen when there's no clear past example to follow. In hindsight, it all seems obvious, but investors back then didn’t have clarity.

Microsoft tried to buy Intuit for $1.5B in 1994. When rejected, Gates vowed to crush them.

30 years later, $INTU is worth $170B while Microsoft Money is dead.

Here's how a small tax software startup outmaneuvered the tech giant and built a financial software empire: In 1983, Intuit was founded by Scott Cook and Tom Proulx, driven by their vision to create a personal finance program to simplify money management

Their first product Quicken beat 46 competitors through its simplicity and was the best-selling consumer software product by 1988

Warren Buffett loves monopoly-like businesses with pricing power.

That's why he owns $200M of this stock.

Here's why this stock has beaten the market over the past 20 years. The company is Heico $HEI, a serial acquirer in the aerospace industry.

Its competitor, TransDigm $TDG, has also seen terrific returns as a serial acquirer.

Billionaire investors like Warren Buffett and Ken Fisher are both invested in Heico.

Wayne Huizenga is one of the most prolific and successful entrepreneurs in US history.

He was the first person to ever build three Fortune 500 companies: Waste Management, Blockbuster, and AutoNation, despite never graduating college.

Let’s dive into how he did it! Wayne dropped out of college after 3 semesters and spent a brief stint in the military before joining a garbage collection service like his successful grandfather.

After getting a handle on the business, he borrowed $5,000 from his father-in-law to buy a truck and some clients.

Shad Rowe at Greenbrier Partners was an incredible investor and human being. He sadly recently passed away from cancer.

One of his big wins was buying Southwest Airlines at a $5M market cap and holding until it reached >$20B.

In this thread, I share a bit of his amazing story: Shad got into investing after his father recommended he use his summer construction job savings to buy Central Airlines stock.

He bought 200 shares at $2.25, and it was acquired for $14 a year and a half later. That motivated him to learn all he could about investing.

Josh Tarasoff, founder of Greenlea Lane Capital, pitched Amazon in 2012.

Although the stock traded at a $100B market cap and 179x trailing GAAP EPS, he believed it would return 30% annually over the next decade; it ended up doing ~26%.

Let’s dive into his thesis! Josh’s thesis rested on 3 points:

1. AMZN possessed a structurally better business model than physical retailers

2. The size of the e-commerce tailwind was underestimated

3. AMZN’s earnings power was understated by looking at revenue growth and GAAP operating margins

Larry Goldstein at Santa Monica Partners is one of the most underrated Superinvestors.

He's earned 18% gross annualized returns over 40 years by investing in overlooked small-cap stocks, including being an early investor in the single best-performing US stock.

Let’s dive in! Larry started his career at the bank Burnham & Company where he would make a name for himself on small/illiquid stocks

One of his first successes was Overnite Transportation, trading on the Pink Sheets, which was selling at 1.5x P/E; his $3000 investment grew to >$100K

“An investor that earns a 16% IRR over a decade will end up with more money than one that earns a 20% IRR for 9 years and loses 15% in the 10th year” – Seth Klarman

In this thread, I cover 7 common portfolio management biases and how you can avoid them.

Let’s dive in! Sin 1: Illusion of Knowledge (Gluttony)

We tend to become overconfident when we have spent a lot of time understanding an investment.

The more data we’re given, the more confident we feel, even if the data doesn’t really improve our accuracy.

Bryan Lawrence at Oakcliff Capital is one of the most underrated Superinvestors, achieving 17% annualized returns since 2004.

He has only raised $3M net despite having $270M AUM today.

In this thread, we dive into their investment process and strategy: Bryan graduated from Harvard and started his career at the investment bank Lazard.

He pitched buying Amazon bonds during the Dot Com crash when they were trading at 40 cents on the dollar and implying that the company was going to be insolvent.

This company started as a small internal project within Morgan Stanley.

Now, it's exploded into its own $40B+ company and has delivered 2,400%+ returns over the last 17 years.

Let's dive in! MSCI started in 1969 as a division of Morgan Stanley, to help institutional investors gain international stock exposure through global equity indexes.

By 2007, MSCI spun off as an independent public company, trading under the ticker $MSCI.

Randolph McDuff is one of the best investors you’ve never heard of.

Over the last 24 years, he has achieved a 21.5% IRR, resulting in a 100-bagger on his entire portfolio!

Let’s dive in to see how he did it as well as some of his favorite stocks today! Hailing from The Pas, a cold, remote town in Manitoba, Canada, he graduated in 1986 with an economics degree and spent 14 years as a stockbroker.

He saved $2M by 2000 after living a frugal lifestyle driving a 1991 Toyota 4Runner and living in a $150K house.

The book "Capital Returns" offers a powerful framework for investing successfully.

In this thread, I explain the capital cycle, Marathon's core investment framework, and four main key takeaways.

Let's dive in! What is the capital cycle?

1. New capital is attracted into sectors with outsized profits

2. Eventually, this influx of capital causes supply to overshoot

3. Weaker firms exit and capital leaves the industry

4. As a result, returns on capital for remaining firms increase

Is investing just a game of luck?

40 years ago, Warren Buffett and Professor Jensen had a public debate.

Jensen argued that if we had a national coin-flipping contest, a small group would win just by luck and have 20 straight winning flips.

This was Buffett's counter-argument: In 1984, Buffett gave this speech in honor of the 50th anniversary of Graham and Dodd's book "Security Analysis" - the bible of value investing.

In Buffett's speech, "The Superinvestors of Graham-and-Doddville, " he countered Jensen and the Efficient Market Hypothesis.

An under-the-radar $2.3 billion fund made an ~8x return and over $1 billion on just one stock.

The most surprising thing is that it wasn't a tech stock, but was an infrastructure stock no one was talking about. It now makes up 60%+ of their portfolio.

Let’s dive in! William Harnisch began his career at Chase Manhattan Bank in 1968, eventually becoming VP of Special Equity Investments.

He joined Forstmann-Leff Associates (FLA) in 1978 when the business managed $300 million. Under his leadership, FLA grew to $5 billion in assets by 1997.

Legendary investor, Peter Lynch, found one of his all-time top-performing stocks completely by accident.

After a tip from a hotel manager, Lynch found a business that ended up 11x’ing his money over 10 years, delivering 27% annualized returns.

Let’s dive in! The company was La Quinta Motor Inns, and the secret to La Quinta’s success was their ability to offer rooms at much lower prices than their competitors.

In this thread, I’ll give you an overview of La Quinta’s business model and why it was such a good investment.

Evaluating management in the investment process.

In this thread, I share some thoughts on the importance of management when investing.

I also share 10+ specific ways to analyze the quality of management:
First of all, is it even worth it to spend time evaluating management when investing?

Three downsides to emphasizing management in your investment process:

1. Difficult to separate pretenders from good management

2. Can increase confirmation bias

3. Information overload

This individual investor has made 8,000%+ returns over the last 25 years to build a $250 million portfolio.

The most surprising thing is that he has sent 1,000 letters to the government to close the loopholes that gave him his advantage.

Let's dive in! David Webb graduated in mathematics from Exeter College, Oxford University in 1986. He was a self-proclaimed “computer geek” who authored a couple books on programming and built a few games in the early 1980s.

He started his career as an investment banker in London.

An inside view of a $20 billion fund that you likely have never heard of: EdgePoint

We’ll review the fund’s strategy, a few of its actual stock pitches, and the current holdings in its portfolio.

We’ll also go over some of their biggest investment mistakes.

Let’s dive in! EdgePoint was founded in 2008 by Tye Bousada, Patrick Farmer, Bob Krembil and Geoff MacDonald.

It was a challenging time to start a fund given the global economic recession, but they managed to launch on November 4, 2008 with $234 million in assets under management.

There’s a $100 billion retail concept that has thrived despite threats from Amazon & e-commerce.

50,000 brick-and-mortar US stores are going to close over the next 5 years. But this concept is still growing!

Let’s dive into the business model + strategies driving their success: The retail concept is Off-Price Retailing.

TJX Companies ($TJX) and Ross Stores ($ROST) are the two biggest winners in the space with $50 billion and $20 billion in revenues, respectively.

Their stock prices have compounded at 15%+ over the last 20 years for a 2,000%+ return.

There’s a $13 billion fund that you likely have never heard of that has tripled the returns of the average hedge fund over the last 20 years.

The most surprising thing is that their investment strategy involves buying and selling the same few hundred stocks.

Let’s dive in! Greg Poole founded Echo Street Capital in 2002 at the age of 28 with less than $10 million in assets under management.

Echo Street manages $13 billion as of June 2023.

It’s a fascinating story of learning and continuously improving one’s investment process.

Danaher used DBS to build a $200 billion company and generate a 45x return.

Billionaire investor Dan Loeb believes studying Danaher is worth more than a 2-year MBA.

In this thread, we’ll dive into the actual tools & tactics behind their success - Danaher Business System (DBS): Before jumping in, if you haven’t seen my last thread (pinned on my page), I recommend you review it to get an overview of Danaher.

In this thread, we’ll deconstruct the playbooks used to build this $200 billion company.

As far as I know, DBS has never been studied like this!