Here are a few psychological tools that can instantly help you to make better investment decisions. Distancing In 1985, Intel has a tough decision to make: expand its core memory chip business that is rapidly losing money due to heavy competition from Japanese counterparts or bet on their nascent but fast-growing microprocessor business. There was […]
Our intuition works like this: Decision → Outcome (feedback) → Better Decision You burn your hand (outcome) after touching a hot stove (decision) or place your feet on the brake (decision) slows down the car (outcome), we use outcomes as feedback to change our actions and make better future decisions. But there’s a caveat. In […]
A few things I learned over the past year. 1. Process first, analysis second, margin of safety last A robust process can prevent a poor analysis but a good analysis can still create silly mistakes. Let’s say a stock is an excellent buy for 10 reasons. That’s a good analysis; your judgment comes from facts […]
Law #1 – Business Return Determine Investor Return This goes back to the first principles of investing: a share in hand is the same as owning a fraction of the underlying business. When you own a company’s share for 10, 20, or 30 years, your return will be similar to the return of the business. […]
Bill Walsh was the head coach of the San Francisco 49ers back in the 1980s where the team won six division titles and three Super Bowls. Here is some wisdom from his philosophy of leadership—The Score Takes Care of Itself. Whether it is in sports or the market, things can unfold differently than we imagine. […]
“We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.” – Richard Feynman Investing is part art, part science. There’s no single formula for success as the future is uncertain, probabilistic, and constantly changing (our forecast changes the outcome). All of which rely on our […]