Beware the Tail

Always throw half the CVs of applicants away without reading them. You don’t want to hire someone who is unlucky. There is an existential problem with investing if your goal is to outperform a benchmark. There is always the risk of massive underperformance wiping out even the best of track records. Tail Risks are high impact, low probability events. They can carry the only information that matters, and if you miss them… you didn’t add any value. Two of the most intelligent, clearest thinking, stock pickers I know don’t pick stocks anymore because of mistakes carved into their souls. That lifts them in my esteem. I also know unextraordinary stock pickers with the gift of the gab and political skill. Confidence sells. Wisdom often stays silent. I don’t believe in Gods of investing. I think you make sensible choices and let the cards fall. Manage the risks and do something else that inherently adds value in and of itself. Take ideas like Meritocracy with a pinch of salt. There is normally too little information to see clearly, or so much that it is stale. Our lives, and particularly our working careers, are just blips in the time scales of long-term wealth creation. The key is custodianship, not immortality.