Nothing Pie

There are a few hard truths about investing. The market is both noisy and irrational, and making good decisions is not the only factor in success. It is not even the main factor. The father of Fundamental Investing (“Security Analysis” Benjamin Graham 1934) only outperformed passive investment by about 2% over his career. Making alpha (outperforming the benchmark) your goal is incredibly dangerous. It opens up an existential crisis where an entire career can factually (by your own definition) have added no value. You cannot eat alpha. Alpha on nothing is nothing. 100% ownership of a 10% alpha generating nothing pie is nothing. Often the conspicuous success of investors is based on (1) inherited wealth, (2) big salaries, (3) sales, and (4) fees. The main factor in wealth creation is saving and reinvestment. Getting money a job. Making sure that job adds value. Reinvesting the money money makes. It is not about you, how smart you are, or whether you see the matrix. I am not Neo. You are not Neo. No one is Neo. The world is complicated, ambiguous, and random. There are no heroes. We are all just doing our best.

Take as much as you like

Not Good Enough

When the default is to work full-time for one company, that becomes the container into which we direct most of our energy. I think you get a maximum 4-6 hours a day of really good quality creativity. Where you dig deep into the unique path that has led you to where you are, and connect interesting dots of the paths that have led everyone else to you. The values of the container matter. Lots of businesses, communities and containers discuss “Values” to create an inspirational glue for team members. Often it is platitudes like Excellence and Accountability. That can be a hubris factory. Creating, and sustaining, the idea that those in the container are better than those outside the container. Schadenfreude in the failure of others, and a lack of genuine self-reflection as you defend the illusion of superiority. It is dangerous to categorise others into “good enough” and “not good enough”. We seldom have a complete picture of the story of others. The ability to see them. Relative thinking and comparison is often just a reflection of the voices in the heads of those doing the judging. The voices telling them they, themselves, are not good enough.

Self-Contained

The Gods Envy Us

One of the challenges with investing is when to admit you were wrong. If your goal as a stock picker is to do better than just investing blindly in everything on offer (an index). History is, at least, compelling enough to know that outperforming in 60% of your decisions will raise you to the status of demigod if people give you the credit. But if you underperform more than 50% of the time? If you underperform the benchmark over an extended period? How long is long enough to take the blame? Performance is noisy, which gives lots of space to hide. Going to Zero ends the discussion, but lots of companies stutter along. Max Plank reminds us that Science progresses one funeral at a time. Death is a feature, not a glitch. So how do we know when it is time to let go of beliefs? How do we ensure that we are not so tied to our stories, that we serve them, rather than them serving us? How do you maintain a sell discipline?

"They envy us because we're mortal, because any moment may be our last. Everything is more beautiful because we're doomed."