It can sometimes feel that all the exciting things have already happened, that the frontier is closed, that we’re at the end of technological history and there’s nothing left to do but maintain what already exists. This is just a failure of imagination. In fact, the opposite is true. We’re surrounding by rotting incumbents that will all need to be replaced by new technologies. Let’s get on it.
Investing Is Identifying Mispricings
Success in gambling doesn’t go to those who pick winners, but to those with the ability to identify superior propositions. The goal is to find situations where the odds are generous to one side or the other, whether favorite or underdog. In other words, a mispricing. It’s exactly the same in investing. People often say to me, ‘XYZ is a great company with a bright future, so I bought the stock.’
They’re picking a favorite but ignoring the proposition. The former alone isn’t enough; they should consider the latter as well…. While in investing we generally aren’t offered explicit odds, the attractiveness of the proposition is established by the price of the asset, the ratio of the potential payoff to the amount risked, and what we perceive to be the chance of winning versus losing.
Students Rise To The Level Teachers Expect
Balancing Responsiveness and Leverage
Alfred Sloan summed up decades of experience at General Motors by saying, “Good management rests on a reconciliation of centralization and decentralization.” Or, we might say, on a balancing act to get the best combination of responsiveness and leverage.
– Andy Grove, High Output Management
Confidence Comes From Hard Work
People don’t realize I’ve put a lot of my life into what I’m doing right now. I didn’t just have a hit record and get lucky. I put a lot of my life into it so the things that come out of it is not due to bravado and arrogance. I have confidence because of the work that I’ve put in, and I’ve put in so much work.
If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.
Stories and Numbers
Every investment is valued by taking a number from today and multiplying it by a story about tomorrow. Sometimes an asset is mostly numbers, sometimes it’s all story.
Assets, Earnings Power and Growth
A further advantage of the value investor’s approach-first the assets, then the current earnings power, and finally and rarely the value of the potential growth-is that it gives the most authority to the elements of valuation that are most credible.
– Value Investing: From Graham To Buffett And Beyond