I’ll be keeping note of my lessons learned as a private investor and also my previous experience as a tech entrepreneur.
- In the market, only 1 thing matters: Supply & Demand. Never fight the present strongest force that drives price & direction. In Equity Markets, from 2009-2019, it was QE/Fed Printing pushing up Stocks. In 2020, again, the Fed has pushed up Stocks. Opinions don’t matter.
- Risk and worry go hand in hand. If you’re not worried then you’re probably not risking enough. Always play for meaningful stakes but don’t bet amounts whose loss would bankrupt you. Nobody becomes rich without some kind of big risk taken.
- I agree with Gerald Loeb, one of Wall Street’s great traders, when he once said: “All investment is speculation. The only difference is that some people admit it and some don’t.”
- Focus 70% of your resources on near term payoff base-hits, 20% on longer term doubles and triples, and 10% on transformational home runs.
- Always take your profit too soon: short modest winning streaks are the most common. Decide in advance what you want from a venture, and when you get it, get out. This is extremely important especially in highly volatile markets like crypto.
- Cut your losses; you are right at most 50% of the time. When the ship starts to sink, jump. Take small losses to protect yourself against big ones. Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.
- Be cautious about long-range plans. Planning is useful but you must adjust as you go. Periodically evaluate all that you have invested in.
- The majority is probably wrong: think things through on your own. Never follow a fad: the best time to buy something is often when nobody else wants it.
- Optimism is expecting the best, confidence is knowing how you will handle the worst. Never make a move if you are merely optimistic. Know how you will handle the worst.
- Your intuition can be trusted if it can be explained. First determine if you have a rich enough experience base to have formed a viable hunch. Don’t confuse a hunch with a hope: put more trust in hunches about negative outcomes.
- Beware of getting too comfortable. Do not become trapped in a souring venture because of loyalty or nostalgia. Keep your eyes open to better opportunities at all times.
As an investor for the long term, Buffett said the best move is the easiest: buy and hold. He quotes Rudyard Kipling’s “If”:
If you can keep your head when all about you are losing theirs …
If you can wait and not be tired by waiting …
If you can think – and not make thoughts your aim …
If you can trust yourself when all men doubt you …
Yours is the Earth and everything that’s in it.