“The four most expensive words in English are ‘This time it’s different’.”
— Sir John Marks Templetonin 1999 called “the world’s largest stock picker of the century”
recent old videos resurfaced on social mediaYou’re the one asking Warren Buffett and Charlie Munger at the 2008 Berkshire Hathaway shareholder meeting.
A trembling voice was clearly audible, and I became extremely nervous.
The clip went viral and was picked up by many media outlets (wall street journal, business insider, ) reached out to me for comment and asked questions such as, “What advice would you give a 30-year-old who has just won his first million dollars?”
Due to space constraints I was unable to include my complete answer.
I decided to write this blog post to share some extended thoughts.
First of all, how did you actually get the coveted mic and question the Oracle of Omaha? Here’s the full story and strategy. I’ve also shared highlighted notes from the event for those interested.
Recent first headlines and subheadings WSJMore The piece when I looked at it looked like this:
fair enough. I have studied Warren for a long time. his letterand having invested a lot according to his principles, this makes sense.
But then there is this strange development…
Since the heading above was used, printing platea few things briefly.
of WSJMore This piece makes some great points and highlights an arrogance we all need to watch out for ourselves, but I don’t recognize myself as a Warren Buffett wannabe .
To be fair, the piece doesn’t describe me as such directly, but the casual reader might conclude it based on the headline. and I highly recommend the book Seeking Wisdom: From Darwin to Munger and A few lessons for investors and business owners from Warren Buffett, even if you don’t consider yourself an investor. But I don’t want to be Buffett in everything. I also gave strong advice to anyone trying to mimic my investment approach with technology, so I’m more of an anti-cheerleader than a cheerleader.
But perhaps most importantly, the printed edition states:Ferris ignored these pearls of wisdom [to invest in low-cost index funds]” of WSJMore has kindly updated the digital version, but I’ll correct it here in case I missed it. I fully admitted that I was a public equity amateur and didn’t own a stock, so I invested a good amount in low-cost index funds. competitive advantage. For me, this applies to almost all asset classes.
There is one exception. I am an early stage angel decided to “go pro” by investing in technology. The result is a much higher return than if you invested all your savings in low-cost index his funds in 2008.
i highly recommend Against This is true for 99.99% of people, but I approached it systematically. More on that below.This is also worth reading The Power Law: Venture Capital and Creating a New Futureprovides an idea of how this world works, how the economy may or may not work, and what assumptions are made in investment strategies. For an angel investor without a stake, “winning” generally means acquiring a significant portion of your net worth in one to three companies.
Is it anti-Buffett? no.of Same 2008 conferenceBuffett somehow repeated several things he said or wrote over and over again.
“Diversification is for investors who know nothing.”
“There have been several times when I had 75% of my net worth in one situation.”
“So it turns out that … — if you’re working with a small amount — not putting in half your net worth is a mistake.”
But…these only apply if you are willing to lift a lot of heavy weights.
If someone asked me to give investment advice to a 30-year-old who had just made a million dollars, I would direct them elsewhere. I am not a financial advisor, nor am I qualified to give financial advice to anyone. Details are too important. But if they insist, I might say:
(1) If you want to participate in early-stage technology investments (or high-risk, high-return), plan to develop a huge information advantage. Aim to build new skills and relationships through your portfolio companies, even if many bets are “failed” to zero. Only bet what you can afford to lose and what you can get back in some other way. My angel investments snowballed, but I started with his $10,000 check and sweat his equity advice. Think of this as actual MBA tuition. Do you want me to move to the hub of activity to ensure the best possible information and deal flow, like when I moved to SF Lifetime ago? Are you willing to make the commitments and sacrifices that are worth it? If not, we recommend choosing another game. Others will take the initiative you don’t and beat you. Many of the early stage investments are supportive, no kidding. A lot of it is competitive and not everyone can make it to the podium.
(2) The rest, maybe all, follow Buffett’s advice. Keep it simple.
One notable example of doing the opposite: catching the COVID curve ball early, making many very “sophisticated” (complex) investment-related decisions, conducting relevant research, Chewed diligence, phone calls and more. An incredible amount of time and energy. After 18-24 months I was doing very well and decided to look at how the S&P 500 passive his returns add up over the same period. And…they were pretty much the same. Of course, you can’t always expect this result, but be careful not to ask for complexity if problem-solving has been rewarding all your life. Looking back over the past 15 years, The handful of investment decisions that made all the difference Simple, somewhat obvious to me, and didn’t require any major gear grinding.
(3) Knowing when to buy is not enough.Have policies and rules about when you sell and the universe punishes you very bad very expensive decision.
(Four) Don’t underestimate luck, including lucky timing. I started angel investing in earnest in 2008 and saw a golden opportunity: converging trends, cheap valuations (by today’s standards), and an uncrowded playing field. The financial crisis has culled out a swarm of investors and sun-kissed founders. It was a target-rich environment, even for those with little to invest in. Micro VCs had just come out of their shells and big companies hadn’t started attacking seed-stage stuff. Looking back, it was a very rare combination. I don’t think we can replicate what we did in 2008-2012 now.
(Five) Personally, I’ve strayed far from angel investing and have focused more on writing and podcasting (The Tim Ferris Show, will soon reach 1 billion downloads). This comes from a desire to be more predictable and less stressful. I love the excitement of startups and have been lucky enough to succeed, but nothing is more interesting than developing a creative muscle that delivers predictable returns year after year. For me, it’s definitely compounded more than an all-or-nothing bet. I think simplicity is the name of the game in this chapter of my life (e.g. remove 100 decisions he finds 1 decision).
(6) Overoptimization isn’t nearly as bad as underoptimization. After a certain point it makes no sense to buy extra skittles. Note to myself: Stop messing with that fucking spreadsheet, Get more interesting hobbies in your calendar. Hobby? that’s right.
(7) Given that the purpose of investing is ultimately to improve your quality of life and the quality of life of those you care about most, investments that consistently stress you over the long term are: Money is exchanged for things and experiences that arouse certain emotions. If your investments are producing emotions on the opposite spectrum, it may be time to reassess.
It’s easy to miss the forest for the trees. Money is a means, not an end.
And in the end, most things matter little. Do something to help you sleep at night and wake up with a lower heart rate. To me, these are the hallmarks of a world-class investor who sees the big picture.
Related posts on this blog:
How to Create Your Own Real World MBA (I)
How to Create Your Own Real World MBA (II)
How to Say No When It Matters Most (or “Why I’m Taking a Long ‘Startup Vacation'”)
Warren Buffett Preparing: The Art of the Elevator Pitch
Choosing Warren Buffett’s Brains: Notes from a Beginner
Exclusive Warren Buffett — Some Lessons for Investors and Managers
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The Tim Ferris Show is one One of the world’s most popular podcasts with over 900 million downloads. He has been voted “Best of Apple Podcasts” three times and is often the #1 interview on all of his Apple Podcasts. Ranked.To listen to past episodes for free, check out this page.