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I.   It ain't easy. If it were...

...managers would last longer than one cycle. Investing is hard. And people don't like to be wrong. Lack of willingness to be wrong is what drives most [aspiring] investors mad, or broke. Be wary of those who pretend it's easy or have quick answers for every question.

II.  Respect what you don't know...

...because it's more than what you do. Overconfidence, arrogance, and silky smooth persuasion - each of these are virtually incompatible with long-term investment success. Investing requires a constant, healthy respect for the unknown.

III. Understand Value...

...because there's no other way. Every investment is based on a thesis - a premise and linkage of assumptions - that the price of something will be more in the future than it is today. Hence, our efficacy is a matter of the quality of our decisions. And our decisions are a function of the quality of our process.  

Investment Principles

  • Long-term sustainable investment success is the result of continuously enhancing a systematic, probabilistic, and asymmetric decision-making process; combined with avoiding risks that could (or will eventually) lead to collapse.

  • All investment decisions are a function of expected returns. Expected returns are a function of (1) the estimated value above the current price, (2) the probability of being right [or wrong], and (3), most importantly, magnitude of gains if one is correct vs. severity of losses if one is wrong.

  • Markets are inherently complex and emotionally and intellectually challenging.

  • One must be able and willing to be wrong and, in fact, look forward to those occurrences; understanding them as useful learning opportunities and an essential component to long-term superior results.

  • One cannot expect to "win" with every investment or beat the market every period. Seeking to do so is futile.

  • Use short-term price movements to your advantage, rather than the other way around.

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