Seedly PFF 2021.. and Charlie Munger bought Alibaba?!
This week, I had a blast at the Seedly Personal Finance Festival (PFF) 2021 as the workshop speaker for the segment: Everything You Need to Know Before You Start Investing.
I will also be going on MONEY FM 89.3 on 18 May 2021 at 10AM to talk about companies such as Bilibili, iFast, Twilio, Facebook, and Starbucks, so stay tuned!
I. Charlie Munger Buys into Alibaba?!
Charlie Munger seldom makes moves and when he does, he goes big. He’s known for swinging the bat only when the odds are favorable.
And swing the bat he did, making Alibaba his third-largest position at Daily Journal Corp:
P.S. Please do your due diligence and make sure you understand the business!
II. Farnam Street nails it on deliberate practice.
Apply this to investing, sports, or any of your pursuits.
“Deliberate practice means practicing with a clear awareness of the specific components of a skill we’re aiming to improve and exactly how to improve them…
If we want to improve a skill, we need to know what exactly has to change and what might get us there. Otherwise, we plateau.”
III. Lessons from Bill Gurley on Investing
Tail-ends rewards are often underappreciated by investors, especially for companies with smaller market caps. We are often trained to think in terms of risks and margin of safety, and rightfully so. But there is a cost to not thinking about what could go right and just sticking to safety could paradoxically cost us much more.
Think in terms of opportunity cost.
“It’s called asymmetric returns. If you invest in something that doesn’t work, you lose one times your money. If you miss Google, you lose 10,000 times your money. You have to orient yourself toward — ‘What could go right?” And you have to kind of think that way all the time.” “The learning is that if you have remarkably asymmetric returns, you have to ask yourself, “How high could up be?” And then that “what could go right?” Because it’s not a 50/50 thing on the judgment call. Like, if you thought it was a 20 percent chance at doing it, you should still do it, because the upside is so high.” “You have to be very fortunate to fall on what people sometimes refer to as positive black swans, these break-out plays. And I think you could spend your whole career and do extremely well and never get behind one of the ones: A Facebook, a Google, that kind of thing. And it’s almost impossible to predict ahead of time what’s going to turn into something like that.” “The moment that John Doerr and Mike Moritz closed the Google investment, which was probably all of a week and half, it was the biggest event in both those firms for over a decade. And something had happened in a week and a half. And for a lot of those companies, and I’ll include the ones we’re in, if you worked there it probably would have come out that way anyway. So the seminal event was that closing event that was very quick.”