Things I learned this week (July 9, 2024)
Jul 8, 2024
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Spotify Podcast Link: https://spotifyanchor-web.app.link/e/PReakOZi5Kb
Resources I learned from: A Random Walk Down Wall Street Podcast: Acquired - Berkshire Hathaway parts 1, 2, and 3 Company research: Berkshire Hathaway Websites: Ernestine Fu: All You Need to Know About Venture Capital https://www.youtube.com/watch?reload=9&app=desktop&v=qieDyvn6q0Q 10 powerful visuals to power your career https://www.linkedin.com/posts/lokenauth_10-visuals-to-change-the-way-you-think-activity-7212936235332317184-nr2I/?utm_source=share&utm_medium=member_ios
Book - A Random Walk Down Wall Street
Quick Summary
1.What is the main idea or thesis? "A Random Walk Down Wall Street" by Burton G. Malkiel posits that stock market prices are unpredictable and follow a random walk. It emphasizes that a diversified portfolio of low-cost index funds is the most reliable way for individual investors to achieve long-term success.
2. What are the key points or arguments? Efficient Market Hypothesis (EMH): Markets are efficient and reflect all available information. Random Walk Theory: Stock prices are random and cannot be consistently predicted. Investment Strategies: Advocates for passive investing through index funds over active management. Behavioral Finance: Examines how psychological factors impact investor behavior and market outcomes.
Personal Insights
3. What are your personal insights or thoughts? Malkiel's argument that markets are efficient and that passive investing outperforms active strategies resonates with the empirical evidence of the last few decades. It challenges the traditional belief that skilled investors can consistently beat the market.
4. How can you apply this information in your life or work? Adopting a passive investment strategy by investing in diversified index funds can be a prudent approach to managing personal finances and retirement savings, reducing the costs and risks associated with active trading.
Actionable Takeaways
5. What are the most important takeaways? Markets are efficient, making it difficult to outperform through active management. Diversification and low-cost index funds are key to successful investing. Understanding and mitigating the impact of psychological biases can improve investment decisions.
6. What specific actions can you take based on what you've learned? Invest in broad-based index funds to diversify risk. Minimize investment costs by avoiding high-fee active funds. Educate oneself about behavioral finance to avoid common investment pitfalls.
Sharing
7. Who would benefit from this information? Individual investors, financial advisors, students of finance, and anyone interested in understanding stock market behavior and improving their investment strategies.
Diving deeper
8. What are my next steps to dive deeper? Read more on the Efficient Market Hypothesis and behavioral finance. Follow financial news and analyze market trends through the lens of random walk theory. Explore other works by Burton G. Malkiel and related literature on passive investing.
Trust
9. Do I trust the source? Yes, Burton G. Malkiel is a respected economist and professor with a long-standing reputation in the field of finance. His book is well-regarded and widely cited in academic and professional circles.
10. Identify bias Malkiel strongly advocates for passive investing, which might bias his critique of active management. However, his arguments are supported by extensive research and empirical evidence.
Podcast - Berkshire Hathaway Part 1,2,3 - Acquired
Quick Summary
What is the main idea or thesis? Logistics is the reason for success Outperform the market 20% compounded annually since 1965 VS 10% S&P 500 Markets are not efficient
What are the key points or arguments?
Part 1
Money can create more money. (aka "Compounding")
Align incentives: be a doctor, not a prescriptionist.
You can't expect to control other people's emotions around money (or anything else).
Sins of omission (selling or passing) nearly always cost more than sins of commission (buying).
Part 2
Change your mind. Evolve. Reinvent.
Focus on getting a few simple things right — and the rest takes care of itself.
Risk ≠volatility. Risk = chance of going out of business.
Never wrestle with a pig. You both get dirty and the pig likes it.
Part 3
The Berkshire Hathaway "Culture"
You need different strategies at different company scales and points in time.
There are huge advantages to a company structure where one person makes all decisions.
Never Bet Against The Internet. (aka the "Rosenthal doctrine") Continue to learn and develop always no matter what Warren Buffett was the world's greatest status quo investor - if the world stays somewhat the same he is good but now more change is happening
Personal Insights
3. What are your personal insights or thoughts? Things don't happen for no reason. Instead when gambling you need to be the house and make it so you always win systematically through logistics
4. How can you apply this information in your life or work? Always have logistical ways to win… not put it up to luck
Actionable Takeaways
5. What are the most important takeaways? Not only do you need to find the logistics but you need to be the only ones to understand the logistical competitive advantage.
6. What specific actions can you take based on what you've learned? You need to be learning, understanding, and keeping up to date with all info in order to know something that all other professionals don't know. You need to be extreme in order to find extreme opportunities for arbitrage You are your own biggest investment Warren Buffett reads for 7 hours every day
Sharing
7. Who would benefit from this information? Investors, business leaders, curious people
Diving deeper
8. What are my next steps to dive deeper? Berkshire Hathaway's yearly and quarterly reports Berkshire Hathaway annual shareholder meetings
Trust
9. Do I trust the source? Acquired is very successful in doing so much research and telling in-depth stories
10. Identify bias They need to keep listener's attention so they likely avoid more dull details that might make the story less clean
Berkshire Hathaway Company
Berkshire Hathaway Question: Can people actually outperform the market as "A Random Walk Down Wall Street" said was not possible? About the company: Berkshire Hathaway, led by Warren Buffett, is renowned for its exceptional long-term investment performance. Buffett's value investing approach has consistently outperformed the market, raising questions about the Efficient Market Hypothesis (EMH) and random walk theory. Connection: Buffett's success suggests that while markets are generally efficient, certain investors with unique strategies and insights, like Buffett, can indeed outperform the market over time. Thoughts While "A Random Walk Down Wall Street" asserts that consistently beating the market is unlikely, Buffett's track record at Berkshire Hathaway demonstrates that it is possible, though rare, to achieve superior returns through disciplined and strategic investing.
Ernestine Fu: All You Need to Know About Venture Capital https://www.youtube.com/watch?reload=9&app=desktop&v=qieDyvn6q0Q
General but has some more specific knowledge
10 powerful visuals to power your career
The Power of Walks ↳ According to a study by Stanford University, walking increases creative thinking by an average of 60%. ↳ Next time you're feeling stuck, take a 15-minute walk.
The Biggest Failure is Never Trying at All. ↳ Embrace challenges as opportunities to learn. ↳ Failure is an inevitable part of the learning process. The key is to embrace it as an opportunity to grow.
Micromanagers hurt Productivity ↳ Micromanagement stifles motivation. ↳ Having someone constantly looking over your shoulder hinders your productivity.
True Leadership is Empowering Others ↳ Being a leader means creating an environment where others can thrive. ↳ Being a leader isn't just about telling people what to do; it's about helping others grow and become leaders themselves.
The Power of Mindset ↳ Your thoughts shape your words, influencing your actions and becoming habits. ↳ A positive mindset makes you feel more motivated and confident to take action.
The Benefits of Sleep, Nutrition, and Exercise for Peak Performance ↳ Taking care of your physical and mental health is crucial for your productivity. ↳ Make self-care a priority, and you'll see the benefits in your personal and professional life.
Overcome Procrastination ↳ Break your tasks into smaller, manageable parts, focusing on one thing at a time. ↳ The key is to take that first step. Use tools like the Pomodoro Technique or the Eisenhower Matrix to prioritize your tasks and manage your time effectively.
The Recipe for Career Success ↳ When you work with great people, you push each other to improve. ↳ Collaborating with talented individuals inspires you to reach higher.
Learn from Your Mistakes ↳ We all make mistakes; that's part of life. ↳ View mistakes as opportunities for learning and growth.
Embracing Introverts and Extroverts ↳ Introverts often excel at deep thinking and one-on-one connections. ↳ Extroverts often excel in group brainstorms and networking.
This week's startup work/personal learnings
Notes: Weekly keep up to date with info of industry you are interested in
Take all info with grains of salt Efficient market theory VS Berkshire Hathaway outperformance of market
Final Takeaways
Efficient Market Theory VS Berkshire Hathaway outperformance of market
Take all info with grains of salt
Weekly keep up to date with info of industry you are interested in
You and your time are your own biggest investment (Warren Buffett)
Logistics to systematically beat the odds If you don't like the odds, change the odds
TAKE ALL INFO WITH SALT!
Beating the market is extremely challenging
