🔑 Sieva's 3 favorite tweets this week + how I think about Asymmetric Investing
🔑 #1 - Invest in Asymmetric Opportunities
When investing, focus your attention on asymmetric returns.
We only invest in a business if our downside is "we get our money back", and our upside is uncapped profits. It's simple as that.
How do we do this?
We buy small private businesses.
Why is that important?
My estimation is there are 100,000+ businesses for sale at any given time in the US. Less than 25% of those will sell (most of these we would never consider).
But we don't need thousands of companies.
We just need to buy 1 great company per year.
It's a waiting game. If we wait long enough, we will find an incredible business at a great price.
And our investing horizon is indefinite, so we're happy to wait.
Full thread of the tweet above.
🔑 #2 - Own Assets
The most important take-away from this thread is "own assets that can raise prices".
The US Dollar is not pegged to anything.
Why is that important?
Some things in history will always repeat:
- Politicians will create new ways to spend money on constituents (it feels good, and wins votes)
- The Federal Reserve will get pressured into Quantitative Easing (QE) to stimulate economy growth
Both of these actions increase the money supply.
If the money supply dramatically increases, the value of a single dollar decreases.
What do we do about it?
If you believe the two points above to be likely and true, then you need to own assets that can increase their prices.
A cash flowing business is the best inflation hedge.
This doesn't mean you need to own the whole business. You can own the stock of a few great companies. Or cash flowing real estate too.
I thought the rest of the thread above was a bit disorganized, but if you're curious to see it, you can find it here.
🔑#3 - Save Money
The best business lesson my mother taught me was the importance of saving money.
Some parents find joy in buying things for their kids.
Not my mother.
We had very little money growing up.
Even when my grandmother would gift me cash, my mother always encouraged me to save it.
She never asked me "what do you want to buy?".
She always said something along the lines of "why don't you save that for later? Then you'll have more money."
Ultimately I saved 100% of my money and never bought anything with it.
If you want to be a good investor, delayed gratification is the most important skill you can build.
If you can save enough money, you can put your money to work for you.
Your money will make money.
That's the dream.
Have a great week!
Sieva
