Successful investing is hard work because it means disciplining your mind to do the opposite of human nature. Buying during a panic, selling during euphoria, and holding on when you are bored and crave action.

More from Ian Cassel

Poor Investors often disguise inexperience with arrogance. Rich investors disguise experience with humility. The richest person in the room is usually the quietest one in the room. The poorest person in the room is usually the loudest one in the room.

Ian Cassel
@iancassel

One of my favorite

Forbes estimates that Beanie Baby creator Ty Warner’ net worth is $2.7 Billion. This is an amazing achievement considering a bulk of it was earned during a 3-year time frame selling a $5 per unit stuffed animal.

The fact that Ty Warner’s Beanie Babies were able, without the benefit of a single ad, to outpace the combined annual profits of the largest toymakers in the world for even a few years is unprecedented.

To illustrate how quickly the bubble grew - In 1995, Ty Warner’s company Ty Inc had sales of roughly $28 million. In 1996 sales were $280 million with $90 million in pre-tax income. By 1998, Ty Inc sales reached $1.34 billion with pre-tax income of $700 million.

In Ebay’s 1998 Annual Report it disclosed Beanie Babies as material. “At times, approximately 7% of our listings involved Beanie Babies”. Furthermore, it was said that 10% of Ebay sales at the time were derived from Beanie Babies.

Ian Cassel
@iancassel

Your portfolio will naturally concentrate itself, the way it should be, into your winners if you just stay out of the way.

Ian Cassel
@iancassel

Great post. Lots of similarities with how you invest and successful microcap investing. The first bet is about the broad strokes. The subsequent bets is when you see the details fill in and average up. Buy low and then don’t be afraid to buy higher - sometimes aggressively.

Spoke to a group of students from London School of Economics this morning. So many great questions. As usual, multiple Qs gravitate around \u201chow do you know?\u201d Or how did you know or how could you know? It\u2019s the reason I wrote this. https://t.co/aECMjIFxw0
— Ho Nam (@honam) June 27, 2021

Ian Cassel
@iancassel

I became financially independent in 2008 at age 27. Or as my Father likes to say, I retired. Yeah right. It’s more like you exchange security for total insecurity.

I get asked a lot about how much capital you need to become a full-time investor. That answer will be different for everyone. It’s a personal decision. I was single with no kids living in Lancaster, PA. It was a great time to make that decision.

I would say a much better question is how much pain can you endure.

Can you sustain a 30-40-50% drawdown while also drawing it down to pay bills?

How would this affect you emotionally, psychologically?

Would two or three bad years in a row cripple you?

At what point would your investment strategy start to crumble by these emotions?

At what point does my advantage of “focus on the long-term” shift to “this next quarter needs to be good” or else..

Am I mentally prepared to perhaps go to my wife and tell her I failed and can’t support us anymore? That I need to get a job, that she needs to get a job.

More from Wise investing

Krishna Bahirwani
@BahirwaniKrish

Live tweeting highlights from our discussion with @SamitVartak moderated by @ishmohit1 and the DIA gang. @saket1974 @saketreddy @dadalife369 @cautkarshpandey @vishal_chandi

So let’s begin -

1. Before looking at the valuation of a business, look at the fundamentals first.

On cyclicals -

2. We look for profit power, the ability of the company to control price and gauge profit. This is why we don’t look at cyclicals.

3. With cyclicals, oftentimes the promoters themselves cannot predict pricing and profitability.

On building a portfolio -

1. Reducing the size of your portfolio too much can make it harder to find big winners, the ones that can give up to 40x in 10 years.

2. I look at 15-20 stocks as a balance between not spreading yourself too thin and not takeing too much risk.

On taking away market share -

1. Creating disruptions and innovating with new products allows you to take away market share. Example #APLApollo and the DFT technology.

2. Cash cows don’t deliver outsized returns for an investor. Aggression and innovation is needed.

On themes -

1. It is very difficult to pre-empt a theme before it happens and predict how it will play out. Instead of that, I look for data.

2. Deleveraging and capex is taking place. Companies have become lean in this period.

Ram Bhupatiraju
@RamBhupatiraju

Excellent list of "Investing Lessons". Very relevant and useful stuff for individual investors. h/t @FMUndercover

The List 👇

Christopher Bloomstran
@ChrisBloomstran

There were some smart folks there before Mr. Buffett. Weston Hicks & his preds at $Y. Larson at Cascade. If you followed what Hunter Harrison was doing at the CN you’d have been there. It had been such a lousy industry I ignored it. Figure out why smart people are in bad assets.

In hindsight, it obviously was a steal...but I think I would have come to the same (wrong) conclusion you did at the time of the announcement.

Given this info in hindsight, what would you do differently if you came across a similar situation today?
— Deliberate Capital (Corbin) (@corbinw22) August 9, 2021

Intrinsic Compounding
@soicfinance

Out of 17 stocks that I own, I am allowed to go wrong in 2-3 of them. Not going wrong shows that you are not taking enough risks or operating on the edge. Learning from mistakes is the number 1 way to improve as an investor. An excerpt from the annual letter :)

Dinesh Sairam
@Dinesh_Sairam

@abhishec_s @Sanjay__Bakshi The most rational course of action is to buy below your expected value, hold when it's between your expected value and overvalued zone and sell above overvalued zone (No in-betweens or holding extra cash).

But there are many impediments in executing each step.

What are the features of a normal urine?

A normal urine should have a light yellow colour, painless, odourless (or faint smell), steady stream and should ideally not foam when you pee.

When there’s something wrong, then you see changes in all the above normal features of urine.

For instance if urine becomes very deep yellow, it may mean you are dehydrated;

If urine becomes painful or smells really really bad, it may mean you have an infection;

If urine has a poor stream, especially in a man, it may mean a prostate problem like cancer.

Do you get me?

So today let’s talk about Foamy Urine.

What are the things that can cause urine to suddenly be foamy. As I said in the first tweet, it MAY mean a serious medical illness like a serious kidney problem.

First things first- it does NOT always mean a problem but it may as well.

Now what are the causes of Foamy Urine:

1. SPEED-
If you pee really fast or with a lot of force, it may make your urine more foamy than usual. The speed and force makes the urine generate a lot of bubbles which tend to almost quickly disappear as it is formed in the toilet bowl.

Patrick McKenzie
@patio11

So the cryptocurrency industry has basically two products, one which is relatively benign and doesn't have product market fit, and one which is malignant and does. The industry has a weird superposition of understanding this fact and (strategically?) not understanding it.

If everyone was holding bitcoin on the old x86 in their parents basement, we would be finding a price bottom. The problem is the risk is all pooled at a few brokerages and a network of rotten exchanges with counter party risk that makes AIG circa 2008 look like a good credit.
— Greg Wester (@gwestr) November 25, 2018

The benign product is sovereign programmable money, which is historically a niche interest of folks with a relatively clustered set of beliefs about the state, the literary merit of Snow Crash, and the utility of gold to the modern economy.

This product has narrow appeal and, accordingly, is worth about as much as everything else on a 486 sitting in someone's basement is worth.

The other product is investment scams, which have approximately the best product market fit of anything produced by humans. In no age, in no country, in no city, at no level of sophistication do people consistently say "Actually I would prefer not to get money for nothing."

This product needs the exchanges like they need oxygen, because the value of it is directly tied to having payment rails to move real currency into the ecosystem and some jurisdictional and regulatory legerdemain to stay one step ahead of the banhammer.