In last week’s arti­cle I talked about long-term dou­ble mar­ket returns and whether or not they could just be luck. The sta­tis­tics sug­gest­ed that isn’t the case.

This week I don’t real­ly have a “myth killer”. It’s more of a “why is it so” Pro­fes­sor Julius Sum­n­er Miller arti­cle.

This week’s myth: Invest­ing suc­cess is about willpow­er.

Anoth­er one of Mor­gan House­l’s “100 Lit­tle Ideas ” leaped out at me this week.

Mor­gan Housel has a blog post called [“100 Lit­tle Ideas”](https://collabfund.com/blog/100-little-ideas/). It’s a list of con­cepts from dif­fer­ent fields that help explain how the world works, and num­ber 52 on the list is ‘Feed­back Loops’.


Last week I wrote about Richards Heuer’s “Psy­chol­o­gy of Intel­li­gence Analy­sis”, the book he wrote inside the CIA about why intel­li­gent, well-resourced experts reach wrong con­clu­sions from good infor­ma­tion. I’ve kept read­ing it. Chap­ter 12, “Bias­es in Esti­mat­ing Prob­a­bil­i­ties”, is worse for the finan

I’ve recent­ly been read­ing a fas­ci­nat­ing book called “Psy­chol­o­gy of Intel­li­gence Analy­sis” (1999), writ­ten by Richards Heuer, who worked for the CIA for 45 years. He wrote this book ini­tial­ly for inter­nal use at the CIA to pro­vide a method­ol­o­gy for over­com­ing intel­li­gence bias­es by using a frame­work

You’ve heard it a hun­dred times. A stock you own has had a good run, you’re sit­ting on a fat gain, and some­one (your bro­ker, your broth­­er-in-law, the voice in your own head) tells you to take some off the table. Lock it in. Bank the win. Nobody ever went broke tak­ing a prof­it.

Chris­sy and I cel­e­brat­ed our 18th anniver­sary last week­end at a two-day Wing Chun sem­i­nar. As you do.

Our new mar­ket­ing tagline is “Sys­tem­at­ic Out­per­for­mance.” Tony came up with it last week and I love it. Appar­ent­ly he’s not just a pret­ty face. But he also said some­thing else on the pod­cast this week that’s worth drilling down on.


This week I want to talk about one of the old­est chest­nuts in the invest­ing play­book. “No risk, no reward.”

The hottest IPO in his­to­ry hap­pened this week: Elon Musk’s SpaceX (SPCX). We already talked about it a bit on the pod­cast, but in case you haven’t lis­tened to it, here’s my take on it.


I read this sto­ry in Tobias Carlisle’s lat­est book,[ “Sol­dier Of Fortune”](https://www.amazon.com.au/Soldier-Fortune-Buffett-Ancient-Risk-Taking-ebook/dp/B0FT516BDW) (by the way, we inter­viewed him this week, should be out soon).

## The Myth: You need to under­stand inter­est rates, GDP, infla­tion, cen­tral bank pol­i­cy, and geopo­lit­i­cal trends to invest well.

“Microsoft sit­ting at such a low PE was crazy” -[ some guy on reddit](https://www.reddit.com/r/smallstreetbets/comments/1tjk3vp/i_have_been_buying_up_msft_and_now_for_the_past_2/).

[In a recent inter­view on CNBC](https://www.youtube.com/watch?v=XY6o7TnNUUw), War­ren Buf­fett com­pared the mar­kets to a church with a casi­no attached.

### AVERAGE DOWN ON LOSERS

There’s a line in invest­ing, usu­al­ly attrib­uted to Sir John Tem­ple­ton, that the four most expen­sive words in the Eng­lish lan­guage are: _“This time it’s different.“_

Aus­tralians have a near-spir­i­­tu­al belief in prop­er­ty. It’s prac­ti­cal­ly encod­ed in the nation­al DNA. Bricks and mor­tar. Safe as hous­es. You can’t go wrong with real estate.

Peter Lynch once said: “Far more mon­ey has been lost by investors prepar­ing for cor­rec­tions, or try­ing to antic­i­pate cor­rec­tions, than has been lost in cor­rec­tions them­selves.”

When we start get­ting inter­est­ed in val­ue invest­ing, one of the first things well-mean­ing friends warn you about are “val­ue traps.”

In the year 2000, Enron had a P/E ratio of around 60. Wall Street ana­lysts were trip­ping over each oth­er to slap “Strong Buy” rat­ings on it. _Fortune_ mag­a­zine named it “Amer­i­ca’s Most Inno­v­a­tive Com­pa­ny” for six con­sec­u­tive years. The P/E ratio said it was expen­sive but wor­thy of the pre­mi­um. The b

If you’ve ever spent much time read­ing the Investos­phere, you’ll have come across some form of this bon mot of dodgy wis­dom: “Index funds always beat active stock pick­ing”.

On our Amer­i­can episode this week, while talk­ing about Colom­bian oil explo­ration out­fit GeoP­ark, we had rea­son to men­tion the clas­sic val­ue invest­ing book “What Works on Wall Street: A Guide to the Best-Per­­for­m­ing Invest­ment Strate­gies of All Time” by James P. O’Shaugh­nessy (his cousin was a co-foun

This week I want to talk a lit­tle about volatil­i­ty.

I love Peter Lynch.

This week I’ve been read­ing _The Black Hole War_ by Amer­i­can the­o­ret­i­cal physi­cist Leonard Susskind. Fun­ni­ly enough, it got me think­ing about invest­ing.

Ray Dalio, founder of Bridge­wa­ter Asso­ciates and one of the most suc­cess­ful hedge fund man­agers in his­to­ry, once said: “He who lives by the crys­tal ball will eat shat­tered glass.”

If you’ve spent five min­utes read­ing main­stream invest­ment media or lis­ten­ing to the high priests of Old Guard val­ue invest­ing, you’ve heard the ser­mon. They tell you to find a great com­pa­ny, buy it, and hold it until the heat death of the uni­verse. They preach that if you’ve done your home­work, you

### The Pitch You’ve Heard a Thou­sand Times

## The Myth

One of the most per­sis­tent habits in retail invest­ing is the obses­sion with price tar­gets.

Here’s the uncom­fort­able truth most of the invest­ment indus­try would rather you did­n’t sit with for too long.

Okay so this one isn’t real­ly about debunk­ing a “myth” — it’s about debunk­ing the finan­cial press.

### **The Myth**

### **The Myth**