Guest Interview: Pythia Capital

(Edition Number: Seventeen)

Good morning,

Today we are welcoming Pyhtia Capital to kick off the seventeenth edition of the guest interview series. Anonymous for obvious reasons, you will recognise our guest today as the gentleman who posts under the Twitter handle, @PythiaR.

“I view investing as testing a hypothesis. You start by establishing the state of knowledge: study the business, study competitors, learn about the industry etc. You then form an opinion about what will happen. You then invest behind that belief.

Once you’ve invested, you are running iterative tests. You refine your view. Your hypothesis was that if you dropped the ball it would bounce. You test it, and indeed it works. Then you refine it: if I drop it from this height, it will bounce this high. You can keep repeating that.

Investing is like that too. Your initial thesis might be that the stock goes up because it’s in an expansion phase of a cycle. Once it gets to the top, you sell it. But imagine if that stock didn’t go down because you were…