Wow, thank you Conor, for the kind words and the fantastic breakdown.
I am very aligned with the idea that each investor competes with its own goal. In my case, I care about improving my craft so that the "recipe" that led me to do well with Palantir and Robinhood could become quite repeatable over time.
Sharing a public track record is my way of sharing this path against myself.
"Suppose he sold everything, allocated 100% to cash, and did nothing for a decade1. The CAGR would be 17% (before inflation)— a 700 bps surplus to the lifetime CAGR (10%) of the SPDR S&P 500 ETF, SPY."
"To repeat the above comment once more highlights the bliss of being an individual. None of that shit really matters to an individual."
I sorta disagree with this.
For the most part, those metrics are supposed to reflect the risk that was taken in achieving the return achieved. I don't subscribe to their methods, for the most part - such as measuring the risk by the volatility - but I agree with their notion. Risk is the idea that more things could have happened than did happen.
I think the distinction as to whether such metrics (or the less tangible thing that they are trying to represent) matter is not so much between the individual and the institution as it is between hindsight and the future. An institution cares about those things because it must now reuse (to some degree) the strategy that produced those returns - and while those returns are known, the future ones are not. The individual has the freedom not to care because he may now, as you say, stick his cash in a savings account and go drink cocktails on the beach.
But if an individual goes to a casino and wins it big, are the risk-adjusted metrics of any relevance to him? In terms of whether such a move was a "good choice" - yes.
Amazing article Conor! Love the high level perspective of UK households and the fact that actively investing in tax efficient vehicles is already a huge deal towards financial freedom and that everything shouldn’t always be compared. We forget that the vast majority of equities are owned by the richest in our countries, an individuals saving and investing should be celebrated more often.
Luck is always a factor; as you said, the shorter the time frame, the more it matters. I do however like the definition of luck by Seneca: When preparation meets opportunity.
An example: My nephew bought Tesla a decade ago without doing any work. He was enamoured by Musk. Did he make a great return? Absolutely. Did he hold for a decade? Absolutely not. He lacked conviction during drawdowns. 😊
Wow, thank you Conor, for the kind words and the fantastic breakdown.
I am very aligned with the idea that each investor competes with its own goal. In my case, I care about improving my craft so that the "recipe" that led me to do well with Palantir and Robinhood could become quite repeatable over time.
Sharing a public track record is my way of sharing this path against myself.
"Suppose he sold everything, allocated 100% to cash, and did nothing for a decade1. The CAGR would be 17% (before inflation)— a 700 bps surplus to the lifetime CAGR (10%) of the SPDR S&P 500 ETF, SPY."
I confess I thought of this...!
Thanks for inspiring the post and for being so transparent. Love to see you winning sir 💪🏼
But if you buy the etf, then you can't learn and play the game anymore. And I suppose that's what makes it exciting? Congrats by the way 😉
That's the problem. I love the adrenaline of being "forced" to learn to give a sense of what I do!
Thank you Kevin!
"To repeat the above comment once more highlights the bliss of being an individual. None of that shit really matters to an individual."
I sorta disagree with this.
For the most part, those metrics are supposed to reflect the risk that was taken in achieving the return achieved. I don't subscribe to their methods, for the most part - such as measuring the risk by the volatility - but I agree with their notion. Risk is the idea that more things could have happened than did happen.
I think the distinction as to whether such metrics (or the less tangible thing that they are trying to represent) matter is not so much between the individual and the institution as it is between hindsight and the future. An institution cares about those things because it must now reuse (to some degree) the strategy that produced those returns - and while those returns are known, the future ones are not. The individual has the freedom not to care because he may now, as you say, stick his cash in a savings account and go drink cocktails on the beach.
But if an individual goes to a casino and wins it big, are the risk-adjusted metrics of any relevance to him? In terms of whether such a move was a "good choice" - yes.
First of all, I think the name of your newsletter is brilliant- kudos. Second, thanks for taking the time to read and comment.
Third, it's a valid point. I did elaborate on this in a draft, but I tend to be quite long-winded so sometimes I remove stuff during the final edit.
I agree that you 'can' ignore them as an individual and that if you choose not to there is value in doing so as well. For sure.
Great stuff as always.
Thank you!
Reminds me of my favorite way of thinking about measuring success: return/stress.
First learned about it here:
https://fundooprofessor.wordpress.com/2012/04/05/returns-per-unit-of-stress/
Enjoyed this piece, Conor! Glad you approached the topic from different angles, too.
Appreciate it Paul!
I think there are similar dimensions here https://www.philoinvestor.com/p/you-cant-beat-me-
Amazing article Conor! Love the high level perspective of UK households and the fact that actively investing in tax efficient vehicles is already a huge deal towards financial freedom and that everything shouldn’t always be compared. We forget that the vast majority of equities are owned by the richest in our countries, an individuals saving and investing should be celebrated more often.
Thanks for taking the time to read and comment!
Luck is always a factor; as you said, the shorter the time frame, the more it matters. I do however like the definition of luck by Seneca: When preparation meets opportunity.
An example: My nephew bought Tesla a decade ago without doing any work. He was enamoured by Musk. Did he make a great return? Absolutely. Did he hold for a decade? Absolutely not. He lacked conviction during drawdowns. 😊
I do like that description of luck. I think it mostly applies.
Great piece on the importance of long term returns. Well written!
Thank you kindly!
1) "For every individual who made a killing shoving the stack into a stock at the right time, there are 99 who went all-in with the losing hand."
2) "the cat that never sat on a hot stove before will continue sitting on the stove, assuming it will be cold, until the day it is not."
https://blog.inverteum.com/p/individual-stocks-fools-game
Will read, thanks for sharing and reading.
And so by the same token if BRK bought AAPL much earlier and put ALL their capital in it, they would be better investors than they are now :)
If return is all that matters I mean. Which I know is not what you are arguing for 🦉