My Partner Is Much Richer Than I Am – So Why Don’t I Invest Like He Does?

Bill Bonner (partner/mentor/friend) made a massive fortune by investing 80% of his time and money in a single business. He is a cautious investor. But he’s also – from my perspective – a very courageous and committed investor. He sticks to one thing.

I’ve made my fortune, less impressive than Bill’s, by hedging my bets. I invest 80% of my time but less than half of my investible income on my main business. The rest is in proven, income-producing assets that grow without much prodding from me.

I don’t regret investing the way I do. Had I followed Bill’s path, my net worth might have been only a fraction of what it is today.

It comes down to this: To my mind, the most important factor in investment success has to do with psychology. Not the market’s insane psychology, but my own. That’s what I was thinking while reading an interview with Aswath Damodaran, a finance professor at NYU’s Stern School of Business, in Forbes recently.

I liked this bit particularly:

I tell people that the person you have to understand best to be a good investor is yourself. It’s not enough to understand what Warren Buffett does and [what] Peter Lynch does. It might surprise people, [but] I spend very little time reading investment books…

We live in a Google Search world. People think that if they search long enough, they can [find] answers to their questions, when in fact what they need to do is to stop and think about the questions and think through their answers.

We need to own our own investment philosophies. We need to think through what we think about markets.

If you have a deep understanding of macroeconomics, the investment markets, and you are a courageous and committed investor, you should invest the way Bill does. But if you have only a superficial understanding of those worlds and limited confidence, you may be better taking my approach: Work your ass off, focus on income, favor investments that you understand, and employ the three cardinal rules of investment safety: diversification, position sizing, and stop-loss strategies.

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Diffidence (noun) –Diffidence (DIF-ih-dunhs) is timidity; lacking confidence. As used by Golda Meir: “Ability hits the mark where presumption overshoots and diffidence falls short.”

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James Altucher on “The BEST Thing About Self-Publishing”

The worldwide web has changed the world. In some ways for the worse. But in many ways for the better. It is, for example, better today for writers that have the tenacity to publish their own books.

The first half-dozen books about business and entrepreneurship that I wrote were published by a major publisher. They sold well. (All of them were Amazon bestsellers. One was a NYT and WSJ bestseller.) But I never made much money from them. I decided after that to publish my own books… and that was far more profitable.

James Altucher tells his own version of this.

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I didn’t know Anthony Hopkins was a composer. I don’t know much about waltzes. I’m sure there are some that would criticize this one, but to me it’s pretty impressive. The audience seems to enjoy it. It could catch on. Imagine – this artistic effort of his could be alive in the culture 100 years from now, after his movies are forgotten.

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