Once I Understood This About Investing, My Life Changed.

People think investing is a getrichquick business and it's not because this is a tough game and most people lose at this game. So I would encourage you to just

game. So I would encourage you to just start and just not tell anybody and then show up 10 or 15 years later with a huge war chest and shove it up their ass.

If you're going to start investing, there's like a couple of rules that I think are very important. The first is I would manually build my own compound interest table and I'll tell you a story

about an incredibly famous athlete. He signed a just a

famous athlete. He signed a just a ginormous contract and I built a a a Google sheet, you know, took this this new salary, took out the taxes, what you

have to pay for the manager and the agent and all this other stuff. And I

showed him a compound interest table and his mind was blown. And I said, "Well, let's back all this off and let's assume it wasn't this, but it was 1/ 1,000th of this." And his mind was still blown. And

this." And his mind was still blown. And

I said, "That is the power of compound interest." I remember when I started

interest." I remember when I started investing, I did this because I was told by everybody how that was the game. And

so I did it for myself.

And it was a very important thing that at least showed me that I'm going to get to these forks in the road constantly, which is about short-term gains and long-term true alpha. I think

there are examples of people like Buffett who have just been incredibly patient and allowed compounding to do most of the hard work. I've definitely

been a little bit too active at times, buying things, selling things, buying things, selling things, changing my mind a lot. But I think that is the first key

a lot. But I think that is the first key step. Build a compound interest table.

step. Build a compound interest table.

So you understand even with the most meager of beginnings. When you start small, you can post huge numbers if you focus on a systematic process and these things can grow over 20 and 30 years.

And you just have to be okay with that.

And if you can do that and manage your anxiety or the desire for short-term wins, that's a huge unlock. The second

is you have to embrace the nature of what you're doing, which is it is about taking risks. And the further out on the

taking risks. And the further out on the risk curve you are, the odds are that there's the risk of capital loss. And if

you don't know where you are out on the risk curve, you shouldn't be there. And

you need to understand that. And you

need to take complete 100% responsibility for all of it. And if you can't, don't be in the arena. take your

money, stick it into an index fund, just go home because this is a tough game and most people lose at this game and you're going to be no better than everybody

else if you can't do that. I remember,

you know, November of 21, markets were just ripping and I remember saying, you know, it's time to start de-risking and trimming. And the reason was because I

trimming. And the reason was because I saw Bezos and Elon start selling and I thought, well, these guys are the two best capital allocators in the world today. And so if they're selling, I

today. And so if they're selling, I should sell.

I sold a little bit, but I didn't sell nearly enough. Then March of 2022, the

nearly enough. Then March of 2022, the war between Russia and Ukraine starts and the market just starts puking and there's no liquidity. And so, you know,

everything is spearing down. You know,

we start to go through a rate cycle. It

was a perfect storm. And I thought to myself, when could I have changed my mind? And

the honest answer was in November. Now,

why didn't I? Because I was also in a period where again, I had confused my growing fame with what I thought was a growing skill. I would be able to tweet,

growing skill. I would be able to tweet, the markets would change, go up, go down based on what I was saying. Part of my portfolio, which was the part in spaxs, was just ripping.

And I was too afraid to tell everybody, "Guys, let's just cut it all. Let's go

all the cash." Because I was afraid of what people would think. That was so stupid because then starting in March, these things just got absolutely obliterated. You want to try to make

obliterated. You want to try to make decisions that are forever decisions so that you make your life easy. But now

I've created room in my mind where the people that I think are just structurally and fundamentally smarter than I am. When they do things that are against the grain of what I've done, I immediately say to myself, I need to do

the exact same thing. Now prove to myself why I shouldn't. Number one. And

number two is I can now see when things are just materially different. Wars,

rates, commodity dumps, these are things that just have shapes now that I can see a little bit more clearly because I've lived through it. And that's when again I have to just reunderite everything. I

go to the point of everything's wrong.

Why do I keep these positions? But I

only learned that by, you know, torching5 billion dollars.

Brutal. Uh but uh I you know I barely survived but I survived.

Four years ago I went on a vacation. We

went to this island called Canowan in St. Vincent the Grenadines. We were at

St. Vincent the Grenadines. We were at like the Ritz Carlton. Beautiful. And it

had a really beautiful golf course. And

so a couple of my friends were there. My

family and I and I were there. And I

love gambling on golf. And so, you know, we were playing a pretty low stakes match because my two older sons were with me. And so I said, "Guys, we got to

with me. And so I said, "Guys, we got to keep the stakes low because I don't want them to hear crazy numbers." The two guys decide to get into my kids' heads.

And they're like, "$100 bet on the putt." And I was like, "You guys can't

putt." And I was like, "You guys can't do that." They're like, "Let's see.

do that." They're like, "Let's see.

Let's see if the, you know, the apple falls far from the tree." Then I was like, "All right, let's go see what these kids are made of." And so these boys both have $100 over their head. And

uh my 8-year-old was the first up, gets over it, it's like a 15-footer, holds it. My older son got over it,

holds it. My older son got over it, missed it. But I had pressed so much.

missed it. But I had pressed so much.

Anyways, I won. Long story short, the kids get a couple hundred bucks each.

100 from the bet and, you know, 100 for playing with us. They ask me if they could invest in the stock market. And I

always give the same answer to them to to everybody. What do you love? What do

to everybody. What do you love? What do

you think is good and useful in your life? Let's go find if that company is

life? Let's go find if that company is public. Buy that thing. My older son

public. Buy that thing. My older son said, "Nah. Uh, but I like the price

said, "Nah. Uh, but I like the price action of this Virgin Galactic thing.

Plows 200 in makes like 3,000. Sells it,

buys a computer. He's never to be seen again in the stock market." My younger son, however, says, "Well, I like Xbox, I like PlayStation, and I like

Nintendo." and he bought all three and

Nintendo." and he bought all three and he's been a steady compounder but they both kind of you know they they looked at things that they liked. One was much more speculative but the other one you

know he steadily I think he made like a 30% compounded return the last 3 years.

So, I guess the summary of all of that, the long convoluted story is if you're first thinking about investing, look around you and look at the products that you love,

that you think are incredible, that are wellmade, that are good, that you would pay for happily. Find out who makes those things and see if that company is public. That's a really good way to

public. That's a really good way to start when you're first learning. And

then number three is have a backup plan.

And the backup plan in the United States is incredible, which is your losses don't really hurt you. And the reason your losses don't hurt you is you get

these carry forward losses that will offset future gains indefinitely. They

don't have an expiration date. So when

you lose money, because it's not an if, but it's a when, take the time to understand why. Were you too greedy?

understand why. Were you too greedy?

Were you too short-term? Did you think it was a safe investment and you oversized it, but it actually turned out to be a much riskier investment and so you had too much money in it? What was

the reason why you made the mistake? And

then know that all of that money will come back to you if you can course correct that decision. So let's just say you lose $1,000.

Guess what? You get you get a $1,000 carry forward capital loss.

Next time you make a,000 bucks in profit, you don't pay any taxes. The

number of people I see who are just blather on about losses, I think that they're lying or they're a bot.

How else could you not know if you're an investor that you get this?

I think that people think investing is a getrichquick business and it's not. It's

a getrich slow game.

It's an infinite game. It's a game that requires unbelievable amounts of patience. Every time that people want

patience. Every time that people want get rich quick schemes, they stop thinking for themselves. They

start looking for answers from others.

They invariably blow up and then they blame others.

Don't do that to yourself. You are

responsible. So, don't make decisions you can't justify as your own decisions.

When I first started investing, I did not follow my own advice. I was looking for get-rich quick schemes. I looked for max leverage, max exposure in things I didn't know, but I was told by others

were about to pop. And I didn't do any diligence. I remember putting 10 or

diligence. I remember putting 10 or $15,000 when I was in my early 20s into a gold mining stock on the Toronto Stock Exchange.

That is basically as close to the stupidest decision that one could make.

And I lost most of my money. A couple

years later, I actually started to take my own advice a little bit. I understood technology at the beginning of the.com bubble that a

lot of the people around me did not. And

so when I would see these IPOs, they would open, they would go crazy. I

had a really good sense of which ones were real and which ones were not real just by reading the perspectuses, which I would do. And then that portfolio just crushed and I was like, "Wow, I could be

a pretty decent long short equity investor if that's what I wanted." The

problem was that I was just much more fascinated by technology. And so I really wanted to get on a path to eventually work at a venture fund. My

first few foray into investing were largely about public market equities.

They were all horrible and I lost my money, which is the right thing. you're probably not going to make

thing. you're probably not going to make a lot of money in the early days and there's just a good chance that you're going to lose money. It happens to all of us. The question is how you rebound

of us. The question is how you rebound from that and how you create the structures to um soften the fall.

I think the most important part of investing is what the goal is. When

you're young and the risk of ruin is low, you have more freedom to play for very large

upside.

When you're older, probably want to make sure you always fade the risk of ruin because starting over is exceptionally hard. So then as a younger person, you

hard. So then as a younger person, you can generally take more risk. As an

older person, you probably want to take less risk. As a younger person, you can

less risk. As a younger person, you can then be more concentrated in fewer things. So that if you do your

work correctly and those things really explode, you absorb the positive entropy of those changes inside your portfolio.

When you're older, you want to make sure that you're position sizing in such a way where there is nothing that could blow a hole in the portfolio. Now

instead of saying old and young, you can also reframe this in just in terms of your personality. There are some people

your personality. There are some people that independent of their age much prefer to be far out on the risk curve.

They are fine dealing with the vicissitudes of the market. Then there

are other people that just can't deal with it and those people just need to be highly diversified. And so I think part

highly diversified. And so I think part of it is knowing yourself and then also knowing your stage in life and your goal. And if you know those things, then you can do portfolio

construction properly. For me, I think

construction properly. For me, I think of my life as a barbell where on one end of the barbell, I have the overwhelming

majority of my capital in extremely concentrated, highly asymmetric bets on technology. And then on the other side,

technology. And then on the other side, I have it hedged with what is effectively cash.

You know, people ask me a lot like why did I invest in the Warriors? You know,

I was one of the six or seven people. We

pulled our money. We bought the team. I

own 10% of it. I bought 10% for about 25 million bucks, which today feels like a steal because that 10% is now worth, I don't know, 6 7 800 million, 900 million

probably. I sold it for 500. But, but

probably. I sold it for 500. But, but

why did I do it? Because I was like, well, I need to structure my risk barbell. I'm going to go out here on the

barbell. I'm going to go out here on the risk curve and make a bunch of concentrated bets in technology companies. They could all go to zero.

companies. They could all go to zero.

and I don't want to start my life from zero.

So worst case, I'll have this $25 million investment that I thought at the time would effectively be totally uncorrelated to tech and effectively compound at the rate of inflation. And

you know, I thought what's the most uncorrelated thing to technology? The

best I came up with at the time was sports, professional sports. So even if that asset didn't appreciate, I still would have felt like I did the right thing because it gave me the mental

freedom to then go and you know build my investing chops in technology.

There's absolutely nothing you have to sacrifice in investing. Nothing. Zero.

Zilch. If you feel like you're spending too much time, you can modify your investment strategy to give you more time. I mean Buffett talks about this

time. I mean Buffett talks about this all the time. He sits there, he reads, he plays chess, he plays bridge, he makes phone calls, he goes home, he gets

a good night's rest, he's been doing it for 80 years. If you believe that investing is like an incredibly physically taxing thing that takes away

from other people, you're doing the wrong strategy for you.

I think one of the most important things in investing is to just start. It's kind

of like making a baby. You just got to start. Talking about it doesn't actually

start. Talking about it doesn't actually help you make a baby. So if you want to be rich or if you want to be financially secure or if you want to you know uh acrew capital that you can invest in the

things that you believe in the causes you believe in you need to just start.

The thing about starting is there is this incredible trick that people will play on you which is the only people

that care how much you start with is other people. And if you think about

other people. And if you think about that for a second, what they want to do is they want to feel better about their decisions. And

this is what stops people because they think, "Oh, what's 50 bucks? What's a h 100red bucks?" Well, to others, it seems

100red bucks?" Well, to others, it seems meager and not worth it. So, I would encourage you to just start and just not tell anybody and then show up 10 or 15

years later with a huge war chest and shove it up their ass.