- To grow really rich, don't fetch water from a pond. Put your bucket under any one water fall.
This is attributed to George Soros. Compare this with what Andrew Carnegie says about putting all of your eggs in one basket and watching that basket really closely.
- The author suggests keeping 4-5 thematic buckets as a tool for reducing ricks.
e.g. demographics, economy, energy, emerging markets
- The author discussed two "civilized approach to fear" as
1. engineering : divide and conquer
2. insurance : aggregate many small probabilities/risks
- When things don't make sense to you:
1. Short the market = Buy the options on the expectation that the markets or your stocks will go down.
2. Get out altogether (Compare this with how Konosuke Matsushita decided to exit the PC industry)
- Alternatively, when things don't make sense to you:
1. Find something simpler e.g. If China as a whole is too complex, can you just focus on Macao opportunities?
2. How much information do you need to make a correct decision?
1. Organize information more deliberately
2. Synthesize outside information with your own experience.
3. Make and test your own hypotheses. Dry-run your betting.
Compare this with what Drucker says about tracking your own decisions.
January 8, 2013
Unknown, Uncertain, Unpredictable, Unexpected Part 4 of 10
The Either/Or Investor is a very nice book: readable but quite insightful. Read about the author Clark Winter.