FCH

Buy right and sit tight.

[Aleksander Edemann @AleksanderEde]

Wolfe's Quality model - Highlights:
- Changing D&A policies
- Cost capitalization and classification under investing
- Large increases in DSO!
- A declining cash conversion ratio (should be stable)
- Reporting recurring expense items as “special items”
- Aggressive PPA (Goodwill)

[Dirtcheapstocks @dirtcheapstocks]

Valuation trick that has served me well over the years:

Start with net cash companies.

EBIT / 3 / (Prime +5%) > EV

You can LBO the whole business with debt at prime + 5% that is covered 3x.

Good for identifying undervalued takeout targets.

[Paul Enright @pmje73]

IMO there are increasingly three paths to achieving alpha in a world where everyone is going to start leveraging AI to have an opinion on everything.

1.) Having a nose for where and when to dig. The wider the funnel of potential ideas the harder it is to know what to work on in the moment. The margin for error for working on the wrong thing is lower than ever. Knowing everything is for cocktail parties. Knowing what’s most important is for making money.
2.) Concentrating in only the very very best ideas. Dollars will flow to levered breadth, simple indices or the very best ideas. The moderate mediocre middle of the road book is the path to irrelevance. Cut tails and put them in the best ideas.
3.) Removing all nostalgia for past performance and only being focused on future expected returns. Duration isn’t the path to anything other than index level returns. The market will increasingly pull forward future returns and the alpha is in accepting when the market gives that to you.

[Jay Yang @Jayyanginspires]

“Stay in the game long enough to get lucky” is underrated advice.

[FCH @FreeCashHoe]

@OnodaCapital @grok @grok how much did Bill mbd cflt return cumulatively in the past five years

[FCH @FreeCashHoe]

@OnodaCapital @grok what is he saying this person is going long

[Anthony Pompliano 🌪 @APompliano]

“The distance between deciding and doing is the single most reliable predictor of whether your life will be extraordinary or ordinary.”

These three paragraphs will change your life:

[Todd Wenning @ToddWenning]

@lhamtil @mjmauboussin @rsandler21969 Investing is hard in part because of the contradictions that need to be balanced and altered. Know what you own…but not too well. Have conviction…but don’t be arrogant. Dont lose money…but don’t be too risk averse.

[Sidecar Investor @sidecarcap]

I used to think successful investing was making a huge contrarian call the market would come around to agree with.

It’s more like riding a wave that is far bigger and longer than anyone expected.

[Dhaval (Investment Books) @InvestmentBook1]

12 Mental Models to upgrade your thinking

[Vishal Khandelwal @safalniveshak]

The joy of missing out.

#investing #life

[Turtle Bay @turtlebay_io]

This is a good thread.

A word of encouragement to newbies: It’s worth putting in the time to learn investing. I know of no other business like it. No employee hassles, no customer hassles, no supplier hassles, no government hassles, no fundraising hassles. No need to market or have a high profile (or any profile at all). No need for connections or credentials. It’s favored by our tax system (which is insane). And you can learn to do it on your own. It’s also a scalable skill in a huge market. You can literally go from zero to tens of millions of dollars with nothing more than your mind and a liquid balance sheet. And you can do it from anywhere in the world while having a ton of free time.

What a business!

[Reads with Ravi @readswithravi]

Beautifully written by @JamesClear:

[Chuk Anyaegbuna @chukanyaegbuna]

The necessary dualities are legion. Discipline and adaptability. Arrogance and humility. Frugality and greed. Fear and aggression. Kindness and ruthlessness. The people who have the ability to inhabit those dualities as states are insanely rare. @alixpasquet

[Tokamak @GrandTokamak]

@ltmleverage Yeah buying long dated garbage gets bad real quick

[Mostly Borrowed Ideas @borrowed_ideas]

1/ Thread: The Wisdom of Crowd

In 2007, @mjmauboussin wrote a paper on the wisdom of crowd, and showed with simple maths and experiments why the crowd can trump individuals.

Some of the takeaways were VERY counterintuitive and it materially influenced my thinking.

[Gurwinder @G_S_Bhogal]

4. The Reading Recession:
There is more text than ever, yet people are reading ever less and outsourcing writing to chatbots. This is dangerous because language is the basis of thought, and if you can’t read or write well, you won’t think well.

h/t @george__mack

[Morgan Housel @morganhousel]

“Everyone driving slower than you is an idiot and everyone driving faster than you is a maniac.” -George Carlin

[Alan Edward 🇬🇧 @TraderDivergent]

21 Sentences that will get you ahead of 95% of traders:

1. Be a risk manager first and a trader second.

2. Taking a trade outside your plan and winning is not a good trade. All you have done now is create bad habits.

3. Every trade is random in the short term. Focus on thinking in larger sample sizes of 20 trades. It's just big enough to see if the probabilities are working.

4. Discipline is the backbone of any winning strategy. Without it, your toast! Focus on 100% on improving it!

5. Profits are great, but if you can't make peace with your losses, you will never succeed.

6. True confidence stems from the losses you wisely cut short, not just the big wins.

7. The fear of losing can ironically lead to more losses. Trust your strategy, and fear less.

8. A single undisciplined move can undo weeks, months, and even years of progress. Stay vigilant.

9. Overconfidence can be the undoing of even the most seasoned traders. Learn from your wins, but never let them cloud your judgment.

10. Journaling is how you improve. 90% don't do it because it's boring. Separate yourself from the herd and start growing.

11. Trade smart, not just every day. Quality over quantity should be your mantra.

12. Even best traders take losses just like you do but the difference is that they cut them fast and don't let them get out of hand

13. The real edge in trading is knowing yourself.

14. The best way to become successful in trading is by focusing on fixing 1 mistake at a time.

15. Narrow your focus to speed up your progress. For example, 1 strategy, 1 timeframe, 1 session etc.
Keep it simple.

16. Your risk per trade can be an emotional thermometer. Too big and you become fearful. Too small and you don't care. Find the right balance.

17. You need a short-term memory. Be quick to forget your losses Be quick to forget your wins. Stay present

18. Your willpower drains the more time you spend at the charts. Optimize your routine so you can stay more focused and avoid sabotaging your trading.

19. A set and forget system will probably solve 90% of your problems.

20. What gets measured gets managed. This goes for metrics and psychology. Do both!

21. Focus on direction—not speed. It’s better to climb slowly up the RIGHT mountain than to climb fast up the WRONG one! When you look for shortcuts you end up taking 2 steps back.

Hope these help, Alan

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P.S. if you enjoyed this, 2 quick requests:

1. Share it with your audience so others can see - or just hit reply to let me know if it helped!

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Cheers!

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