Millennial_Investor

student of the market | beware of the unknown unknown

[Millennial_Investor @i_m_karank]

Well it’s not going home I guess!!

#ARGvsENG

[Millennial_Investor @i_m_karank]

Time to read a good book and stay away from the market for a few days

[MrBeast @MrBeast]

I’m gonna give 10 random people that repost this and follow me $25,000 for fun (the $250,000 my X video made)

I’ll pick the winners in 72 hours

[Millennial_Investor @i_m_karank]

@Aditya_joshi12 On the other hand, you’ll find people with the privilege of having had more opportunities to fail to eventually succeed just coz they could afford to will also offer you a different perspective

[Millennial_Investor @i_m_karank]

@Aditya_joshi12 You’re forgetting the survivorship bias here. Yes people from these backgrounds have succeeded, but the question to ask here is out of how many. What was the denominator to this numerator. That question will put this into perspective.

[Mr Family Office @MrFamilyOffice]

The wealthiest families in the world hold secrets that are passed down through the generations

Educational secrets that even the most exclusive schools don’t teach

In fact, virtually all schools are horrible at teaching finance, whatever their fees

This is why Family Offices do not rely on schools

They have exclusive financial education programs. Programs delivered through private agencies, Ivy League universities and specialist organizations

11 lessons on financial education from Family Offices

(and tips on how they can be applied by any family)

→ Lesson 1: be open

A simple one to start

Successful UHNW multi-generational families talk about money. They are not coy

It’s part of everyday life to talk about business, wealth and money. Business at the dinner table is never off limits

Wealth brings opportunities and difficulties. But if wealth is a taboo subject, opportunities will be missed and difficulties exacerbated

A lot of people think they are helping their kids by shielding them from financial matters. But like any topic, to master it, you need to be consistently exposed to it

→ Lesson 2: start young

That doesn’t mean telling wealthy toddlers their net worth

It means teaching kids about:

- the history of the family wealth
- the scope of the wealth
- the family values

As they get older, focus can shift to areas such as budgeting and saving. Then investing, tax, credit, finance, philanthropy

Kindergartens and schools don’t teach finance. It’s on you

→ Lesson 3: curate bespoke financial education

Family offices often engage specialist agents to customize education for families. The lessons can take different forms; workshops, one-on-one tutorials, distance learning, etc.

The bespoke educational programs are based on the specific needs, experience, and knowledge of the family members

The circumstances of the family will also help inform the educational program, for example:

- has the family recently experienced a liquidity event
- is there an ongoing operating company
- do some family members want to work in the family office and some in other fields
- are there specific succession issues to address

The education programs will be tailored to the dynamics of the specific family, taking into account the involvement of spouses, extended families, step-siblings, etc.

Regular families may not have complex family businesses to navigate, but you can still design your kids’ financial education based on their personalities, interests, and your family’s circumstances

→ Lesson 4: find mentors

Wealthy families have a rich source of mentors for their children. These can be people from the family office, the operating business, or the family network. It's an inherent privilege

Family offices help ensure that suitable mentors are available at the right time in the lives of the next generation

Many seasoned operators are used to being asked to be mentors on LinkedIn or Twitter. But in my experience, wealthy families don’t formally request mentorships. They ask wise colleagues or acquaintances to advise their kids on X or talk to them about Y. From there relationships can blossom. Exposing kids to experienced and intelligent counsel can lead to a blossoming mentor/mentee relationship

Whatever level of wealth you have, you can encourage your kids to seek advice from smart people and ask your friends to guide your kids. Any parent who coaches kids' sports will know that advice from another coach usually lands far better than parental advice

→ Lesson 5: get involved

Multi-generational wealthy families understand the importance of getting their children actively involved in the family business or family office

Involvement goes beyond mere observation. It means children having a voice and a sense of belonging within the family's financial life

Getting kids involved provides:

- first hand experience of finance, entrepreneurship, and management
- exposure to the inner workings of wealth creation, investment decisions, and strategic planning

Being hands-on empowers children to develop a deeper understanding of how money flows and how decisions are made within the family

The level of involvement should gradually increase over time

While it may initially feel awkward or challenging for both the kids and the employees, the speed at which children learn by actively participating is remarkable

All families, regardless of their wealth, can benefit from giving their children responsibilities and involving them in the family's work. It could involve engaging children in household finances, budgeting, or saving for family goals. It may also mean involving them in family projects or ventures, such as charitable initiatives

The key is to provide children with opportunities to actively participate and contribute, enabling them to develop a sense of financial empowerment and responsibility

→ Lesson 6: give responsibility

In tandem with getting involved, wealthy families teach their children the value of taking responsibility

When children are entrusted with meaningful tasks and responsibilities, they

- gain valuable experience
- develop a sense of accountability
- gain a sense of independence
- learn self-reliance

Family offices help wealthy families assign age-appropriate tasks that align with their abilities and interests. As children grow older, their responsibilities can expand, for example to managing a small portion of the family's investments or participating in financial decision-making discussions

The act of giving responsibility supports decision-making and problem-solving

It also helps kids learn about the consequences of their actions

It's important for parents to provide guidance and support while allowing children to make their own choices and learn from their mistakes. Mistakes and setbacks are valuable learning opportunities that shape children's financial acumen and resilience

For regular families, giving responsibility can start with simple tasks such as managing a small allowance or participating in family financial discussions. As children mature, parents can gradually increase their responsibilities, such as involving them in investment decisions or teaching them about credit and financial planning. The goal is to instill a sense of ownership and accountability while equipping children with the skills necessary to navigate their financial futures

→ Lesson 7: have a plan

Successful UHNW families recognize the importance of having a structured learning plan for their children spanning many years

This means avoiding a haphazard approach; but instead, purposefully helping kids acquire the necessary skills and knowledge as they grow up

A comprehensive financial education plan can encompass various aspects, including

- budgeting
- saving
- investing
- taxes
- credit
- finance
- philanthropy

Part of the plan should be to learn about the family office itself, the structure, the organization, and the importance of governance and decision-making

Regular families can also create tailored learning plans based on their children's personalities, interests, and family circumstances. Plans should remain flexible and implementation can include part-time jobs, family activities, volunteering, etc.

→ Lesson 8: model behavior - set an example

Actions speak louder than words when it comes to teaching financial values

Enduring families show their children how to behave and interact with others in financial matters, they lead by example. Children imitate the behavior they observe in their parents

Modeling behavior helps kids build healthy respectful relationships. It also helps kids to understand boundaries within the family and family office

A common theme in the education of the next generation is how to balance assertiveness and respect. Getting that balance right is vital for younger members joining a family business

Regular families should also model positive financial behavior, regardless of their level of wealth

By setting an example, you instill valuable lessons in your children, shaping their attitudes and behaviors toward money

→ Lesson 9: discover purpose

Discovering purpose in their life is particularly challenging for ultra-wealthy children

Wealth can provide an overwhelming array of choices, leaving children contemplating how to create meaning and purpose in their own lives

Family offices help the next generation to effectively balance career aspirations with engagement in family life

Finding a purpose in life is important for all families, no matter what the wealth. No matter what your aspirations are for your kids, they need to be able to choose their own path in life

→ Lesson 10: effective family communication

Family offices support effective communication within the family. For rising generations, balancing respect for the older generation while asserting their voice is vital

Mastering communication is key to becoming an impactful family leader

This involves

> active listening
> clear messaging
> developing emotional intelligence

Effective communication is vital for all families. Talk about finance, talk about financial goals, talk about financial decision-making

→ Lesson 11: give back

Wealthy families have a long-standing tradition of philanthropy. This practice not only strengthens their connection with the community but also gives purpose to their wealth

Charitable endeavors help family offices to connect with like-minded people

Engaging with community and philanthropic boards equips younger family members with valuable skills that carry over to their roles within the family business or family office. It also helps family members build:

- leadership skills
- collaboration skills

Regardless of wealth, all families have the ability to give back to their local community whether it's through donations or time. It helps build connections with their community but also provides opportunities for networking and personal growth

---

To summarize:

→ Lesson 1: be open
→ Lesson 2: start young
→ Lesson 3: curate bespoke financial education
→ Lesson 4: find mentors
→ Lesson 5: get involved
→ Lesson 6: give responsibility
→ Lesson 7: have a plan
→ Lesson 8: model behavior - set an example
→ Lesson 9: discover purpose
→ Lesson 10: effective family communication
→ Lesson 11: give back

If this was helpful, please let me know with a retweet, bookmark or comment below

And for more insights on family offices, follow along, join the fun:
@MrFamilyOffice

[Millennial_Investor @i_m_karank]

Absolute classic

[Brandon Beylo @marketplunger1]

Bruce Greenwald invited Li Lu to speak to his class on value investing.

The result is a 90 minute masterclass on how to be a value investor.

If you haven't watched the video, do it now.

If you have, it's worth re-watching.

Here is a list of my favorite quotes from Li Lu 👇

PERSONALITY OF A VALUE INVESTOR

• "Understand who you are as an investor, because you will be tested. You will have to ask yourself if you truly are a value investor."

• "Value investing goes against our evolution of following the crowds to survive."

• "You will spend most of your time as an investigative journalist. To have insatiable curiosity."

• "You almost have to be curious about everything. Because you never know where you'll get that one major insight."

INVESTOR CRITERIA

• Is it cheap?

• Is it a good business?

• Why is this opportunity available to me?

"Once you answer those questions, you really have to go for it."

INVESTMENT CASE STUDY 1: TIMBERLAND

• "The first thing I check in a company is it's valuation."

• "If you're an investor you don't care where it traded before."

• "What matters isn't the price-to-book ratio itself, but what's in the book value."

• "You want to compare the capital invested in the business to how much pre-tax cash flow the business generates using that capital."

• "So Timberland generated $100M on $200M in capital invested. So why does the opportunity exist?"

- Nike, Reebok, all the shoe brands fell off a cliff during the Asian Financial Crisis.

- Founder owns 40% of the stock

- Company was profitable and didn't need financial markets (no sell-side)

- Tons of shareholder lawsuits

• "What would be your conclusion if you were a normal mutual fund hearing this information? That management is milking the company for their own gain."

What does Li Lu do next?

• "I download every file of the shareholder court cases. That's the investigative journalist part."

• "The result was that the founder withdrew guidance and shareholders didn't like it. That was it."

How do you determine if management are decent people?

• "You've got to be an investigative journalist and find the trail of evidence. Go to their community. Introduce yourself to their friends/family/neighbors."

Total Time Commitment: "A couple of weeks of diligent/obsessive work"

• "Investing is intensive work for short bursts of time."

HOW MUCH TO BUY?

• "If you go join a fund, they'll tell you not to risk anything more than 25-50bps."

• "Think about how much effort you put in to this work. You have no downside and its trading at 5x profits."

• "So, I put a shitload of money into Timberland. Over the next 10 years it went up 7x. It was never more than 15x earnings."

• "If you're not a good analyst, you'll NEVER be a good investor."

• "When it goes up, you don't have to do a damn thing. You just sit on it and ride with it."

INVESTMENT CASE STUDY 2: KOREAN COMPANY

• "Don't think about per-share numbers. Think of yourself as an owner."

• "$236M in book value, $60M market cap, $25M net earnings."

How do you know it's cheap?

• "You must confirm that the earnings are there, and that the book value is real, liquid, and tangible."

• "They're trading at the cash value in the bank with no debt. They have hotels and department stores that they own outright. They're making $30M+ in pre-tax earnings. And insiders own 50%."

The result: Went up 5-6x

VALUE INVESTING IS NOT NATURAL

• "There's a lot of money in value investing. But it's still unnatural to most people."

• "One thing you have to do, is you have to do the work. You have to do the reps. You can make a ton of money if you really do this stuff."

• "I benefited by listening AND THEN DOING my own work. Making my own investments and mistakes."

WHAT MAKES A GREAT ANALYST

• "You must provide accurate and complete information. If you can't succeed on that, you can't succeed in this business."

• "If you're not confident about your prediction and what you know, you can't put any money when the stock's in free fall."

WHAT PROVIDES THE BIGGEST RETURNS

• "Your biggest returns will come from no more than ten tremendous insights. That's it."

• "The only way to build those insights is intense curiosity, intense study."

INVESTING MISTAKES

• "The biggest mistakes come when you buy before you've done all the work."

• "My biggest mistakes aren't buying and losing money. It's not buying and missing out on 50-60x returns."

HOW MANY COMPANIES SHOULD YOU BUY

• "I don't have any set rules on how many stocks or companies I buy. Opportunities are sporadic and it depends on the environment."

• "I usually have 3-4 big ideas. If the market is exciting, I have more opportunities. Or if the market is boring, I have fewer."

HOW LI LU ALLOCATES TIME

• "Most of the time I spend reading and studying about everything. Learning new companies and industries."

• "If I find an idea that captivates me. I stop everything and obsess over that idea."

• "Besides that, I spend a lot of time with my kid and my wife."

TL;DR:

• Be an investigative journalist.

• Work obsessively in short bursts and spend the rest. of your time learning.

• When you've done the work and have conviction, buy a shitload to make it worth it.

• Before you invest $1, make sure you can answer the three big questions: Is it cheap, is the management team good, and why does the opportunity exist.

• Never stop learning.

• Become a curiosity machine.

[Millennial_Investor @i_m_karank]

@sweatystartup So on point

[Millennial_Investor @i_m_karank]

@_Sandeep09 Market knows everything. You or I just don’t know that the market knows

[Millennial_Investor @i_m_karank]

The only future that arrives is the one you make for yourself

[Millennial_Investor @i_m_karank]

@GabbbarSingh @neeleshmisra Man I miss irrfan khan. Guy was an effortless genius

[Millennial_Investor @i_m_karank]

@aham_yogini @VoicelessRights @Pfa_AntiCruelty @IndianDogsuport @HarshDhaka4 @thrishul @KiranGa66151282 @LOVE_CATS_ONE @Lucycrew7 @SkyLaGatta @MyBoxerLuvMac1 @fish_guardian +1 to that. Easy to preach sitting at home not realising the consequences are borne by others who don’t have the luxury of driving away after feeding these strays

[Millennial_Investor @i_m_karank]

@ProfFeynman Realised this the hard way just a couple of days ago after having been trapped in the philosophical ideology of trying to find meaning in life. The only ideology worth following is to find something to do and keep doing it, while living your life alongside

[Millennial_Investor @i_m_karank]

@HappymonJacob If only economists were businessmen

[Millennial_Investor @i_m_karank]

@RegeWolf ASM decision should be applicable from Monday

[Squat University @SquatUniversity]

Have wrist pain?! 🤔

Try this routine & return to lifting!

[Millennial_Investor @i_m_karank]

A world of knowledge in these books!

[Connor W @CopyWriteConnor]

An entrepreneur who changed my life:

Naval Ravikant

He’s one of the deepest thinkers alive and attributes all of his success to reading.

Here are 10 books Naval recommends to make you healthy, wealthy and wise in 2023:

[Millennial_Investor @i_m_karank]

@BogdanZimmerman @ericschiffer This. You can be kind, but you have to be a killer, esp in certain situations that have a zero sum outcome

[Millennial_Investor @i_m_karank]

@CoachMacUK But you can’t do everything

[Millennial_Investor @i_m_karank]

@bhak_sala See the dollar milkshake theory by @SantiagoAuFund