October 6, 2015
The Tim Ferriss Show: 5 Things I Did to Become a Better Investor
- Checkout Tim’s Podcast Page
- Don’t play games you aren’t prepared to research and win
- How do you invest and win: Do you have an advantage?
- Informational: You know something other people do not (Tim’s network in SF)
- Analytics: Can crunch data, model markets, etc. better than others (Renaissance Capital)
- Behavioral: Do you have certain skills/behaviors that help you avoid “Mr. Market” that human nature tends to lead to mistakes
- Can you be “Greedy when others are fearful, and fearful when others are greedy”? – Warren Buffett
Read Up on Various Approaches to Investing
- Must Read Books: If you invest and are too lazy to do the research, you’ll “get your f*cking face ripped off” – Tim Ferriss
- Buffet:
- Making of an American Capitalism (unauthorized biography)
- Snowball
- Buffet’s Annual Letters Paperback
- More Money than God (on Hedge Funds)
- Michael Lewis: Liar’s Poker and Flash Boys
- If you expect you can compete with pro’s with unlimited resources, you’re wrong
- Just like you wouldn’t compete in a sport or anything else against the best and most resourced
- You Can Be a Stock Market Genius: Joel Greenblot
- Event based investing
- Intermediate/advanced investors
- MONEY, Master the Game (Tony Robbins)
- Compilation of interview with various experts
- Tim’s interview with Tony Robbins
- Daniel Solin: The Smartest Investment Book You’ll Ever Read
- Buy and hold/Index approach
- What I learned Losing a Million Dollars: Learn of psychological and cognitive biases
- Problems arise when you address failure to bad luck and success to skill
- Your risk tolerance is generally much lower than what you think (5-10% loss/quarter)
- Black Swan, Antifragile
- Venture Deals: Startup Deal Structure
- The 80/20 Principle: Richard Koch, Less is More Anthology, 4 hour workweek
- Rethinking Investing Blog Posts by Tim
- Buffet:
- Pick an Area, a Timeline and Rules (criteria for investment – buying and Selling)_
- Choosing a stock and buying is not it all, you haven’t made anything until you SELL and you need a plan for selling
- Test Time: Paper Trade
- Hypothetical portfolio to trade over time, but not actually use real money (takes time)
- Look back over a couple years and see how you did
- Angelist: If startup focused, place bets on Angel list (on Paper), see how many die/aquhire/succeed with larger rounds and new valuations (takes Time)
- angellist.co/tim
- Back-Test: Look at Tech-Crunch Disrupt pitches and bet on 1-2 from a few years ago
- Probably be able to tell which are ok, dying, etc. very quickly
- Real World MBA: Read Tim’s Approach
- Take 200k and spend it on startups over 2 years – assume you lose the cash, but the skills/relationships make up for the cost (just like an MBA)
- Key: Assume you will LOSE IT ALL
- How Tim started in 2007 – average hold time has been 7-10 years, so be in it for the long haul
- Doing it for real is always better practice than a simulation
- Take 200k and spend it on startups over 2 years – assume you lose the cash, but the skills/relationships make up for the cost (just like an MBA)
- Regular Check-ins/{Practice
- Don’t focus purely on financial metrics, many of which that look good could be making your miserable (you also want to be learning, expanding network, etc. etc.)
- Finally: Find an approach that best fits your personality, resources, timing, etc.
- Tim picks hyper-conservative approaches for 90% and 10% that are hyper aggressive
- Nothing moderately conservative/aggressive
- Likes to lock himself into investments rather than stocks that he can obsess on and adjust everyday
- Tim picks hyper-conservative approaches for 90% and 10% that are hyper aggressive
- Hypothetical portfolio to trade over time, but not actually use real money (takes time)
his podcast is brought to you by Wealthfront. Wealthfront is a massively disruptive (in a good way) set-it-and-forget-it investing service, led by world-famous investors technologists from places like Apple. It has exploded in popularity in the last two years, and they now have more than $2.5B under management. In fact, some of my good investor friends in Silicon Valley have millions of their own money in Wealthfront. Why? Because you can get services previously limited to the ultra-wealthy and only pay pennies on the dollar for them, and it’s all through smarter software instead of retail locations and bloated sales teams.
Check out wealthfront.com/tim, take their risk assessment quiz, which only takes 2-5 minutes, and they’ll show you—for free–exactly the portfolio they’d put you in. If you want to grab their advice and do it yourself, you can. Or, as I would, you can set it and forget it. Well worth a few minutes: wealthfront.com/tim.
Mandatory disclaimer: Wealthfront Inc. is an SEC registered Investment Advisor.
Investing in securities involves risks, and there is the possibility of losing money. Past performance is no guarantee of future results. Please visit Wealthfront.com to read their full disclosure.
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