Safe Haven - Investing for Financial Storms
Mark Spitznagel
Summary
How to make money during chaos using math and proven methods to set up your portfolio to thrive with volatility
Rating: 4/5
Notes
It is harder to persevere with no promise of vindication while living the daily grind of humiliation of one’s peers
Never underestimate the effect of absence of feedback on unconscious behaviour and choices of people
Things that are good but don’t look good must have some edge
Take care of losses, the profits will take care of themselves
Becoming conventional is self defeating in the investment business
Safe havens preserve and protect your capital - they shelter you from financial storms
Risk mitigation must be cost effective
A cost effective safe haven doesn’t just slash risk, it lets you simultaneously take more risk
All knowledge is a hypothesis, it is all conjectual and provisional and it can only ever be falsified, never confirmed
Water diamond paradox: the value of something is relative to what we already have of it
You raw linear returns are a lie; your true returns are crooked
The steeper the losses, the disproportionately larger the damage they inflict - for greater than profits of the same size can overcome
Profit is finite, risk is infinite. Avoid plunging down the logarithmic Bernoulli waterfall
Do not judge your decisions purely on outcomes as good decisions can have bad outcomes
‘The task is to live in such a way that you must wish to live it again ‘ Nietzsche
Set aside 60% of cash and wager 40% on your bet
W/ the remaining cash, add it onto an insurance bet against the outcome to maximize returns
Safe havens are not fixed and constantly change according to time like evolution
The safe haven has to make a high cost per crash unit
‘Whoever fights masters should see to it in the process she doesn’t become a master’ - Nietzsche
Safe haven imposters are traditional strategies betting on markets to always go up
Diversification is a confession that you don’t understand the business you are in
Diversification is a dilution of risk, not a solution to risk
Risk mitigation investments are very context dependent
‘Dwell on the past and lose an ego. Forget the past and lose both eyes’
2% allocation to insurance of save haven on a 10-1 payout and 98% allocated to the market
‘Essence of investment management is the management of risks, not the mgmt of returns’ - Ben Graham
Errors of omission are unseen and easy to ignore; errors of commission are the ones we notice. Ignoring the power of the latter is a fallacy
The bigger the insurance payout, the less is needed
Risk mitigation shouldn’t be a tradeoff against wealth creation
Aim high and aim small, miss high and miss small
‘Love the hand that fate deals you and play it as your own for what could be more fitting’ - Marcus Aurelius
It is not death that a man should fear but he should fear never beginning to live - Aurelius
‘Life isn’t about waiting for the storm to pass. It’s about learning to dance in the rain’
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Make Something Wonderful
Steve Jobs
Summary
The life of Steve Jobs in his own words
Rating: 5/5
Notes
Make something wonderful and put it out there
‘You appear, have a chance to blaze in the sky, then you disappear’
When you’re a stranger in a place, you notice thing you don’t otherwise (Jobs after India trip)
Whenever you start with nothing, always shoot for the moon. You have nothing to lose.
You never achieve what you want without falling on your face a few times
Never be afraid to fail. You never achieve what you want without falling flat on your face a few times
We are never taught to listen to our intuitions, to develop and nurture them. But if you do pay attention to these subtle insights, you can make them come true
Creativity equals connecting previously unrelated experiences and insights others don’t see
Believe that some of what you follow with your heart will come back and make your life richer. And it will. And you will gain even firmer trust on your instincts and intuitions
Make your avocation your vocation. Make what you love your work.
The journey is the reward. The reward isn’t in the pot of gold at the end of the rainbow, it’s in crossing the rainbow
To find A+ talent, if experienced, look at their track record and results
The world we know is a human creation and we can push it forward
The people who are crazy enough to think they can change the world are the ones who do (read whole ad ‘here’s to the crazy ones)
We are what we repeatedly do. Excellence then is not an act but a habit - Aristotle
Hire people better than you are
You can’t plan to meet the people who will change your life
It’s impossible to connect the dots looking forward, but they make sense looking backwards so you have to trust the dots will somehow connect in your future
Everything around you that you call life was made up by people no smarter than you
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