Morgan Housel’s top beliefs

1 minute read

* Note: this is a backdated post on notes I took in the past, edited for clarity

Morgan Housel wrote about his top beliefs on business and investing here, and I particularly liked the points below:

  • “Investing is a game of probabilities, and almost all probabilities are less than 100%. […] Being wrong is part of the process. Survival is the only road to riches.”
    • The prerequisite for success is survival. Don’t put yourself in a position to get taken out
  • “The best results happen when your interests align with others’.”
    • As I’ve written about on my bio page, I think understanding incentives and having incentive alignment is critical. Morgan writes about incentives a couple paragraphs down.
  • “Many failures can be traced to the pointless pursuit of arbitrary benchmarks.”
    • As Goodhart’s Law would have you believe, when a measure becomes a target, it ceases to be a good measure. I do believe metrics and measurement is important. However know if you’re judging actual performance, or a proxy of that performance
  • “There are five sources of edge: 1) Learn faster than your competition, 2) empathize with stakeholders more than your competition, 3) communicate more effectively than your competition, 4) be willing to fail more than your competition, and 5) wait longer than your competition.”
    • I think the informational edge from (1) is fleeting. The post on tortoises vs hares and willingness to fail can elaborate on point (4). I firmly believe in point (5), given how loosely the phrase ‘long-term’ is thrown around in investing with different interpretations.