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At the Berkshire Hathaway shareholder meeting in 2013 Warren Buffet said he's owned 500 stocks during his life and made most of his money on 10 of them.
Munger followed up: "If you remove just a few of Berkshire's top investments, its long-term track record is pretty average.
Munger followed up: "If you remove just a few of Berkshire's top investments, its long-term track record is pretty average.
In 2018, Amazon drove 6% of the S&P 500's returns. And Amazon's growth is almost entirely due to Prime and Amazon Web Services, which itself are tail events in a company that has experimented with hundreds of products, from the Fire Phone to travel agencies.
Apple was responsible for almost 7% of the index's returns in 2018. And it is driven overwhelmingly by the iPhone, which in the world of tech products is as tail--y as tails get.
And who's working at these companies? Google's hiring acceptance rate if 0.2%. Facebook's is 0.1%. Apple's is about 2%. So the people working on these tail projects that drive tail returns have tail careers.
When we pay special attention to a role model's successes we overlook that their gains came from a small percent of their actions. That makes our own failures, losses, and setbacks feel like we're doing something wrong.
When you accept that tails drive everything is business, investing and finance you will realize that it's normal for lots of things to go wrong, break, fail and fall. If you are a good stock picker you'll be right maybe half the time.
If you're a good business leader 50% of your product and strategy ideas will work. If you're a good investor most years will be just OK, and plenty will be bad. If you're a good worker you'll find the right company in the right field after several attempts. Thats if you're good
Source: https://www.reddit.com/r/fatFIRE/comments/itwf03/what_rfatfire_can_learn_from_the_book_psychology/
This is a summary of @morganhousel book: https://www.amazon.com/Books-Morgan-Housel/s?rh=n%3A283155%2Cp_27%3AMorgan+Housel
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