The 20 most important lessons from the book "The Joys of Compounding."

A thread

1/ Learn from others. Figure out where you are going and find out who has been there before. Knowledge comes from experience,
but it doesn’t have to be your experience.

2/ Investing is a field in which success can flow from passively observing the world, reading,
thinking, and doing nothing more than making an occasional
telephone call. Most investors would perform better if they thought more and did less.

3/ A strong passion for lifelong learning is a durable competitive
advantage for an investor. What differentiates successful investors
from mediocre ones is passion.

4/ All the money in the world is
pointless if you don’t have the time or the health to enjoy it.

5/ It is better to be an average guy on a star team than a star on an
average team. The former will be better for you in the long term; the
latter is just an ego trip.

6/ The people
closest to you play an outsize role in your level of success or failure
- so choose wisely. You are, after all, the average of the five people
you associate with the most in your life.

7/ Many people achieve success, but to sustain the same over an entire lifetime requires humility, gratitude, and a constant learning mind-set. Becoming rich often
becomes the biggest obstacle to staying rich.

8/ Investor should judge the businesses based on their operating
results, not on the volatility of their stock prices. The stock market is
focused on the latter, but investing success is based on the former.

9/ Every day, millions of hardworking people around the world are
doing great things at so many companies. As investors, we are thankful.

10/ Capital allocation is a CEO’s most important job. How he or she
allocates capital is what determines the value created for the business and its shareholders in the long run.

11/ Investing is less a field of finance and more a field of human behavior. The key to investing success is not how much you know but how you behave.

12/ It takes a fairly short time to learn how to make money, but it takes a lifetime to learn how to not lose it. A margin of safety in investing is necessary to avoid “compounding in reverse".

13/ Insiders may sell for many reasons, including personal ones. But insiders have only one reason to buy their own stock: they believe it will go up. A particularly strong insider buying signal is what is known as a cluster-buy.

14/ Debt, intense competition, and high capital intensity together make for a deadly concoction.

15/ Liquidity and sentiment drive the market index in the short term,
whereas individual company earnings drive stock prices in the long
term.

16/ In small companies, the
P/E that matters most is the “promoter entrepreneur"

17/ The greatest learnings always come from a bear market, and these lessons bear fruits for an entire lifetime. Never let a bear market go to waste.

18/ Investor should not aim for the highest possible returns in the shortest period of time but rather they should seek above-average returns over a long period of time with the lowest possible risk.

19/ Do not compare yourself with others. The only person you need to be better than today is the person you were yesterday. Competing with others makes you bitter. Competing with yourself makes you better.

20/ Persistence is more important than knowledge. You must persevere if you wish to succeed. Knowledge and skill can be acquired through study and practice, but nothing great comes to those who quit.