1/ Thread: The Superpowers in Investing

Investing has been dubbed as the last liberal art.

Unless your name is Jim Simons, raw intelligence or brain power is perhaps not a sure-fire way to be successful investors.
2/ The more I think about it, the more convinced I am on just three superpowers in investing.

I. A bias for optimism
II. A better grip on time
III. The ability to imagine turbulent times

Let me elaborate.
3/ I. “Pessimists sound smart, optimists make money”.

Pessimism not only appears more rational, but it can also sound seductive to many.

Compared to pessimists& #39; elaborate and complex theories, optimists often come up with very naïve sounding thesis.
4/ Sometimes these can be literally one-liner thesis: think buying $ZM because we all are video conferencing or buying $PLTN since we are all stuck at home.
5/ The secret to the triumph of the optimists is not naivete, but an openness to the possibilities which is juxtaposed by a more level-headed assessment of those possibilities.

For long-only investors, if you are not generally optimistic, you are probably in the wrong business.
6/ II. This is largely tied to liquidity.

Our ability to think clearly is severely constrained at the face of short or even medium-term liquidity requirement.
7/ But even beyond liquidity, some people enjoy an innate orientation to long-term thinking.

Anyone who can truly sense how much progress can be made in a decade as opposed to all the noise that you encounter in a quarter or even in a year or two, it is a superpower indeed.
8/ III. The most difficult superpower is perhaps to be generally optimist and yet have some sort of ability to imagine turbulent times.

This sounds contrasting and it often is contradictory.
9/ Do you remember how you felt during Covid-19 drawdown? GFC? Good.

While the next recession won’t be GFC/Covid, if you can recreate the “feeling” in your mind during Pollyannaish times what it felt to see your portfolio go down 5% every other day, it is indeed a superpower.
10/ In the long run, if you can ensure far less drawdown in your portfolio compared to market, you are almost certain to outperform the market significantly.
End/ None of these are easy, and as mentioned, the first and third are seemingly contradictory.

There is a reason I consider them superpowers because most of us won’t have it.
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