Stocks
Currently, I am investing 100% of my money into stocks. I should probably explore other options.
Some of the stocks I am holding:
Insight from The Psychology of Money (duplicate text), point 6 6. Tails, you win You can be wrong half the time and still make a fortune. You don’t need to be right most of the time to be making money.
There is something REALLY important I learned in this chapter. The distribution of success among large public stocks over time is not much different than it is in VC. 40% of all stocks lost at least 70% of their value and never recovered since 1980, effectively failures. Yet the S&P still goes up. Why? Because of the outliers. Ex: In 2018, Amazon drove 6% of the S&P 500 returns.
Few things account for most results. It’s the 80-20 Rule. This is the this doesn’t apply just for companies but my own Investing. Few things will drive the majority of your winnings. Tails drive everything. So focus on these.
“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong”.