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Risk management keeps you alive, but risk taking is what makes you rich
Black Edge337,697 Aufrufe • vor 2 Monaten
Leopold Aschenbrenner just revealed where he thinks the biggest investment opportunities lie from 2026 to 2030
Black Edge111,179 Aufrufe • vor 24 Tagen
Bill Gates on what Warren Buffett's calendar taught him about time: Bill Gates built his career packing every minute. As he recalls it: "I had every minute packed and I thought that was the only way you could do things." Then Buffett showed him his calendar, and it changed how Gates thought about time entirely. Buffett's calendar looked nothing like that. Whole days sat blank. Flipping through it, Gates notes: "he has days that there's nothing on." One stretch was almost comically empty. As Gates describes it: "this is the week of April of which there are only three entries for a week." One of those rare entries was simply to file tax, prompting Buffett to joke, "Yeah, there'll be four maybe by April." Asked what the lesson was, Buffett explains: "that you control your time and that sitting and thinking may be a much higher priority than a normal CEO who, you know, there's all this demand and you feel like you need to go and see all these people. It's not a proxy of your seriousness that you filled every minute in your schedule." Then he gets to the part that reframes time as the scarcest asset of all: "And people are going to want your time. It's the only thing you can't buy. I mean, I can buy anything I want basically, but I can't buy time." He closes with this: "And so to have time is the most precious thing you can have. I better be careful with it. There's no way I will be able to buy more time."
Black Edge123,922 Aufrufe • vor 1 Monat
A day in the life of a Wall Street fixed income salesman, in his own words:
Black Edge117,601 Aufrufe • vor 1 Monat
Dave Ramsey to a 17-year-old with $5K invested and $1,500/month income: "Don't get too fancy." Sterling called into The Ramsey Show with what sounds like a dream problem for a teenager. He's 17. He owns a $1,000 car outright. He has $5,000 in a Roth IRA and is contributing $500 a month. He makes around $1,500 a month working as an HVAC cleaner while finishing high school full-time. His college tuition is already covered because his dad works at a university. His question: Should he open an index fund and start investing more aggressively, or save up for a house? Dave's answer pushed back against the instinct most young investors have, which is to maximize every dollar into the market as early as possible. "I would not try to get too fancy. I'm just going to park it as an insurance policy to make sure that if something goes sideways on the free part of the college, you can still finish." His reasoning came down to protecting the bigger asset, which isn't the portfolio. It's Sterling himself: "It's more important for you as especially sharp and as much of an ambition and much of a go-getter as you are to complete school and to complete it debt-free. That is more valuable than any amount of money you will ever make on a mutual fund in terms of the actual math. In other words, you will be more valuable by many times more than this money will make in a mutual fund." The investment, Dave said, was his secondary concern. The primary concern was making sure Sterling had a backup if the free tuition fell through. Worst case if it does? "You have, I don't know, 30 or 40 or $50,000 when you graduate. Oh, darn." Jade Warshaw built on the point with something young investors rarely hear: "Between 17 and 22 years old, there's a lot of transition. There's a lot of change. You have no clue kind of what life is going to bring you. And so, you're not going to not become wealthy if you start really kind of hardcore investing at 22 versus 17 if that makes sense." Her case for keeping cash accessible was practical. Moving for a job. Buying a ring. Covering the gap between graduation and a first paycheck. Liquidity buys optionality in the years where your life shape is still forming. The synthesis from both hosts: Investing early matters, but not at the expense of the runway you need to make good decisions in your highest-transition years. Once life settles after college, then go hardcore.
Black Edge105,783 Aufrufe • vor 2 Monaten
Warren Buffett and Charlie Munger on why rich parents shouldn't blame their kids for lacking drive: At a Berkshire meeting, Sumit Maharra from Kashmir, India, asks Buffett a sharp question: If you live in a rich society, it's hard to get your kids to work hard because they simply don't need to. So how would you incentivize a child to compete against the hungry, highly motivated kids from emerging markets? Buffett's answer starts with what not to do: "I think certainly that if you are very rich and you bring up your kids to think that they are more important in society or that they have some special privilege simply because they came out of the right womb, that's just a terrible mistake." He points to Munger as proof it can be done well, noting that Charlie raised eight children he knows quite well, and none of them carry that sense of entitlement. Then comes his warning about the outcome: "If you really are going to raise your kids to think that other people should do all the work for them and that they will be entitled to sit around and fan themselves for the rest of their lives, you will probably not get a good result." Buffett adds a piece of counterintuitive advice. The goal isn't to push kids to surpass you at your own game: "The one thing I don't think you want to give them an incentive to do is try and outdo their parents at what their parents happen to be good at. I don't think that makes sense, whether you're a professional athlete or a rich person or whatever it may be." And here's the line that flips the entire question back on the parent: "If you're rich and your kids turn out to have no incentives, I don't think you should point at them; I think you should probably point at yourself." Munger takes it even further, accepting that some incentives are simply lost the moment you raise a child in affluence: "I don't think you can raise children in an affluent family and have them love working 60 hours a week in the hot sun digging fence post holes or something; that's not going to work. So, to some extent, you are destroying certain kinds of incentives, and my advice to you is to lose your fight as gracefully as you can." But Munger doesn't see wealth as the real variable. What matters is genuine interest: "The kids that really get interested in something will work no matter how rich they are, but it's rare to have an avid-like intensity of interest."
Black Edge53,605 Aufrufe • vor 1 Monat
Warren Buffett on why he chose bonds over stocks during the financial crisis: A shareholder asked Buffett why, during the 2009 crisis, he leaned toward debt instruments rather than equity. Specifically, why he invested $300 million in Harley-Davidson at 15% interest instead of buying the stock at $12 (which later traded at $33). Buffett's answer reveals his core investment philosophy: "I don't know whether Harley-Davidson equity is worth 33 or 20 or 45. I just have no view on that. I kind of like a business where your customers tattoo your name on their chest or something, but figuring out the economic value of that, you know, I'm not sure even going on questioning those guys I'd learn much from them." But what he did know was enough: "I do know, or I thought I knew, and I think I'm right, that A: Harley-Davidson was not going out of business, and B: 15% was going to look pretty damned attractive." The lesson is about decision difficulty. Buffett deliberately chose the simpler question: "I knew enough to lend them money. I didn't know enough to buy the equity. And that's frequently the case... I'll go with a simple decision." In other words, he didn't need to predict whether the motorcycle market would shrink or margins would get squeezed. He only needed to answer one question: are they going to go broke or not? Charlie Munger added another dimension to the answer, pointing to their responsibility as fiduciaries: "After all, we are a fiduciary for a lot of people, including people with permanent injuries, etc. And to some extent we are constrained by how aggressively we buy stocks versus something else." Munger also offered a broader insight for investors: "Very often when you're looking at a distressed situation and buy the bonds, you should have bought the stock. So I think you're looking in a promising area." Buffett tied it back to a principle Ben Graham wrote about in 1934: "In the analysis of senior securities, the junior securities usually do better, but you may sleep better with the senior securities." And this is where his philosophy crystallises. Berkshire has $60 billion of insurance liabilities extending out 50 years or more: "We would never have all of our money in stocks. We might have very significant amounts, but we are running this place so that it can stand anything." The payoff for that conservatism came during the crisis itself: "A couple years ago we felt very good about where that philosophy left us. We actually could do things at a time when most people were paralyzed, and we'll keep running it that way."
Black Edge76,530 Aufrufe • vor 1 Monat
A caller asks Dave Ramsey what to do with required minimum distributions from his 401k that he doesn't need. His gut tells him to invest in gold. Dave's response is immediate and emphatic: "No, no, no, no, we don't put anything in gold." His reasoning starts with the math. "Gold is much more volatile. If you look at the price of gold on a chart, it's way up and way down, much more than the stock market is. It is a lot riskier, and it does not yield a good net return; the average annual rate of return on gold sucks." But Dave doesn't stop at performance. He wants to explain "why" gold underperforms. And this is where the conversation gets interesting. "Gold is a commodity; it's a rock that is yellow." He explains that commodities, whether barrels of oil, precious metals, or corn, are all traded 100% based on people's perception of shortage. If the perception is that there's too much of it, the price goes down. Compare that to a real investment: "An investment that creates revenue is a company that's running and making a profit, like Home Depot, Microsoft, or Apple. Their stock goes up because they are creating revenue. Gold, corn, and oil do not create revenue; they only trade based on scarcity and the psychology of the marketplace, greed and fear." In other words, when gold prices rise, the gold itself hasn't become more valuable. Dave puts it plainly: "If a whole bunch of people rush towards gold, it creates a shortage and the price goes up, but the gold did not become more valuable, just more people were chasing fewer bars." He extends the logic to income-producing real estate, which is priced based on the income it creates, not because it's a "golden rock." And he takes a swipe at diamonds while he's at it: "Diamonds are not necessarily a girl's best friend; that is a marketing slogan. Diamonds do not go up in value; there is no actual investment return on them." Then Dave addresses the headlines designed to scare people into gold, stories about the dollar being threatened by China, Russia, or Brazil: "You can't run to gold because there is nothing magical about it." His geopolitical take is sharp: "While Russia and Brazil are large landmasses, they are not large economies. Texas has a larger gross domestic production than Brazil; Texas is a bigger economy. These countries are going to have to do business with the '800-pound gorilla,' and we do business in dollars, so they are still going to be at our mercy." His advice to the caller? Pull the required distribution out of the 401k as the law demands, and move it into good mutual funds in the process.
Black Edge83,185 Aufrufe • vor 2 Monaten
Dave Ramsey on the wealth-building sequence he believes turns ordinary earners into millionaires: A 22-year-old caller phones into Dave Ramsey's show with $104,000 left on his mortgage, $10,000 in savings, and $1,800 left over each month after bills. His question: Should he start investing $1,000 a month, or throw everything at the mortgage? Dave's answer reveals the order he believes wealth-building has to follow, and the math behind why this caller is on track to become a millionaire decades before most people. First, Dave confirms the foundation is in place: "You're debt-free except your mortgage. You have your emergency fund in place of 3 to 6 months of expenses?" With $10,000 saved and a household income of $50,000, the caller is ready for the next phase. The order matters. Retirement comes before any extra mortgage payments: "15% of your income should be going into retirement savings." For this caller, that's $7,500 a year. Dave walks him through the mechanics: "You set that up as a Roth IRA… you basically knock it out with one Roth IRA. It's $7,000 a year or $6,000 a year you can put in it… A little bit in your name, little bit in your wife's name. You put 4,000 in each if you want." The key is automation: "You set that up as a monthly hit on your checking account going straight into mutual funds into a Roth IRA." Kids' college would come next, but the caller skips it because he doesn't have kids yet. Only then do extra mortgage payments enter the picture: "We pay everything else on the mortgage." Then Dave runs the numbers on what 15% actually does over a lifetime: "If you invest 15% of your income for the rest of your life, you'll have $10 million or more." The caller mentions his wife will soon start working full-time after finishing school, which they paid for in cash. Dave sees the compounding effect: "That will increase then the 15% going into retirement. And on top of that, then you'll have more money to throw at that mortgage and knock that mortgage out. I suspect you're probably going to be millionaires around 30 to 32 years old." The caller asks the obvious follow-up: If he can do more than 15%, should he? Dave's answer is firm. Not yet. Everything above 15% goes to the mortgage until it's gone. Only then comes the final phase: "Once you pay off the house… there's nothing left to do then but become very, very wealthy and be very, very generous. So yeah, you max out everything in your retirement and you do more investing."
Black Edge52,865 Aufrufe • vor 1 Monat
Warren Buffett on why chasing yield on cash is a mistake: A Berkshire shareholder, Ed Schmidt, asks where all the sidelined money is being held, pointing out that every option looks bad: Banks paying nothing, risky corporate bonds, and government bonds that "seem less and less sound as each day passes." Buffett agrees the choices are poor, but says it doesn't matter, because Berkshire treats short-term money completely differently from most investors. "He's certainly right that all the choices are lousy for short-term money now, but we don't play around with short-term money." He explains that in 2008, before the crisis hit, Berkshire owned no commercial paper and no money market funds. The big money stayed in treasuries, earning almost nothing, and Buffett is blunt that the temptation to reach for a little more is exactly the trap to avoid: "The last thing in the world we would do at Berkshire is to try and get five or 10 or 20 or 30 basis points more by going into some other things with our short-term money." His framing for why is simple: "It is a parking place. It's an unattractive parking place, but it's a parking place where we know we'll get our car back when we want it." The reason that matters became clear in September 2008. Berkshire had committed $6.5 billion to the Mars-Wrigley deal months earlier, long before anyone knew what that autumn would bring. When the date arrived, the form of the money was everything: "I had to show up with $6.5 billion. I couldn't show up with a money market fund or some commercial paper or anything of the sort. I had to show up with cash." That's why his conviction lands where it does: "Virtually the only thing I feel good about in terms of having large amounts of ready cash is treasury bills." Charlie Munger puts it more sharply, reframing the whole question as a discipline issue rather than a yield issue: "I think it's really stupid to try and maximize returns on short-term money if you're an opportunistic game the way we are, where we want to suddenly deploy money." He points to pipelines that came up for sale on a Saturday and had to close by Monday. There was no room to be stuck in "some dubious instrument" when the cash was suddenly needed. Buffett adds his own version of the same story, a pipeline whose seller feared bankruptcy the following week and needed the money immediately, with regulatory clearance still pending. Berkshire offered to close early and let the regulators review everything afterward, even unwind the deal if required. The point being that readiness, not return, is what closes deals: "Our ability to come up with cash when people need it, and when the rest of the world is petrified for some reason, has enabled several deals to get done." And that is the entire logic behind holding tens of billions in treasuries earning almost nothing: "When somebody comes to us and they say we need a deal right now, we can do it, and they know we can do it, and it can be big. It just has to be attractive."
Black Edge46,500 Aufrufe • vor 1 Monat