Develop independence, skepticism, good judgment, and courage as an investor. Use this temperament to sense crowd behavior and either ignore it or act contrarian to it.
Make ‘doing nothing’ your default investment strategy to avoid unnecessary fees and taxes. Only take action if a recommendation is compelling enough to clearly improve upon your existing sensible plan.
Proactively structure your environment to minimize exposure to market triggers if you react emotionally to fluctuations. Turn off market news, unfollow reactive social media, and follow long-term thinkers to reduce emotional amplitude.
When consuming any information, especially claims or conclusions, demand to see the original sources. If sources are not provided, move on, as you cannot independently verify the information’s reliability.
Before making an investment trade, ask yourself what unique knowledge you possess that others don’t, and why you believe you know more than the other party. If you lack strong answers, refrain from trading to minimize risk.
Always ask for the base rate (historical average or probability) when evaluating an investment or making any decision. This provides crucial context and helps avoid being swayed by individual, potentially misleading, stories.
To thrive in a bear market and potentially outperform, ensure you have both available cash and the courage to buy assets when others are fearful. Without both, you cannot capitalize on market lows.
Reduce investment errors over time by trading less frequently. Trading is described as an act of hubris that increases opportunities for mistakes.
To truly understand the weaknesses in a sales pitch or idea, try to define it cynically and humorously. This exercise measures your skepticism and reveals flaws in the idea or your own thought process.
Read fiction, historical biography, and philosophy, focusing on beautifully written works that have stood the test of time. This practice helps gain a long-term perspective and wisdom.
Actively seek out and listen to the wisdom of older people (75+ years old). Their collective experience is a massive and underappreciated source of knowledge.
Establish a strict rule to avoid reading work-related material outside of office hours. This creates mental separation, prevents burnout, and allows for broader personal learning.
Begin your day early, read for a few minutes, and go to the gym. This routine helps clear your head and prepare you for the day ahead.
When creating or presenting information, clearly show your sources and how you learned it, for example, through links. This builds trust with your audience and allows them to verify your claims.
To improve a skill, such as writing, dedicate consistent, focused time to practice daily. Prioritize this practice even over other responsibilities to ensure continuous improvement.
Reread books that have had a significant impact on you multiple times. This practice deepens understanding and better integrates their wisdom into your thinking.
Read physical books for a tangible experience and better recall of information location. Take notes in paperbacks or on separate scrap paper for hardcovers to preserve them.
Financial advisors should actively foster stronger loyalty and trust with clients by demonstrating commitment to their long-term best interests. This can involve contracts or incentives that discourage short-term, unnecessary activity.