1. Invest in Businesses, Don't Trade Stocks

  • Allocate capital to businesses, rather than just "buying shares." Know and understand what you own.

Many market participants are not actual investors. They buy and sell stocks without regard to what they're actually owning. Many mutual funds, passive investments, trackers, quant funds and even traditional mutual funds do not fundamentally know anything about the underlying companies in whose shares they transact.

Remember why the stock market came into existence- it was to allocate capital to businesses. That is how we think about investing- we make decisions based on which companies we want to be part owners of. As capital allocators, we want to know and understand what it is that we're buying.


When you invest, you participate like a business owner. You analyze the fundamentals of the company: what are its products, what do its markets look like, where are the strengths/ weaknesses, what is the competition doing etc. These are all things that we can genuinely analyze and establish an opinion on.

When you trade, you are buying an asset without paying attention to what it is you’re buying. As a result, you don’t really know what it’s worth. How can you if you don’t know what it really is? Instead, to generate a return you’re reliant on someone else being willing to pay more than you did for it. And so you are relying on being able to judge and predict the sentiment and emotions of thousands of market participants.


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