Great post, I’m almost perfectly aligned except on concentration. With the benefit of hindsight my 11-30th fave ideas produced a handful of gigantic winners (SMCI to pick a high profile example of something that always was attractive but not exceptionally so). Gigantic winners drive performance. The gigantic winners you miss out on being too narrow introduce unnecessary luck. Too many long duration growth stories are mispriced to own just 10 imo. Beware embellishing how much better your top 10 are v your top 30. Even a strategy with say 3 big poles and a broader 15-25 basket underneath is good compromise. TSLA maybe example of an 11-30 co. Long duration view: inevitability in autonomy. As exciting as PL? As satisfying to get right? No. But 10% in PL is inferior to 8% in PL and 2% in the humanoid robot front runner unless you’re just maxing variance. Anyhow, just 2 cents from someone who took much longer to learn what you describe here. Can’t believe you’re 23.
Brendan, thanks for reading and sharing your perspective. The risk/reward of concentration vs. diversification is always interesting to think about. I've gravitated one way, but you make a good point. Maybe counterintuitively, I think it comes down to feeling more comfortable owning a few companies that I know well over a lot of companies that I know less well.
No recipe for sure. At a minimum I think there’s value in reserving say 10% of your portfolio for play that incentivizes you to always be seeing new things. More actual slots in the portfolio, I find, opens my aperture to seek out and notice new things. And the best guarantor of not falling in love is a clear picture of opportunity cost in the form of many interesting companies you barely or don’t down. Just speaking from my own mistakes as someone innately geared towards concentration. I’m re-discovering right now how much I enjoy broad search, and how grounding it is to have many gists in mind to compete against each other. Thanks again for the work.
Hi Tim,
Out of interest what are the companies that you are happily holding for the long term?
👍🏼
I've written about a few of them on here. Will keep others to myself for now, but expect I will continue to explore my positions
Great post, I’m almost perfectly aligned except on concentration. With the benefit of hindsight my 11-30th fave ideas produced a handful of gigantic winners (SMCI to pick a high profile example of something that always was attractive but not exceptionally so). Gigantic winners drive performance. The gigantic winners you miss out on being too narrow introduce unnecessary luck. Too many long duration growth stories are mispriced to own just 10 imo. Beware embellishing how much better your top 10 are v your top 30. Even a strategy with say 3 big poles and a broader 15-25 basket underneath is good compromise. TSLA maybe example of an 11-30 co. Long duration view: inevitability in autonomy. As exciting as PL? As satisfying to get right? No. But 10% in PL is inferior to 8% in PL and 2% in the humanoid robot front runner unless you’re just maxing variance. Anyhow, just 2 cents from someone who took much longer to learn what you describe here. Can’t believe you’re 23.
Brendan, thanks for reading and sharing your perspective. The risk/reward of concentration vs. diversification is always interesting to think about. I've gravitated one way, but you make a good point. Maybe counterintuitively, I think it comes down to feeling more comfortable owning a few companies that I know well over a lot of companies that I know less well.
No recipe for sure. At a minimum I think there’s value in reserving say 10% of your portfolio for play that incentivizes you to always be seeing new things. More actual slots in the portfolio, I find, opens my aperture to seek out and notice new things. And the best guarantor of not falling in love is a clear picture of opportunity cost in the form of many interesting companies you barely or don’t down. Just speaking from my own mistakes as someone innately geared towards concentration. I’m re-discovering right now how much I enjoy broad search, and how grounding it is to have many gists in mind to compete against each other. Thanks again for the work.
Great post, very much appreciate your thinking. Keep sharing it! It’s made me think differently about Planet and Spire Global.
Appreciate you reading Nathan! Glad you’ve found it interesting