Long-Term Investing Ideas in a Volatile Market
Simon recently spoke with a $35 billion global asset manager about how they're navigating the market volatility. The key takeaways are to think long term, tune out the noise...
The first No Limit Episode of 2023 is full of the goods Santa forgot to bring you!
January 10, 2023– By Samantha Bailey
The first No Limit Episode of 2023 is full of the goods Santa forgot to bring you! There are, sadly, lumps of coal as we discuss the Worst of 2023, including our worst investing habits, ideas and investments, not to mention Luke’s winner in the “A supposedly fun thing I’ll never do again” category. Hint: his gourmet palate is a work in progress.
There are also lots of goodies in the Best of 2023 bag, including Luke’s decision to watch the best TV show of all-time (finally!), YCharts, and our high esteem for the 7investing community, chatGPT shenanigans, a revolutionary CRISPR cancer cure, and @StockMarketNerd.
Speaking of Nerds, Krzysztof of course had to go on and on about his Top 5 books of the year while Luke spoke to the cool kids about his great adventure at the Glastonbury Music Festival paying homage to some friendly rock n’ roll chaps. Plus New Year’s non-Resolutions galore and a jolly good time on this expansive year-end review episode. Happy 2023 to all!
[00:00:00] Luke: Hi, and welcome to another episode of No Limit with Krzysztof and Luke. This is our first episode of 2023. I think it’s episode eight. Overall, I’m Luke Hallard and I’m joined as ever by my good buddy, Krzysztof Bakowski. Hey, hey.
[00:00:13] Krzysztof: Hey, how you doing? Luke? Happy New Year to you.
[00:00:16] Luke: Happy New Year to YouTube.
[00:00:17] Krzysztof: We couldn’t get out of, uh, 2022 fast enough. Could we
[00:00:23] Luke: and I thought 2021 was bad
[00:00:27] Krzysztof: I’m pretty sure 2020 wasn’t all that great either.
[00:00:30] Luke: Yeah,
[00:00:31] Krzysztof: so, so far the roaring twenties, it’s been pretty rough.
[00:00:37] Luke: It has for, uh, for lots of people in lots of different ways. 2020 was good for my portfolio, but kind of bad in the rest of the rest of life for sure.
[00:00:45] Krzysztof: And, uh, as, as Bob Dylan once sang, just when you thought you’ve lost everything, you could always stand to lose a little more. But that’s not how we’re gonna, that’s not the tone we wanna set for this year. We want, uh, we want to be optimistic, we wanna be bright. All kinds of progress and all kinds of fascinating things are happening in this, in this little bluegreen planet of ours.
So, let’s talk about good stuff,
[00:01:12] Luke: Let’s talk about good stuff. Oh, before we talk about the good stuff though, I do have to make a bit of a fess up and do a, uh, correction from episode seven. If you don’t mind, I’m gonna jump in quickly. I got a DM for one of our listeners, uh, JT Morgan cunning name there. Um, and he took umbridge with some of my commentary around.
I think basically me saying I’m not that proud of being a Tesla driver these days, and because of Elon Musk’s kind of behavior, you know, the, the bad CEO being a bit of a naughty schoolboy reflecting on my ownership experience. And then I, in the same breath, I think I said, and competition is coming from China and companies like b y D.
So I think, to be fair, jt uh, picked me up on should I really be proud of driving a Chinese ev instead of my Tesla? So you’re absolutely right. Probably shouldn’t. You’re right, jt. I wouldn’t be super proud of Giant driving a Chinese vehicle right now.
[00:02:07] Krzysztof: Yeah. That’s fascinating. Principle of, uh, no holy place to stand, you know, especially in the, because the, I think of it in those complexity terms that once you reach a certain level, Multiple variables. There’s too many, and some of them will be far from perfect.
[00:02:24] Luke: right.
[00:02:25] Krzysztof: So in, in other words, I guess it’s hard not to be a hypocrite at some point when you’re dealing with thousands of variables.
[00:02:32] Luke: Yeah. I suppose our takeaway stands though, from last week, right? Um, ideally we don’t want the CEOs of our companies to be kind of crazy public figures, I suppose, for good or for bad. Just kind of Lilo focus on solid execution and solid strategy. That’s what I want my CEOs to be up to.
[00:02:48] Krzysztof: Yeah. And, and something like, I guess the issue with trying to, to simplify things, fix free speech is unwinnable to a certain extent. I mean, that’s why you have government and law and courts and that line is maybe why law exists in the first place. So to, to get .
Mired in that battle when you have rockets and cars and energy to, to worry about is just it seems like not the wisest course for an engineer to take.
[00:03:21] Luke: But anyway, so maybe Happier News as well as we’re in the intro. Um, I think you may have recommended The Wire to me way back on episode. I don’t know, two or three. Uh, so Katrina and I finished the Wire a few days ago. Fantastic. What a show. Incredible.
[00:03:37] Krzysztof: what a show. Huh.
[00:03:39] Luke: we had to, we had to charge through the last season pretty much cuz I’m, uh, I’m heading off to Lake Tahoe in about two days time, so we wanted to finish it together, but, uh, but it was pretty.
[00:03:47] Krzysztof: So I think I mentioned that I teach this show at, at the university and I, I use it to teach systems thinking too, which I think you could see, right? Like how that fits in.
[00:03:58] Luke: Uh, I hadn’t thought about it in that way. Gone. Well, like broken systems, you mean?
[00:04:03] Krzysztof: yeah, exactly. If, if you think about, uh, all the characters that have really good intentions but then can’t get anywhere, that’s because they’re thinking from that level of the individual.
But what the show is asking us to do is to sort of back up and see how do all the pieces work together or where are the failure points.
But it’s hard to take that on the individual level, right? It’s hard to have enough wisdom zoomed way out. Uh, but I always like asking people who have had their first experience with the show to rank their seasons, to rank the seasons, because that says so much about, you know, what you liked and what you didn’t like.
So can I ask you that?
[00:04:49] Luke: Uh, yeah. Um, so I knew there was a, I don’t, we got a bit avoid spoilers because actually one of my buddies kind of gave me a big spoiler years and years ago. So all I’ll say was I knew there was a very significant character death coming up at some point. So I spent every season wondering like, is this it?
Is this it? Every time we saw this character, and it was especially, uh, heart rendering because Katrina, who hadn’t, wasn’t aware of that spoiler, loved this character particularly. And so, uh, every time he’s, he’s doing a scene, I thought, is this the one where Katrina goes, oh my God, what’s happened? ? Um, so, uh, so I spent, I suppose I spent, I watched it Pensively waiting for that moment, which came fairly late, I suppose.
Um, do I have a
[00:05:34] Krzysztof: Well, to be fair, also, to be fair, many characters suffer that fate
[00:05:39] Luke: Right, right, right. Yeah.
[00:05:40] Krzysztof: and they’re, and many of them become, become favorites, so, yeah.
[00:05:44] Luke: right, for sure. But, uh, to answer your question, do I have a favorite season? Like actually I really like season two. Um, I thought that was interesting and I thought it was gonna be like a police drama, I suppose. So suddenly when it’s kind of all about the unions and the dock workers, it’s kind of clearly the show’s about something a little bit different.
Uh, so that was interesting. Um, I’d like season four, was that the school kids one, the school That was pretty cool. Like a whole different range of characters and that kind of set up a lot of, I suppose, good and tragic outcomes when you see kind of what happens to some of these kids. That’s quite interesting.
[00:06:22] Krzysztof: I’ll tell you, Luke, uh, in all the works of art that I’ve processed over the years, I would say season four of the wire broke my heart, maybe more than anything else I’ve encountered.
[00:06:35] Luke: Yeah. Yeah. It’s, uh, it’s tough. And you, and you see one particular character there, sort of trajectory that you see in Season five by the end in the closing montage, I guess you know what I’m talking about. That’s like, wow. Katrina’s still talking about that like a few days later.
[00:06:49] Krzysztof: Yeah. It’s curious also to hear you say, mention season two as one of your favorites, because that is the oddball and most people are get, get, you know, it’s the eccentric one out of the five most eccentric maybe.
I love that duck though. Ziggy’s,
[00:07:06] Luke: yeah,
[00:07:08] Krzysztof: Ziggy’s, duck,
[00:07:09] Luke: That’s so ridiculous. That’s very funny. Yeah. Yeah. So this guy, uh, so there’s another show written by, is it David Simon? He’s a author, yeah. Okay. Is that, is that highly recommended also?
[00:07:20] Krzysztof: you mean Treme?
He did a mini-series called Generation Kill About Soldiers, US soldiers in Afghanistan or Iraq, one of the two, I’m pretty sure. Afghanistan and then Treme, which takes place in the aftermath of Katrina in New Orleans, which is phenomenal.
[00:07:39] Luke: Okay, great.
[00:07:39] Krzysztof: And then another one about, uh, New York City and pornography in the seventies,
[00:07:47] Luke: Okay. Interesting.
[00:07:48] Krzysztof: the, the beginning of that era.
But, um, just so I really, really respect his work.
[00:07:54] Luke: Yeah, that’s good stuff. Well, I think I’m, I think we’re gonna watch, uh, the Sopranos next cuz basically I came to the Wire having like Googled best TV shows of all time. And those two were various lists in positions one and two. So,
[00:08:08] Krzysztof: and you’ve never seen The Sopranos before?
[00:08:10] Luke: now I haven’t, no,
[00:08:11] Krzysztof: Oh, fascinating. Okay. Oh, man. S uh, you know, one last thing maybe about The Wire is only three days ago a new major book about The Wire came out, which is, which was an official, one of these official projects, which David Simon Par partook in with all kinds of backstories and photos and, and documentation of the set itself and how that show got created.
And I’ll say you’ll often see the wire listed as the best show of all time, depending on, you know, critical agendas in, in
[00:08:50] Luke: Yeah.
[00:08:50] Krzysztof: whatever variables they’re using. But for my money, the word best, you know, is, is often subjective and.
[00:08:58] Luke: yeah.
[00:08:58] Krzysztof: but I, I feel that it’s an important show, extraordinarily important show because it helps us think in ways that as investors, it, it, uh, we need to think which is, which is to include in try to have a sense of the big picture rather than being myopic.
And when we run into problems like these characters on the show, it’s kind of like we get tunnel vision and this show forces us to just really zoom out. And I just feel I’m, I’m a better thinker, f as well as citizen, honestly, for having watched that show.
[00:09:36] Luke: You’re a, a professor of literature and you’ve studied this show and I’ve, I’ve covered it just as a kind of view. I, I, I saw it differently, but I’m clearly, you know, wrong. I haven’t applied the right intellectual muscles. The, the overriding message to me was like the futility of these systems and how these characters kind of bang around and, uh, you know, try and fix some things in their own ha passive ways.
And in the end, everything endures and, you know, and they get an outcome that isn’t necessarily, uh, you know, comic based on their behaviors. Uh, maybe they’re a great character and they end up with a terrible situation or vice versa. Um, so yeah, kind of, you know, I almost felt like what’s the point for any of these characters?
But so what’s the, how do we take the sort of systems thinking lesson outta this?
[00:10:22] Krzysztof: Well, if you think about one, I’ll talk about one plot point, a major one in season three, which revolves around one of the high up. Uh, police, I don’t know if it’s lieutenant or whatever, some high up where he goes rogue and legalizes drug use and creates something called Yeah, bunny Colvin because he saw that the war on drugs was not making things better.
So he, he created an alternate system, but that too has spectacular failures. Right. But at least he was thinking in the correct way. So I think if we, cuz we, we like talking about cynicism and optimism, right? We’ve talked about that before.
[00:11:09] Luke: Mm-hmm.
[00:11:10] Krzysztof: It seems like what’s required is, it’s not enough to, well put it this way, I think it’s cynical to some extent to say the systems are messed up and therefore there’s nothing to be done.
but then you take the second step and you have the bunny Colden character say, okay, I’m gonna try to do things in a different way. And that too fails. But there’s, I think an obvious third step is like, that’s okay. , these first two options don’t work. But maybe the solution, you know, the thinking was correct, but an alternate solution could be implemented.
Right. It’s, I don’t think it’s the correct conclusion to say we’re doomed forever
[00:11:57] Luke: Yeah.
[00:11:58] Krzysztof: just because, right. I mean, I hope not. I mean, but that’s, I guess, what makes an optimist, right? Versus a cynic or a pessimist.
[00:12:05] Luke: Uh,
[00:12:06] Krzysztof: The trick being you, you, you just have to identify the correct levers to, to press and, and to pull.
[00:12:11] Luke: Good. Well, let’s, uh, let’s see how we can apply more systems thinking to the way we live our own lives. That’s a, that’s a good, uh, ambition for 2023.
[00:12:20] Krzysztof: It’s a good ambition all the time. It’s just hard to do.
[00:12:24] Luke: so what have you been up to then? What’s, uh, what, what little experiments have you been running over the last week or two?
[00:12:28] Krzysztof: You know, I’m still, I need to check back in with you about the cold showers, cuz I just had one, uh, 20 minutes ago. And, uh, I’m still absolutely thrilled with that, with that experiment. Not, not, not during it, mind you, but it feels like it’s starting to give me, I wouldn’t say superpowers exactly, but I did notice when I was walking around and there was a cold breeze, you know, and typically I would just start kind of like retract and get all, you know, just, but instead I kind of just welcome.
If that makes sense. And it was no big deal. So I, I think there’s, you know, something’s happening here
[00:13:13] Luke: I haven’t re experimented, but if I ever feel the need to be particularly fresh, I’ll, uh, I’ll turn the temperature down at the end.
[00:13:20] Krzysztof: Otherwise I want to become obsessed with reading in 2023.
[00:13:25] Luke: great.
[00:13:26] Krzysztof: That’s kind of my new experiment.
[00:13:28] Luke: Are you not
[00:13:28] Krzysztof: I wanna read more
[00:13:30] Luke: Like, of all the people I know, I would’ve said you were top decile of obsessed readers.
[00:13:35] Krzysztof: and yet, and yet I know there’s infinite room for to up my game.
So I’m, I’m planning to write a, uh, a ck that offers a little bit of a synthesis of what my experience with that book was. And kind of just keep a Rolling report so that that synthesis part that comes after reading that there could be, I could squeeze more of the lemon and maybe some folks who follow my character by design subs could benefit from all the books that I read. We’ll see how it goes.
[00:14:11] Luke: become a subscriber in the last couple of weeks. I don’t know how closely you watch your side ups. Yeah, it’s, it’s, uh, really good stuff. I dunno how you find the time to have all these other side projects, including this podcast,
[00:14:21] Krzysztof: Yeah. Right. I mean, life will be dead soon, Luke, so might as well squeeze all, squeeze all the stuff we can
[00:14:27] Luke: Hey, look, get the, uh, get the, get the full plugin. Tell us about character by design.
[00:14:30] Krzysztof: it’s a project I started maybe three years ago. Where, where for, no, it’s longer than that now. Wow. Geez. As I go through my, the week, I try to keep my ears open for stuff that revolves around the cultivation of character, things we could do, or, you know, bits of wisdom we encounter to help ourselves, I guess grow, like wake up and grow up, so it’s part about habits, it’s part about wisdom, chunks, it’s part about.
I mean, it’s kind of a, a, a mishmash of stuff, but from my my point of view, character becomes our destiny. You know, like the, the way we shape our minds and treat our bodies. That’s kind of this, you know, if life sucks, it’s probably cuz our character sucks, right? And if, if we end up being joyful and happy and at ease, it’s probably cuz we’ve learned how to tap in, in, into those higher wisdoms.
So it’s kind of a blog that, that, uh, tracks good character stuff.
[00:15:31] Luke: It’s, uh, it’s, it’s nice. It’s a nice heartwarming read. Um, I enjoyed your most recent post. Where would, where would our listeners find character By design?
[00:15:40] Krzysztof: The actual address is character by design, all one word.dot com.
[00:15:47] Luke: If you are, uh, if you’re feeling a bit down, uh, as you look into 2023 and what the future might hold, I think Christoph’s latest post might give you a bit of a heartwarming bump. So go to go check it out.
[00:15:59] Krzysztof: thanks for reading Luke. Uh, that, that’s really cool that, that you signed up. Right on.
[00:16:03] Luke: I’m glad you’ve got a, uh, like a bunch of projects and you found the time for that. I guess I’m, uh, being a bit more selfish and just focusing on skiing and snowboarding for the next couple of months, so, uh, not much time to do other stuff, I think one thing we were planning to do this week though, cause I guess we are now firmly into 2023 by the time this episode goes out, is to do a bit of a look back at some of the best and worst moments of 2022.
We’ve posed five categories of best and Worsts and we’re gonna surprise each other with our answers, hopefully.
[00:16:35] Krzysztof: Yeah. Can’t wait to hear what you came up with. I think Luke, the first category, if I’m not mistaken, according to our chart, was tool. You know, like what was the, the best tool that you discovered in 2022?
[00:16:49] Luke: So I, I went with something pretty investing centric here. I’ve tried to be a bit mishmash of investing and non investing stuff, but I mean, frankly, YCharts is just a fabulous tool. It’s quite expensive. I wanted to use it in the past, but I couldn’t afford it. But it now comes as a part of the benefits of being a seven investing lead advisor.
And it’s, uh, it’s a pretty powerful way to understand a company and a financial statement and run screeners and just kind of understand what’s happening. So, uh, that’s, that’s added a lot to my own ability to do good quality due diligence. How about you? Let’s talk.
[00:17:23] Krzysztof: Yeah. Yeah. I love it too. I want to, I, I, my answer is cur it’s two part, I, I wanted to say chatGPT as the most obvious right tool that is like, it’s kind of like a, uh, a nuclear explosion in, in, in terms of like its capacities. And yet it’s not my answer because I still haven’t learned to use it, properly.
I could tell that I. , uh, don’t have the, the proper sophistication and proper framework to take advantage of all its power. So it’s still, I imagine that’s what 2023 will be for. So instead, I’m gonna give maybe an obvious answer, which is Twitter.
[00:18:09] Luke: Yep.
[00:18:10] Krzysztof: I still think that the kinds of rabbit holes I’ve fell into and people I’ve encountered by having a liberal policy of continuum follow many, many people, which is an an interesting thing to talk about itself, by the way, right?
Some people follow only a few accounts or select accounts, and then others follow a seemingly infinite number. And I’m in the latter, which is kind of counter to my usual strategy. But that’s because every time I, I look at Twitter, I really don’t know what I’m gonna see. And that keeps new voices popping up and new views showing up.
And I was genuinely surprised at how much authentic value is produced on that platform, mostly for free.
[00:18:57] Luke: Yeah,
[00:18:57] Krzysztof: And, and how that’s impacted my, my investing acumen, you know, leads and, and websites to check out and all kinds of stuff.
[00:19:07] Luke: it’s good. I’m big fan also. We joked about it a few weeks ago and you said, you know, look, Musk can continue to run this company with 25% of the workforce. Well, I’ve sent you a little news article yesterday. I dunno if you saw it. Uh, they’re being sued cuz they haven’t paid their rent on their San Francisco offices.
it’s all this stupid stuff that’s kind of you falls between the cracks when you fire like most of your organization, someone’s not paying the bills. Yeah,
[00:19:31] Krzysztof: Yeah. It’s like, what are we forgetting this one?
[00:19:33] Luke: yeah, that’s right. So hopefully there’s nothing, uh, like service destroying that happens like that. Um, I’m sure they’ll be on top of their real estate bills.
[00:19:44] Krzysztof: yeah. So I highly encourage any listeners who don’t use Twitter, to take that leap into this, into the Twitter world and curate for yourself some of the best investors that you trust. And it’s amazing what you’ll learn.
[00:19:58] Luke: Totally agree. Well, let’s give our own handles a plug, right? We are trying to accumulate, uh, followers, particularly for the show. So, uh, I am seven. Number @7LukeHallard,
[00:20:09] Krzysztof: And, um, @7FlyingPlatypus.
[00:20:12] Luke: Good.
[00:20:14] Krzysztof: Which I’m still
[00:20:15] Luke: Yeah.
[00:20:15] Krzysztof: Yeah. Which I’m still getting used to, but
[00:20:18] Luke: So hopefully we’re a good place to start. Uh, if you are really baffled by Twitter, I’ve got a relatively curated list of people I follow. I’m in that former camp you discussed. So like I say, just go check out who I follow. If you’re really completely baffled and you want to use it as like an investing tool,
[00:20:33] Krzysztof: . Fantastic way to have off the cuff conversations too. And you never know who’s gonna respond and it’s, it’s quite a world. Yeah.
[00:20:40] Luke: So that was our first best
of it. Should we do all our best and then we’ll do the worst? Or you wanna alternate?
[00:20:46] Krzysztof: Yeah. Let’s, let’s go, let’s do the good news first.
[00:20:50] Luke: Uh, so you go first on this next one then. So, uh, this category was Best book article, or,
[00:20:56] Krzysztof: I couldn’t help it loop, but I’m gonna cheat so hard. I’ll try to make this quick, but I pulled off what I thought would be. Well, were five of the most impactful books for me as, as from an investing standpoint. Now I’m just gonna, I’ll name them, but I’ll also show them for any, for any YouTube listeners.
[00:21:19] Luke: A couple of those. At least one of those looks familiar to, uh, people who’ve caught the Prius seven episodes of our show. But go and tell us what you’ve got there.
[00:21:26] Krzysztof: Yeah. So, uh, I wanted to rejuvenate my understanding of Bio, bio and, you know, with CRISPR and all these technologies in the bio and BioHealth field. So I read, uh, the History of the Gene by, I think I’m pronouncing his name, Siddhartha Muk.
[00:21:45] Luke: Okay.
[00:21:46] Krzysztof: And then I followed that with Walter Isaac Isaacson’s biopic of. Of, uh, Jennifer Dou Doudna, gene editing and the future of the human race.
So this is all about how CRISPR was born, which by the way, one side tangent I heard on the All In podcast, the, the recent podcast, I don’t know if you listened to that, I think named a recent CRISPR innovation as his major scientific breakthrough of the year, which was overshadowed by nuclear fusion. But it, but I did not have time to look more into it.
But from what I remember, somebody with really bad terminal cancer,
[00:22:31] Luke: Yeah.
[00:22:31] Krzysztof: uh, underwent CRISPR therapy and is now cancer free.
And there was no two ways about it. This person was going to die and now they’re cancer free. So the CRISPR stuff truly is astounding and. you. Um, I couldn’t be more excited for humanity based on this technology and this book combined with the Gene, really gives, gave me a good idea of, you know, like the sciences, the journey, how it all came to be.
[00:23:00] Luke: I will say you’ve made an interesting sort of biotech stock recommendation as part of seven investing very recently, so now at least I know you’ve, that’s founded in quite a, quite a deep reading as well, so well done on that.
[00:23:12] Krzysztof: Well, yeah, this is a little bit of a deliberate effort, but I’ve now made three, three biotech and I think three non-bio. So I’m kind of walking, uh, kind of like a platypus. I don’t know what I
[00:23:26] Luke: Yeah.
[00:23:28] Krzysztof: Uh, and the other, uh, I won’t belabor this, but I thought the Metaverse was really pr profound insights into how. , all these new powers of computing are, are potentially going to create this new universe for us. And what I think is the best overall read of the year for me, investing wise Chip War, because it’s a thriller, it’s a history book, and it’s a, it’s a history lesson in, in an industry that I think is going to define the next, the foreseeable future.
And one more that I have not talked about on this show, but I thought it was so well done and so expertly explained, it’s, it’s a book called How Finance Works and uh, it’s by professor at Harvard, Mihir Desai. I’ll say something about chapter one. because this was such a good exercise.
It’s called the Unidentified Industries game. And he shows you basically the balance sheets of uh, something like 10, 15 companies without their names and then the candidates, and you’re trying to match up the balance sheet with the industry. Right. That it’s in working backwards based on, you know, uh, and I thought it was such a good puzzle to, to work out.
And especially if you’re not keen on the, you know, financial analysis part of investing. This book really does a good job holding your hand.
[00:25:04] Luke: I’ve seen like a bunch of those kind of quizzes on Twitter, and I’m woeful of them, so I might go check it out myself, try and hone my skills at reverse engineering a balance sheet.
[00:25:12] Krzysztof: Yeah, you learn, right? There’s so many assumptions and so many things that seem obvious in hindsight, you could learn. And, uh, finance is complicated, right? I mean, it’s such a complicated field. And then when that thinks, they understand it. They, I mean, well, I mean, , there’s, there’s degrees, right? But you could always learn a whole lot more.
[00:25:33] Luke: Yeah.
[00:25:33] Krzysztof: So those were, yeah, my top five reads from, uh, from an investing standpoint.
[00:25:38] Luke: Very good. Well, you got a long answer. I’ve got a super short answer. So, and I’m, you know, I don’t really read, I did actually read a book this week. I’ll talk about it a bit later, but, um, uh, so I’m just gonna plug, one of my favorite Twitter follows actually, uh, is a friend of the show, Brad Freeman, goes onto the Twitter handle @stockmarketnerd or one word, um, just super smart young guy, really interesting takes on companies, super transparent.
He follows a lot of companies I’m really interested in. I think he’s a great Twitter follow. In fact, if you are joining Twitter and you’re looking for like, where do I start? Just follow him. Start with, forget looking at my profile, and, uh, you’ll learn hell of a lot
[00:26:17] Krzysztof: Yeah, I agree. Uh, I’m a big fan of Brad. Maybe we, we can have him on the show, , maybe soon, to talk about some of his views about the coming year. But yeah, I lo I love his work ethic. I love his transparency and diligence. And you could also, uh, I, I get that sense like, yeah, here’s a, a good dude, you know, like, here’s a good dude trying to do good work and providing lots of value and love it.
Love seeing people like that.
[00:26:43] Luke: Very good.
[00:26:44] Krzysztof: Okay. I, oh, you reminded me. I was in the bookstore yesterday as I te you know, when in do like if you, if, if you’re ever looking for me, you know, like check, check the lo local book market. And I, I actually took it off the shelf, the count of Monte Crysto.
[00:27:02] Luke: Great.
[00:27:03] Krzysztof: And I was like, I had the, the sweet sweetheart, like this p uh, hardcover, um, penguin classic edition. And I was, oh my God. I was like, oh, I would love to read this right now. And I couldn’t. I couldn’t, uh, I’ve got too much already. I was like, I can’t go to 19th century. What is this, 19th century, uh, France
[00:27:28] Luke: Yep. You know, you’re gonna, uh, you’re gonna like, hate me for this, but I literally do all my reading, like right here on my ebook reader on my phone. Not even like an actual tablet, like a reader, literally
[00:27:42] Krzysztof: Oh my God. That’s sad.
[00:27:45] Luke: convenient. I can read anywhere like little micro snippets so I don’t keep Katrina awake at night if I’m kind of buried in something with a torch, if I’m so used to it.
And, and you can like, you know, you can like annotate and put, like, if you’re reading something you wanna come back to, you can. , but like, little marker without, I, I noticed you sent me a couple of screen grabs of one of your books and like you’ve written all over this thing and like torn it to pieces.
What the hell, man?
[00:28:09] Krzysztof: Well, you know, by your, by your logic Luke, I said we get rid of all the museums. Right? Turn, they’re just taking up space, right? Like, let’s just take a little image, put it, put them on our phone. Uh, the Vango, the Picassos, the Rembrandt, you know, that’s kindling right there. Am I wrong?
[00:28:28] Luke: Uh,
[00:28:29] Krzysztof: Freaking, yeah.
[00:28:31] Luke: you’re making a false analogy. God. Let’s go
[00:28:34] Krzysztof: Okay, so
[00:28:35] Luke: off. We’re nearly half day down The best offs. So this was, uh, best event. What did you have in mind when you, when you suggested this is a category?
[00:28:41] Krzysztof: I had an obvious event that was clearly stood head and shoulders above the rest and was joining the 7investing team,
[00:28:49] Luke: Uh, very good.
[00:28:51] Krzysztof: which happened I think, uh, if, if memory serves. I was already in the hopper during July, but my first recommendation was August. So I spent all of June, prepping. So, you know, I whipped out the old financial analysis books and looking for financial fraud and all that stuff.
That was painful. That was actually painful cuz I was reading finance stuff outta my ears for like 12 hours straight each day. . But what I wanted to say is that investing, it seems to me investing is this infinite game with so many ways of things going wrong and also so many ways of things going right.
But if you don’t do it with a team of allies or a trusted cohort, I would say like people who, you know, have your back and who you know are on your side and who you know, they’re not trying to manipulate you or any of whatever, the eighties Wall Street finance, you know, the stereotypical, you know, people just trying to take advantage of another, if you find a group of people to do this work with, it seems like it’s a game changer.
It not only gave me more confidence in terms of, you know, ideas and. stock selections themselves, but the process, right. Getting to talk to you, getting to talk to the rest of the team, not just on the calls, but if you’re a Slack channel and testing ideas. I mean, it’s, it’s just night and day and if you’re not doing this professionally like we are, there’s still ways to join the Discord channel.
I guess I’m turning this into a little bit of a sermon, um, because it’s so true for me that getting yourself out from the, under the individual mindset and into a more communal project that is, that is huge.
[00:30:51] Luke: couldn’t agree more. I mean, we almost turned this into a bit of an advert for the seven investing discord. It’s like we’re having a good bear and bull debate right now about, uh, one of your companies. It’s, you know, we’re just having like a, a frank exchange of views and it’s, it’s good quality.
Makes everybody a better investor to try and see the other side of it, kind of steel man. things a little bit, but you’re, you’re right as well. That, that personal thing, like I’ve been, I feel really lucky. I’ve, like one of my close personal friends, Albert, like he and I have been co-investors really in terms of sharing ideas and strategies for coming on for 20 years now.
And, uh, you know, that’s just fantastic. It makes the, when things are going well, it makes them feel better cuz you’re kind of in this together and when things are going bad, uh, it makes it feel better as well cuz you can kind of, you know, lean on each other and support each other so emotionally. Um, so, uh, yeah.
That’s, that’s an invaluable thing of relationship to Foster if you can find someone who’s got a similar passion.
[00:31:48] Krzysztof: Right. Not being alone, not feeling alone during the worst of times is a, is a lifesaver in many ways. And the in blind spots, we all have them and they will never, we will never not have blind spots. And tricky thing about blind spots is you don’t know they’re there.
[00:32:05] Luke: yeah. That’s right. Yeah. Yeah.
[00:32:07] Krzysztof: Right. So it takes a good person that you can work with to, to it,
yeah. To I surface them For you. For the betterment of the, of the whole, so yeah. Huge event in my life.
[00:32:19] Luke: Well, I might, I’m gonna lean on that a little bit, but completely different direction, non investing. So the best event I went to last year, I did a bunch of really fun stuff, but Head and Shoulders was, uh, getting invited to Glastonbury by my brother, and also close best friend Matt and Matt’s in the entertainment industry.
So this was exceptional because we were backstage for a bunch of stuff. We had like crew access. It was an incredible couple of days. My link to the previous conversation is, you know, don’t just have an investing buddy, but, uh, you know, take the time to appreciate and love those that, uh, that you’re close to be the friends or.
[00:32:57] Krzysztof: Was there, uh, a particular act that you saw that that
[00:33:01] Luke: Uh,
yeah, I was a massive Oasis fan, British band, Nolan, Liam Gallagher, they broke up. They’re probably never gonna get back together, but NO’S band is called High-Flying Birds. And so, uh, and to be honest, I mean high Flying Birds, their materials fantastic, but three quarters of his set was Oasis.
So that was pretty spectacular. And then we had pretty cool access for that up on some v i p stage thing. That was quite love.
[00:33:26] Krzysztof: Right on.
[00:33:27] Luke: But like glastonbury’s, like this sprawling incredible festival. I’ve been trying to buy tickets for decades and never succeeded. And I didn’t succeed last year. It’s just Matt managed to.
You know, bumble me onto his, uh, his kind of corporate access. Um, but it’s, it’s enormous, like tens of thousands of acts, literally. And it, when you, once you go into the place, it’s a 14 kilometer perimeter around like the outskirts of this thing. It’s so big.
[00:33:53] Krzysztof: Wow. I remember one of your, your, uh, your pitches, your stock pitches was filmed there, and it’s like you won that. You won that month’s award for, best scene for sure. Cool, man. So good. Rock and roll will never die, right? Luke,
[00:34:10] Luke: you got it.
[00:34:11] Krzysztof: even at our ripe old age, right? We we’re still getting out there.
So next, uh, next category we have as something company specific, right? Something the best of, pertaining to a specific company. . I have a tough time with this one to tell you the truth, but, but I, well, maybe tell me what you think. I think it has to do with the CHIPS act.
other words, this is me trying to put, put the stuff I learned from Chip war into practice and the recent announcement that TSMC is going to contribute.
I believe it was something like 40 billion to a new foundry in Arizona. And so I guess it’s specific to tsm, but in a broader picture,
I’m, I’m just really convinced that what I read in Chip war is true, that the future of the world depends on who controls the resources of the most advanced chip making. and that the United States was starting to fall behind for all sorts of complicated reasons. And that we, the, the US realized this and is now taking drastic steps to correct it.
And not only are, is the industry exploding here, right in my backyard in Austin, Texas, all kinds of companies pouring lots of money and opening the shop. But to have TSM divert their assets away from the real intense geopolitical risk that is being in Taiwan to offshoring it to the US seems like an extraordinarily important move for, I guess, liberal democracies.
[00:35:59] Luke: Yeah, I agree. And exactly right. This isn’t just good news if you. TSM shareholder. Uh, this is good for every industry because the lights could literally go out on society if bad things happen in Taiwan and there’s not a kind of backup we can lean on society to just continue manufacturing semiconductors.
[00:36:18] Krzysztof: how about you?
[00:36:20] Luke: I agree. Like a tough category, right? It’s such a hard year. Very few instances of good news really. I had to really kind of trawl through my portfolio, but once I found this one, it was a clear, uh, answer for me. So one of our co-advisors, Steve Symington, is a big fan of a company called Rocket Lab.
and I’ll be honest, um, when I, I’m not wearing my SpaceX t-shirt today. I, I have worn it on previous podcasts. Like I was a bit skeptical about Rocket Lab performance when he first pitched it. And actually when I read about it before I joined the seven investing team, like the capital costs to be able to reliably put stuff into orbit, it’s just kind of crazy.
And SpaceX are so far ahead other than like government organizations like nasa, I felt like how is there room for anyone else to succeed? But this company has succeeded. Um, so I think they’ve now flown their electron rocket. They’ve now flown 32 times and 29 of those were successful deployments. So, you know, they’re running like commercial missions that they’re making money from.
They’ve only had three failures. That’s pretty exceptional. And now they’re trying to recover their boosters and I think they’re having kind of partial success with that. But they’re clearly like, well on this roadmap, you know, generating real revenue and this is also great for, you know, further ahead society.
because, you know, we don’t want SpaceX being the only company out there, private company that can be putting stuff into orbit. There’s definitely a space for, you know, kind of smaller payloads as well. Um, which is where I think Rocket Lab are more orienting their, um, capability. So, um, yeah, I like it.
Congratulations to Peter and his team. I know they’re, they’ve been on the podcast before Simon knows them. Um, you know, fantastic. And really, I’m a shareholder now as well, really sort of looking to the future and how this company kind of grows up into its next stage of, you know, really fully recovering their, um, their boosters and then driving down the costs of every launch.
[00:38:16] Krzysztof: Yeah. A truly astonishing thing to even consider that this might be the decade where the journey to Mars becomes a real thing. And so what it means for right humanity to no longer be just a, a thing that happens on earth is kind of, to me, mind, mind shattering and yeah, you’re right. There can’t be, there just can’t be one private company doing this.
So to. Uh, a second company like Rocket Lab really succeeding in all these ways is so encouraging for humanity. Really. Yeah. Check out all the deep dives on Rocket Lab. It’s truly fascinating.
[00:38:55] Luke: Yeah, good stuff.
[00:38:56] Krzysztof: Great. Pick. Yeah. Good.
[00:38:58] Luke: So, uh, our last, our last best off category. This was, um, I think this one was best decision or habit or action taken. So kind of a personal one. How, uh, how did you answer this one?
[00:39:09] Krzysztof: I took my own medicine that I suggested for you some shows back, and at some point I can’t remember exactly when during the year I got rid of all the companies in my portfolio that I did not have very, very high confidence into the future.
[00:39:31] Luke: Right.
[00:39:31] Krzysztof: And now the little asterisk being, as we also talked about in the past, I keep the, uh, positions in my portfolio that are probably usually just one share.
So the, it could be $5 or 200 if it’s, you know, shockwave medical or something like that. But point being, I keep a tail end that I don’t consider to be my portfolio. Exactly. So my concentrate portfolio is now made, I would say, entirely of companies that I do not worry about on, I guess in the existential level.
And that makes a huge difference.
[00:40:10] Luke: Very good. I’m gonna, I’m gonna reflect on that a bit later in the episode as well when we, not to, not to sort of blow my own, uh, news, but my investing resolution is pretty tied to that, uh, that aspiration. So well done for clearing out your weeds. Yeah.
[00:40:27] Krzysztof: So what about you?
[00:40:29] Luke: Uh, a non investing one in one. Um, like I’m trying to get into a habit of using QA lingo every day. Someone like, 39 day streak now learning Spanish. So, uh, from zero. So don’t, don’t Tess me, I’m a complete Spanish moron. But, um, uh, but it’s quite a lot of fun. It’s gamified and uh, I’m sure there are other equally good apps out there, but I’m, uh, I’m just having a bit of fun with this one in, you know, in those kind of five minute moments here and there.
And it’d be nice to, uh, develop another language as a skill, a speak woeful, Cantonese, uh, don’t test me on that. If you ever meet me in the street and, uh, you know, barely possible English. So, uh, you know, challenge, , challenge, adding a second language for real.
[00:41:15] Krzysztof: Wait, didn’t you guys invent, invent English Why you not take some responsibility?
[00:41:23] Luke: We published this thing, uh, they’re called the Oxford English Dictionary with the correct spellings of everything. And then, I dunno what happened when it made its way across the Atlantic, like a load of letters got lost and edified
[00:41:32] Krzysztof: Yeah. Learning a new language. think of it as scrubbing your mind, you know, like continually introducing a new way of seeing the world. So it’s not just like a practical, uh, goal of learning vocabulary. It’s also like learning to see the world in this new way, which keeps your mind fresh great habit. Let’s see where you are. Uh, with Spanish next year, at the end of the year.
[00:41:58] Luke: Hopefully 400 day street by then. Let’s see. Yeah.
[00:42:01] Krzysztof: Hey. And maybe, maybe we need to do a little, uh, trip down to Mexico, you know, for pr, for, for practical research purposes.
[00:42:12] Luke: Sounds good.
[00:42:13] Krzysztof: Okay. All right. Do you wanna do the, the worst of the year?
[00:42:18] Luke: Yeah, let’s do that. Yeah.
[00:42:20] Krzysztof: Yeah, we should have done, we should have done that first. Oh, well,
[00:42:23] Luke: I could turn them around in the edit. No, screw it. Let’s just, let’s just face into the worst. What be the worst thing be?
[00:42:29] Krzysztof: So I, I think one category we have is a supposedly fun thing I’ll never do
[00:42:38] Luke: like our caviar. You suggested these categories on slack last night. Some of them were pretty wild. I scratched my head over this one,
[00:42:44] Krzysztof: I think the answer to this is, A lesson I learned, uh, in 2008, and then enough time went by that I forgot it, and now I, now is the time to relearn it. Margin
[00:43:02] Luke: Oh
[00:43:03] Krzysztof: do not under any circumstances use margin to buy stocks.
[00:43:10] Luke: Have you done that in 2022?
[00:43:12] Krzysztof: I did and I regret it. And it’s, it’s like, it’s that, it’s that, you know, it’s that bias where we, we, even if we’re aware of it, right, we know all this stuff and then, and then. And then, but somehow anchoring slips in there and we say, well, it’s already dropped 70%, so could it really go down much low? Like, and then, and then the monster kind of grows.
And this is not, I, I take full responsibility, so let me just acknowledge that. However, I will say that apps like Robinhood and they will critique for this. I chose to use it because I really love their interface and so on and so forth. They really do make it way too easy and way to call it addictive.
All those gambling like features, functions to use something like margin. And when I emperor, I’m gonna, I’m gonna nix that kind of, I’m gonna create some more impediments, but yet,
[00:44:18] Luke: right.
[00:44:19] Krzysztof: do not use margin listeners ever. Take it from me.
[00:44:23] Luke: Good. Right. I won’t ask you to tell us like the painful insights of what went bad, but, uh, but I’m with you. I’ve never used margin and I. It can go if, when things, when when things go south and your portfolio starts dropping. If you are trading on margin, like things plummet way faster than you could possibly imagine from what I’m reading.
[00:44:42] Krzysztof: Yeah. The end, the end point is zero. Your account, you end your account at zero.
[00:44:47] Luke: Yeah. And, and again, doesn’t really understand this stuff if, if I understand it properly. Like it’s not just the stocks that you’ve bought on margin, like your entire account is at risk if you get margin called and you might without any control get sold out of your high quality positions because your broker is gonna make sure you make those margin payments
[00:45:10] Krzysztof: Yeah. It’s a, it’s a complete nightmare and. . It’s just so sad for me to admit that I learned this already in 2008, and then 14 years was long enough for me to, to forget, to forget in quotes. I didn’t forget. I’m just, I was just too stupid. I get, or too, whatever the complex series of factors are. I too smart for my own good.
Let’s . It’s so smart that I’m dumb It’s like, you know, you go , the 360 degree trip from, from smart to dumb.
[00:45:46] Luke: Okay. This is, so it’s an interesting reflection on my own supposedly fun thing I’ll never try again. This is, again, not investing related, but I’ve taken a particular decision that pains me because I feel either the risk of this particular activity is so extraordinary. I’m certain that is how I die if I continue.
So I tried a sport called speed riding. Um, I did like a week’s lesson in the Alps earlier this year, and it’s just fantastic fun, incredible fun. I’m a pretty good skier and it’s basically skiing, but with a parachute. Uh, and when you’re a beginner, like it’s relatively safe and you know, we were going out in like zero wind days and the idea is you kind of ski round, you deploy your shoot, you ski round your shoot, you kind of lift it and then you kind of get like a nice sort of gentle pace down, a kind of off piece beginner slope as a beginner kind of skipping off the snow fly for, you know, 10, 20 meters and then kind of land make like a turn in the air.
It’s super fun. Um, and by the end of five or six days, like I had the bug, I loved it. But uh, like the, the fatality rate of this sport is off the charts as you can probably imagine. Uh, so, uh, so, so it is, with some regret, I think I’ve taken the decision to not go speed riding again cuz I enjoyed it so much.
Like if I, I already have to carry so much damn equipment when I’m going out, like skis and snowboards and all sorts of other stuff, if I have to take like a shoot as well. So, uh, yeah, I, you know, that’ll be a trip I don’t come back from at some point.
[00:47:17] Krzysztof: Speed Riding.
[00:47:19] Luke: Yeah. There’s a, there’s a sort of partner sport called speed flying, which is, without skis, you just kind of run and you jump off a hill and you’re in the air permanently. Whereas ski speed riding, basically skiing at very, very high, high speed, very close to the snow and the trees.
This is where most people die. Um, and, uh, yeah, I mean, it’s, it looks like an adrenaline rush watching some of the guys on YouTube who are experts, which I am not. Um, but, I think essentially there’s actually quite a low incidence of accidents, uh, among the sort of expert community.
But when you have an accident, if it involves an injury, it’s almost always fatal.
[00:47:55] Krzysztof: Yeah, so I’d like to keep you around
[00:47:57] Luke: Yeah.
[00:47:57] Krzysztof: Luke, we’re just, this is only episode eight, so the, the Luke and Show will be so, uh, uh, empty with just sh
[00:48:09] Luke: Yeah.
[00:48:10] Krzysztof: like,
[00:48:11] Luke: Well, at least in me, like a eulogy episode.
[00:48:14] Krzysztof: yeah, Okay. So I’m glad you, you, so that official, that that decision is in the books.
[00:48:21] Luke: I think so. Yeah. Yeah,
[00:48:23] Krzysztof: Okay. Thank you.
[00:48:24] Luke: One’s more serious, I suppose. Like worst outcome. What was this like worst investing outcome or, you know, what were you thinking was this category?
[00:48:31] Krzysztof: yeah, I took this, uh, in the literal direction again, maybe literal investing direction.
Because it’s about the process. And, uh, I had a, I , wow, I can’t even get the words out. I think this stock rose to my, the worst investment of my career status. So that’s why I needed to mention it. And I’ve been doing this now for 20, 25, 26 years. So, you know, it takes a lot to, to get there. But UPSTART gets the cake and I finally sold it, however, months ago in, in 2022. But the reason it was a bad investing decision is because I could see clearly now, despite what the numbers were saying, despite what my understanding of investing during an era of rising interest rates, what that meant. , I continue to, in a sense, take management’s word. I valued management’s word and outlook higher than, than, than the numbers. And that to me translated as trading in reality for hope in a, I think that’s one of the cardinal mistakes that investors can make, especially as you know, the company well, you believe in the product and so on and so forth.
And it cost me more, more capital than I think any of my previous investments. And now, and, and I, when I sold it, I felt a huge sense of relief, which is when you know like, okay, probably should have done that sooner.
[00:50:14] Luke: enough. And that’s not to say like today that upstart is a bad investment, I think. I’m not a shareholder, I never was, but um, uh, like it could well be a good investment right now. But I think what you’re describing there, and it links to my own, uh, kind of similar confession, I suppose, Shopify in my portfolio, the biggest kind of capital loss of 2022 in terms of dollars rather than the percentages.
Um, I think these are probably cases where, You and I have let our emotions kind of cloud our judgment a little bit. And either you know, your history with the company or you know, it’s still, despite that we intellectually understand kind of, you know, price fixation or whatever that term is anchoring, um, we’re still not immune from it, even though we understand, you know, the psychological trick we’re playing on ourselves.
So as, and when you get into that situation, that sort of emotional situation with a company, it’s, it’s sometimes best just to kind of walk away from it as you’ve done, you’ve sort of, you’ve cut the, uh, cut the thread.
[00:51:16] Krzysztof: Yeah. And I think, uh, and this is why, to re-thread a previous topic, making sure you are in conversation with people you trust so that when a doubt like this arises in the future, I think what I’m going to do differently is seek out deliberately someone I trust who has a bear bearish view in for, have them tie me up and then so I can’t escape.
And then, and then have me listen to them, right. And then repeat back . Right. Repeat back what they said so that the words actually have to come outta my mouth. And that might be enough to kind of get out of, you know, the, the mind bubble that we set for ourselves. So, extraordinarily expensive lesson there.
[00:52:05] Luke: Right. Fair enough. Well, and but one thing I suppose though, You know, uh, on the assumption that your total portfolio value has grown, you know, at least directionally over the 26 years, it clearly has, or you wouldn’t be sat here with me today. Um, you know, we, we are always gonna be facing, like in a good year, we’ll have our biggest dollar winners, and in a bad year we’ll have our biggest dollar losers.
It’s kind of the nature of like a growing, hopefully growing, you know, total amount of money. And, um, and the fact that every decision in real terms, um, is more material. I do, I really try and focus on the percentages as far as I can and take some of the emotion out of it. And even some weird trick I’ve kind of found on myself actually to try and dispel price anchoring.
Um, so I took a, I, I started like a new portfolio, uh, for my mom actually. She now has a, like a, a percentage stake in my portfolio kind of notionally. Um, and so I created a sort of baseline spreadsheet for her with, and it mirrors all my own holdings. And it’ll mirror my trades in the future. Um, but uh, it’s kind of, you know, it’s like on paper portfolio for her.
Um, but that was like a reset. Obviously I’m still tracking properly. I know exactly where I am over the last 20 years, but I’ve suddenly got this other thing I have to look at from time to time where it’s baseline was some point in 2022 when my mom started. And, um, and almost I can feel myself re-anchoring to those prices, even though they’re just like random numbers in a spreadsheet.
So yeah, I might, I might, you know, when we finally start turning, I might go re-anchor, then I can feel good about, you know, the trajectory of our portfolio at that point. Hopefully that’s sometime 2023.
[00:53:47] Krzysztof: I don’t wanna generalize, but the behavioral side of investing is, is as significant as the financial and the analytical and the finding good businesses. It really is. And it’s just astounding how even when we know better, we still make these massive mistakes. And so all we could say is right.
Going forward. Like, let’s be aware of them. Let’s try to do better.
[00:54:12] Luke: yep. Only human.
[00:54:14] Krzysztof: Only human. Yeah. So Luke, tell me next about, I guess, worst habit.
[00:54:21] Luke: Yeah. Sort of talked about this before we hit the record button today. So, um, so my worst habit probably of the last few years actually, but particularly so in 2022. I used to be a good poker player, actually, you know, not world changing good, but pretty good poker player. I, I was a money-making player and I’ve got spreadsheets that, you know, demonstrate this.
Um, but I’ve just got into a bad habit of now drinking at the poker table, larking around making suboptimal decisions just for the kind of hell of it to, you know, kind of say, Hey, look at me, everybody. Um, particularly when I’m in a particular group of players like my close friend Tom. Um, so I’ve got a clamp down on that and I’m, I’m heading out to Lake Tahoe in two days actually, so I’ll be there when this goes out and I’ll be there for a couple of months skiing, snowboarding, playing. and my intention I’ve set for myself is to cover hopefully all of, but let’s say at least half of my entire season costs in the local poker game. So that’s gonna require, uh, consistency, discipline, and not boozing. Unfortunately, my buddy Tom, not unfortunately, I’m looking forward to it. My buddy Tom is coming out to visit mid-season as he did in 2020.
And so the wheels will probably come off again when he gets there, but at least I’ll try and play it little smaller when he’s around. Perhaps
[00:55:42] Krzysztof: Hey, Luke. Uh, it occurred to me the most important question to ask is, uh, this place where you stay in the Tahoe, does it have a guest room? An extra.
[00:55:51] Luke: I can, uh, I can host you. Come visit
[00:55:55] Krzysztof: Okay. Let’s chat. Uh,
[00:55:58] Luke: Krzysztof.
[00:55:59] Krzysztof: worst habit. Yeah, my worst habit that. Really diligently trying to fix, starting this year is checking the stock market.
[00:56:10] Luke: Good. Right?
[00:56:12] Krzysztof: And I’m gonna follow that up by saying too often, but it’s become abundantly clear that if I really wanna get back to the roots of process and deep critical thinking, knowing what the price of a stock did,
I’m trying to be reasonable here
[00:56:31] Luke: Because don’t forget, like this also is your job, like it’s part of your job is to look at the stock market
[00:56:36] Krzysztof: yeah. Right.
[00:56:37] Luke: but I know exactly where you’re going. Go.
[00:56:39] Krzysztof: Yeah. Right. But I’m, I’m guessing once a week ought to be enough, right? In terms of the price fluctuations. Right. And yet, Of course, I mean, you know, when the, when the page is open, I must, I mean, without exaggeration over the course of the year, like how many millions of times did I check the prices of stocks?
It’s obscene and it’s stupid,
[00:57:06] Luke: Right.
[00:57:07] Krzysztof: it’s gotta go. It’s gotta go. So now I’m just trying to figure out a way to tweak, you know, being able to read about the stock market and continue to do diligent research and know what’s going on without actually checking prices
[00:57:25] Luke: Very good.
[00:57:26] Krzysztof: to this obsessive kind of level. So I need some system.
I need to game rejig my system, maybe delete the apps or whatever.
[00:57:37] Luke: right.
[00:57:38] Krzysztof: And now where are you? Are you in, uh, where are you in that boat?
[00:57:43] Luke: Yeah, I guess I’ve probably same to like an unhealthy level, at least two or three times a day. Quite glancing at it in one form or another. I’m always buried in spreadsheets and I’ve got so many different like views on my own portfolio, so I’ve. , even like, you know, windows in my PC is popping up and telling me something’s up, like X percent on the day or down X percent.
So I’d have to go to some effort to kind of cuddle that stuff out. Um, but you’re right, it’s unhealthy. Like if really we should be just looking at the quarterly reports and the annual report, right? That’s where you get your real information on the trajectory of the company, what the stock market’s doing. It’s not irrelevant, but, it’s probably unhelpful if you are looking at company fundamentals.
[00:58:25] Krzysztof: Hmm. Yeah, I think once a week when I said that out loud, that feels like a reasonable, like ideal platonic goal, right? You’re still keeping your eye on the kind of momentum stuff, but. More than that is, seems like diminishing returns that might interfere with, with clear thinking.
[00:58:44] Luke: Let’s see how that, uh, you know, that sort of unclear thinking translated into your worst investing decision of 20.
[00:58:51] Krzysztof: uh, well, I think I kind of talked about that a little bit with upstart. So I’m gonna take a slightly different, approach here. And I’m gonna talk a little bit about crypto as, a good idea that went really, really bad this year,
which is obvious to anyone that’s been found in the saga. So no need to belabor that, but I kind of feel like it’s like, hmm, this, this was a necessary evil.
like as with all manias and all bubbles, you get the greed and you get the fraud. Let it happen while the industry’s still relatively young and developing. Clear all of it out and now get the, the, the necessary infrastructure’s regulation so that it could really re be reborn. And I, like we talked about last episode, I have not given up on this industry and this technology.
There’s just too much good in it. So my word, you know, it’s, it was just a sucky 2022 to be a witness to all of that grift.
[00:59:52] Luke: Yep.
[00:59:54] Krzysztof: But let’s see what gets reborn. Let’s see what 2023 brings.
[00:59:59] Luke: uh, mine was a bit more, um, my worst investing decision of 2022 was a bit more precise, and I talked similar. I talked about Shopify, et cetera. This certainly wasn’t like material into dollar terms, but I feel like a sucker. So, um, our colleague, Dana of Ramich has just had an incredible track record over the last 10 months.
I think she’s had, of all of her last ten seven investing recommendations, like at least three quarters are up in this like, woeful market.
And so, unfortunately, the out of Dan’s array of winners, I’ve picked her biggest loser, unfortunately. So, so that hasn’t gone very well at all. I’m, uh, I’m standing firm. I like the company. Unfortunately, it hasn’t played out
[01:00:40] Krzysztof: Oh man. Ah, the fates. There must be a lesson in there somewhere. Luke
[01:00:50] Luke: just bought just by all of Don’s, not just one of them. Yeah. Yeah. There you go. Good
[01:00:54] Krzysztof: There you go. Yeah. Yeah. Diversification. You know, I, I thought instead of doing the three questions game at the end, you wanna do a quick round of the, the resolution or, you know, new Year’s, uh, aspiration.
[01:01:08] Luke: Yeah, let’s do that. Let’s, uh, cuz you’re right, it’s super long episode and I’ve got three really good three conversations, questions for you, but we’ll save those for next episode.
Let’s close out today with what our investing resolution is for 2023. I kind of hinted at mine, so no surprises. I’ll go, so I’ll go first. So I did read a book, I read, um, the Art of Execution by Lee Freeman-Shor and I, I read it last few days cause it’s popped up on Twitter. A few people have been talking about it
in summary, This guy I think he’s a well-known fund manager. Um, and he invested a large amount of money with I think 45 different fund managers. And the only rule he gave each of these 45 was, uh, you can only invest in your top 10 ideas, like no sprawling portfolios.
And then he, he ran that for many years. I think, I’m probably not giving quite an accurate recounting of the thesis. Um, but he, when he looked at the trades and nearly 50,000 actions in those portfolios across those managers, he drew out some quite interesting conclusions. And so essentially he categorized his, his investors in this, uh, experiment.
Um, whenever someone had a losing position, they were either a rabbit, um, and a rabbit basically sits on their losers and doesn’t really take any action and just kind of. You know, they’re sort of paralyzed or a, an assassin and assassins were kind of exiting those losing positions very, very quickly. Um, you know, almost with like stop losses and things like that.
Or as, uh, hunters and hunters were using more like, Dollar cost averaging and not buying in, um, a full position at the start, which enabled them to kind of add to their losers. So kind of his, his, his people were one of those three categories. And then when, when his investors were sitting on a winning position, they were either Raiders and a Raider when something’s up.
So 20, 30%, they were kind of banking it, you know, selling out, you know, banking the capital, or they were connoisseur and connoisseurs would kind of basically, you know, ride the winning positions, let them compound and maybe trim on the way up just to kind of manage portfolio and capital, but essentially let their winners run.
So as I, as I reflected on that, you know, it was, the book was set out in that order and I got to the end of the chapter on rabbits and I. Fuck, I’m a rabbit
[01:03:35] Krzysztof: Uh huh
[01:03:36] Luke: Oh my God. I’m like sitting on these terrible positions, these losers that I haven’t sold and I’ve just done nothing with. Um, and I got to the end of the book, and actually, I think I’m actually a hunter slash connoisseur, like I definitely do d c a and um, and I’ve got some, you know, massive, you know, a hundred plus, a hundred x multi baggers.
Like, I’m not afraid of letting my winners run, but there’s a still a ton of rabbit in my style. So my investing resolution, long way of saying my investing resolution is to be ruthless with my losers. So, um, uh, so I’d need to go back and revisit the remainder of that worry list are just give them a kicking, kick ’em out, um, and move on.
And I need to probably won’t use stock losses. Personally, I don’t think that works for me, but I definitely need to be like reviewing the thesis if any of my stocks are down 10, 15%. Uh, at any point, that’s my resolution.
[01:04:30] Krzysztof: Yeah. That’s so great. Luke, what’s the name of that book? One more
[01:04:34] Luke: Uh, yeah, the Art of Execution by Lee Freeman-Shor. Like, I will say it, I mean, it’s not that I could possibly in a position to criticize this guy, right. But slightly dubious conclusions. I think like the big, one of the big takeaways in the this conclusion chapter was like the author really recommended heavy concentration.
Uh, but I don’t think that’s what he did. Like he had his money with 45 different fund managers, right? He’s not concentrated. There’s a lot of really good examples set, but actually, I, I’d have some question marks about the, uh, how sort of scientific he was in drawing those conclusions, given the nature of the experiment.
But it’s a good book.
[01:05:13] Krzysztof: Yeah. Being ruthless, man. That’s, that’s, uh, that’s where you find the elite, right? The, the lead investors, they, they, they could do it and then not get caught up in their.
inner stuff, which is, uh, yeah, a little bit of a transition to my resolution, which is indirectly related to investing.
I always think that having a sound, body and mind as your platform
allows for the possibility of being a great investor. If you don’t have that, you will inevitably fall into one of these emotional, psychological, reactive states and then mess everything up. So I recommitted myself to sitting, uh, zen meditation every single day at the start of the day. I already have exercise daily. But, the meditation piece, uh, on a daily level is, is very different than doing it some of the time.
And I also likewise had a little bit of a call it moment, not moment of reckoning, but I went in and talked to my good friend and, uh, black belt jiu-jitsu teacher with the kind of like, you know, I’m three years into this journey and you know, I’m old now, I’m old, I’m falling apart.
And things break. You know what I’m saying? When people are trying to break your, your things, they, they sometimes do in fact break. And I was telling Ryan, you know, I’m like, man, why should I keep going in this thing? And it was a rhetorical question, you know, it was kind of, and I think the answer I came up with is, it’s another form of this infinite game where there is no complete mastery of this thing.
It’s too big, it’s too complex, it’s too all of this stuff. But something that really challenges you to such an extraordinary extent on all the levels, physical, psychological, emotional, doing that kind of stuff for real every day or frequently I know, translates into the other realms of life. You know when, when you just survived a serious ass whooping and you get back to say the stock market, and it’s a big down day.
It’s just easier to put things into perspective, you know, and say, I got this, or I’ll survive this, or there’s always the next day or whatever you, you know, and it’s like the embodied practice. That’s the, that’s the thing that’s different than say, reading a book so after we put the, pause on this episode, I’m gonna go and get my ass whooped again.
[01:07:59] Luke: what is the resolution then to persist,
[01:08:03] Krzysztof: yeah. I’m gonna go into your four
[01:08:05] Luke: Get a physical and a emotional ass whipping when you come back to your portfolio. Nice. You’re just a glued, you’re a glued for management.
[01:08:15] Krzysztof: Yeah. So I guess that wraps up our, uh, our overview of 20 22, and a little bit of a peak into 2023 Luke. I, I gotta say, uh, it’s been a real pleasure and delight getting, you know, obviously meeting you earlier in the year and then starting this podcast it seems like, uh, our, our listeners and people new to the investing journey, this is a extremely brutal time for anyone to be doing this, but hopefully conversations like, like this one help remind you that you are not alone and that there’s other people on this journey with you.
And I just couldn’t express more delight and gratitude for you Luke, uh, as a, as a partner and ally on this journey with me.
[01:09:04] Luke: You know, this, this particular podcast was entirely your conception, and I guess you looked across the team and you thought, who’s gonna be the, the sucker enough to kind of join me on this kind of crazy conversation. I, I couldn’t be more delighted that we got this going, and, uh, I’ve, I appreciate the effort you put into, um, making these fun conversations every fortnight.
So thank you for, uh, making me part of the Krzysztof Show,
[01:09:28] Krzysztof: All right, well, I guess that’s a wrap. Go win some money, uh, over there in the, the Western United States and, uh, make my bed in the guest room and
[01:09:41] Luke: You got it buddy. You can, uh, you can come out and be my, uh, martial arts bodyguard if I have a huge win.
[01:09:50] Krzysztof: happy 2023 to everyone.
[01:09:52] Luke: happy 2023. And guys, if you enjoy today’s episode, um, do us a favor and recommend it to a friend. Send them a link. Fantastic. Have a fantastic 2023.
Simon recently spoke with a $35 billion global asset manager about how they're navigating the market volatility. The key takeaways are to think long term, tune out the noise...
Anirban and Matthew were joined by Alex Morris, creator of the TSOH Investment Research Service, to look at seven former market darlings that have taken severe dives from...
On episode 5 of No Limit, Krzysztof won’t let politics stand in the way of a good discussion - among many other topics!