This post was originally shared in my DT Email Newsletter here.
This morning, pay careful attention to this email.
It’s short but important. Because there’s something subtle you need to know about investing.
Look, we don’t need to be experts in everything.
When I invest, I know I’m not qualified to talk about the latest material that could improve a sports shoes product.
I’m not qualified to talk about how much money a foundry should spend on building a 7nm chip plant. I’m not qualified to talk about whether people should like the way a handbag should be designed.
I’m not qualified to talk about Tesla’s latest FSD software performance. I’m not qualified to talk about how much “capital ratios” a bank should hold. I’m not qualified to talk about which chocolate bars should taste the best.
That’s perfectly alright.
I’m not a handbag designer. I’ve no idea how the leather should be stitched, what colours will be in trend next season.
But I can still invest in a company that sells handbags. I know I can never be as good as an oil engineer, a technology expert or a pharmaceutical executive who knows their stuff way more than me.
You don’t need to know how to make a handbag to recognize a great handbag business.
This is the difference between an investor vs operator.
You see, there’s so many ways to invest that we can learn to be good at – learning how to allocate my capital to the most suitable opportunities, learning how to diversify a portfolio, learning how we crave desires like sugary food and chasing social statuses, learning why we always love a good discount.
Like what I’ve previously wrote about Charlie Munger’s Psychology Biases.
Our life experiences and observations – the things we’ve seen, the patterns we notice – all become part of our investing edge.
What we need is a little guidance to nudge us in the right direction to invest. xoxo
Sometimes, investing can be simple.
Willie Keng, CFA
