Posts In: Mental Models

Geoff Gannon May 27, 2018 Case Studies, Mental Models, Recent Memos

Value Trading – Does It Ever Make Sense?

Article by DAVE ROTTMAN I would like to discuss and elicit feedback from our community on the topic of value trading. What I mean by value trading is the purchase and sale of stocks in a shorter time frame than traditional long-term investing, where the buy and sell decisions are driven by the exact same fundamental analysis, margin of safety standards, and owner’s mentality that traditional long-term value investors utilize. In other words, I would like to discuss the idea of a business-oriented investment strategy…...

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Andrew Kuhn November 17, 2017 Mental Models

Becoming a Better Investor: Reading One 10k After Another

I’m a big process guy. I believe if you have the correct processes in place and develop the right habits over time, you will succeed in whatever it is that you want to accomplish. Geoff and I get asked all the time a variation of: How do I become a better investor? The answer is simple, but not easy. I would say it really boils down to reading. A lot. Okay okay yes, I know if you are a Buffett / Munger fan you probably…...

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Andrew Kuhn October 3, 2017 Mental Models

Psychological Tendencies to Guard Against In Investing

“The first principle is that you must not fool yourself and you are the easiest person to fool” -Richard Feynman   Do Something Bias, Social Proof and Confirmation Bias… Let’s walk through a theoretical situation where these three powerful Biases can destroy someone in the field of investing: A new Investment Manager named Benjamin just signed-on a new client for his investment firm and is very excited about it. The new client, let’s call him “Thomas”, rolled over his IRA account of $500,000 and assured…...

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Andrew Kuhn May 25, 2017 Mental Models

The Punch Card Mindset

“I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches–representing all the investments that you got to make in a lifetime.  And once you’d punched through the card, you couldn’t make any more investments at all.  Under those rules, you’d really think carefully about what you did and you’d be forced to load up on what you’d really thought about.  So you would do so much better.”- Warren Buffett Many Buffett…...

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Andrew Kuhn May 21, 2017 Mental Models

“Go Where There Are Network Effects”

“Go Where There Are Network Effects” – Zero to One book, Peter Thiel A business that has a strong and enduring Network Effect can be a great business to invest in. It is one of my favorite tools in my mental-model toolbox, and is one that I look for and think about often. The best part about a business that has a strong network effect is just like compound interest, it only gets better as the numbers get bigger. The simplest way to describe a…...

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Andrew Kuhn May 10, 2017 Mental Models

It’s All About the Long Term: Amazon’s 1997 Shareholder Letter

“Jeff Bezos is the most remarkable business person of our age, I’ve never seen a guy succeed in two businesses almost simultaneously that are really quite divergent in terms of customers and all the operations.” – Warren Buffett I really do agree with Warren in the statement above. Anyone who knows me, knows I am a complete Amazon advocate. Not only does my firm own Amazon stock, but I am a frequent user of the website and really have developed into some sort of fanboy…....

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Geoff Gannon May 10, 2017 Mental Models

Geoff’s Mental Model #1: “Market Power”

“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.” – Warren Buffett A business with market power is a good business. A business without market power is a bad business. In that quote, Buffett gives a clear definition of market power…...

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