Source: Farnam Street
There are as many investment strategies as there are investment opportunities. Some are good; many are terrible. Here’s the one that I lean on the most when I’m looking for low risk and above average returns.
“The whole secret of investment is to find places where it’s safe and wise to non-diversify. It’s just that simple.”
Goal: An investment algorithm to lean on hard when it is available. Low-risk, long-duration, above-average returns.
There are many paths to investment heaven (and we’ve written on the topic before). The diversity of working approaches demonstrates that. However, fundamentally, any useful approach must do three things:
- It must work in all conceivable financial environments.
- It must be within the “circle of competence” and “circle of interestingness” of its user.
- It must meet the moral criteria of its user.
I believe the system below satisfies the first criterion, and allows for all three.
A 7–Element Algorithm for Equity Investing
Everyone Wins
Successful businesses have indefinitely sustainable business systems: owners, employees, customers, suppliers, all content.
Ballast for the Storm
Look for a sustainable balance sheet, given the capricious nature of the world. Past bad events do not predict future bad events. Sometimes
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