A few “big beliefs”

This week, the writer/investor Morgan Housel shared a smart post on what he calls his “big beliefs,” a list of ideas that frame his fundamental view of business and investing for the long-term. “Most fields are a hierarchy of truths with big ideas at the top and laws, rules, and finer details branching off below them,” he writes. “Viewing ideas in isolation, without recognizing the family tree of where they came from, gives a distorted view of how a field works and can overcomplicate what are often simple answers. Beliefs are the same.” 

“Sitting still feels reckless in a fast-moving world, even in situations where it offers the best odds of long-term compounding. It’s like being told that you should play dead if a grizzly charges you – running for your life just feels more practical. The bias towards action is one of the strongest forces in business investing for three reasons: It can be the only signal to yourself and others that you’re not oblivious to risks. It can be the only signal to others that you’re worth your salary. And it can provide the illusion of control in a world where so much is out of your hands.”


The quixotic quest of William MacAskill

I finally got around to reading this New Yorker profile of William MacAskill, the de facto head of the $30 billion Effective Altruism (EA) movement. The EA crusade has been steadily gaining traction among a particular set of Silicon Valley technologists—including Elon Musk, Sam Bankman-Fried, etc.—and at its core, the movement struggles with an almost existential question of morality: How can you use our resources (technology, money, labor) to maximize the most benefits to society over the long-term?

“From the outside, E.A. could look like a chipper doomsday cult intent on imposing its narrow vision on the world. From the inside, its adherents feel as though they are just trying to figure out how to allocate limited resources—a task that most charities and governments undertake with perhaps one thought too few…There were also signs that E.A.s were, despite the hazard of fanaticism, increasingly prone to pluralism themselves. Open Philanthropy has embraced an ethic of ‘worldview diversification,’ whereby we might give up on perfect commensurability and acknowledge it is O.K. that some money be reserved to address the suffering of chickens, some for the suffering of the poor, and some for a computational eschatology. After almost a decade of first-principles reasoning, E.A.s had effectively reinvented the mixed-portfolio model of many philanthropic foundations.”

A few more links I enjoyed: 

“Durable long-term revenue growth is the most important factor in returns, defined as the increase in share price from IPO (or multiple of invested capital / MOIC). It’s about time in market, not market timing: If you stay public for a long period of time and can compound revenue growth, regardless of market movements that can affect valuation multiple in the short to medium term, you will create a ton of value as a public SaaS company. The pace of revenue growth, defined in this analysis as revenue CAGR (compound annual growth rate) since IPO, has little relationship to share price returns. The size of a company’s LTM (last-twelve-months) revenue at IPO has no relationship to returns.”
“Over the last few years, I’ve been exceptionally lucky to meet some of the finest minds and writers in business and investing. I thought it would be a fun exercise to tap their accumulated experience by asking a single question: ‘If you could tell a sophisticated finance audience one thing, what would it be?'”
“I sought good judgment mostly by collecting instances of bad judgment, then pondering ways to avoid such outcomes. Second, I became so avid a collector of instances of bad judgment that I paid no attention to boundaries between professional territories. After all, why should I search for some tiny, unimportant, hard-to-find new stupidity in my own field when some large, important, easy-to-find stupidity was just over the fence in the other fellow’s professional territory?”

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