The worst-case scenario sets our floor. If we think the company is worth $50 in a disaster and $100 in the most probable scenario, we don’t want to pay much more than $50. This is our margin of safety.

Their assets (loans) and liabilities (customer deposits and borrowings) must be marked to market (values) quarterly, and thus book value becomes a useful metric.

I am not advocating for timing the market, but I am arguing for being rational, not letting the market make decisions for you. Don’t get intoxicated on the market’s euphoria.

When you hear or read about ‘the market’ being up or down, this is usually a reference to the S&P 500 market-capitalization-weighted index. The equal-weighted index, where the Mag 7 have only a 1.4% weight, has underperformed SPY by 27% since January 2023.

P/Es mean-revert from above-average through average to below-average levels.

We have this mechanical, quantitative position-sizing framework to protect me from myself. When you find a company, you can fall in love with it and get emotional, thinking it should be a 50% position. But it’s not, because things can always go wrong.

Thinking about thinking, or being aware of making decisions. It requires you to take a step back from yourself, to become almost an outside observer of yourself and your programming.

GoPro was a momentum stock that was riding a wave about to break.

When people pay for my creation, there is meaning in that exchange. It signifies that my effort, my dedication of time, are voluntarily honored by someone’s stored time — which is what money truly is.