|#529 MWAVC| — Tails, You Win
Hi,
Welcome to MWAVC, a newsletter about finance, investing, venture capital and all that jazz. My name is Ato (more about me here and here) and I try to write every single day. Most of it is stuff I find interesting that I’d like to share and hear your thoughts on. If you’d like to sign up, you can do so here. Or just read on.
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More takeaways from the Psychology of Money!
One chapter discusses how at the Berkshire Hathaway shareholder meeting in 2013 Warren Buffet said he's owned 400 to 500 stocks during his life and made most of his money on 10 of them. Charlie Munger followed up: "If you remove just a few of Berkshire's top investments, its long-term track record is pretty average."
In 2018, Amazon drove 6% of the S&P 500's returns. And Amazon's growth is almost entirely due to Prime and Amazon Web Services, which itself are tail events in a company that has experimented with hundreds of products, from the Fire Phone to travel agencies.
Apple was responsible for almost 7% of the index's returns in 2018. And it is driven overwhelmingly by the iPhone, which in the world of tech products is as tail--y as tails get.
And who's working at these companies? Google's hiring acceptance rate if 0.2%. Facebook's is 0.1%. Apple's is about 2%. So the people working on these tail projects that drive tail returns have tail careers.
Takeaway:
When we pay special attention to a role model's successes we overlook that their gains came from a small percent of their actions. That makes our own failures, losses, and setbacks feel like we're doing something wrong.
When you accept that tails drive everything is business, investing and finance you will realize that it's normal for lots of things to go wrong, break, fail and fall. If you are a good stock picker you'll be right maybe half the time. If you're a good business leader maybe half of your product and strategy ideas will work. If you're a good investor most years will be just OK, and plenty will be bad. If you're a good worker you'll find the right company in the right field after several attempts and trials. And that's if you're good.
Sign up to my cousin Yasbo’s newsletter, ChopLife Express btw AND listen to her podcast, Savings or Current. She’s already been dropping some serious gems, including this one on time management and this one on how the economy works.
Also, Afrobility Podcast is exactly what you need to be listening to for the deep-dives into Africa’s most note-worthy companies.
Recommended Substacks: Afridigest by Emeka; African Entrepreneurship Series by Jeph; Getthebrief by Loye and Fola.
📱📱Quote of the day
“When the student is ready, the teacher will appear.”
Remember: “Until the lion learns to write, every story will glorify the hunter.”
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