"reached two conclusions:1. It no longer believes that considerations as to what it thinks r* is can guide monetary policy and its adjustment.2. The major risk is not a deep recession and a return to the zero interest-rate lower bound, but rather some sort of rebound in inflation and a consequent de-anchoring of inflation expectations."
- In chess sacrificing a piece can serve one of two purposes: (1) a "sham" sacrifice - when one gives up a piece in order to obtain a concrete benefit that can be calculated and (2) "real" sacrifice - when giving up a piece provides no immediate or tangible benefit but may offer some strategic benefit.
- "The analogy to investing begins to become clear. Buying a 10-year U.S. Treasury note is a modest or “sham” sacrifice. You give up the use of your money for ten years, but that’s only an opportunity cost, and accepting it brings the certainty of interest income. Most other investments involve real sacrifices, though, where the risk of loss is borne in pursuit of “gains that are neither immediate nor tangible.”
- In chess players often intuit the level of risk and have to decide if making a risky move is worth it.
- In investing "Because the future is inherently uncertain, we usually have to choose between (a) avoiding risk and having little or no return, (b) taking a modest risk and settling for a commensurately modest return, or (c) taking on a high degree of uncertainty in pursuit of substantial gain but accepting the possibility of substantial permanent loss."
- While most investors understand that earning high returns, both in absolute and relative terms, requires bearing meaningful risk, they may take for granted that "The risk inherent in not taking enough risk is very real. Individual investors who eschew risk may end up with a return that is insufficient to support their cost of living."
- "There’s such a thing as the risk of taking too little risk. Most people understand this intellectually, but human nature makes it hard for many to accept the idea that the willingness to live with some losses is an essential ingredient in investment success."
- "You have to take a shot. Not every effort will be rewarded with high returns, but hopefully enough will do so to produce success over the long term. That success will ultimately be a function of the ratio of winners to losers, and of the magnitude of the losses relative to the gains. But refusal to take risk in this process is unlikely to get you where you want to go."
"One investment rule at Berkshire has not and will not change: Never risk permanent loss of capital. Thanks to the American tailwind and the power of compound interest, the arena in which we operate has been – and will be – rewarding if you make a couple of good decisions during a lifetime and avoid serious mistakes."
Remember optimism and taking risk is not incongruent with "Margin of Safety".
XTOD: Sebastian Steudtner, a German pro surfer, rode a wave over 115 feet tall at Nazare, Portugal, a record breaking surf!
XTOD: How bad is @CathieDWood ? Over the last 5 years she has now returned -7% in $ARKK she trails the $SPX by 88% and $COMP by 107% respectively. Maybe think twice about shoving her face on TV again.
XTOD: Economics is an ecosystem and I love most or perhaps even all of it. Theorists. Empiricists. Government statisticians. Ivory tower academics. In the trenches think tankers. Investment bank economists. Government economists. Tweeters. And many more I didn't mention.
XTOD: Bank of England policy maker Megan Greene said developed economies including the UK face a “bumpy ride” as central banks squeeze out the final effects of the global inflation shock
XTOD: Clarity comes from cutting out the clutter. Pinpoint your focus, relentlessly eliminate noise, and watch productivity soar.
XTOD: Tony Robbins believes that, in a lowered emotional state, we only see the problems, not solutions. Let’s say you wake up feeling tired and overwhelmed. You sit down to brainstorm strategies to solve your issues, but it comes to naught, and you feel even worse afterward. This is because you started in a negative state, then attempted strategy but didn’t succeed (due to tunnel vision on the problems), and then likely told yourself self-defeating stories (e.g., “I always do this. Why am I so wound up I can’t even think straight?”). To fix this, he encourages you to “prime” your state first. The biochemistry will help you proactively tell yourself an enabling story. Only then do you think on strategy, as you’ll see the options instead of dead ends. “Priming” my state is often as simple as doing 5 to 10 push-ups or getting 20 minutes of sun exposure. I often ask myself, “Is this really a problem I need to think my way out of? Or is it possible I just need to fix my biochemistry?” I’ve wasted a lot of time journaling on “problems” when I just needed to eat breakfast sooner, do 10 push-ups, or get an extra hour of sleep. Sometimes, you think you have to figure out your life’s purpose, but you really just need some macadamia nuts and a cold fucking shower.
XTOD: In a world loud with information, mute the unnecessary. Pinpointing the essential is a superpower.
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