Investing Is A Game Of Evolution (Issue #77)
It is almost exactly the one-year anniversary of the introduction to Pillars in this newsletter. For that reason today I will be talking about evolution in investing. Investing is not a stationary topic. It is dynamic and built on experience.
“It is a painting you get to paint yourself over a lifetime”
Ian Cassel on “investing journeys”
While your values may not change significantly over time, many lessons are learned that guide your future decisions. I am still an investor who follows the exact same Pillars as a year ago, but the Pillars were developed through failure and experience. Over the years my investing style has evolved from focusing on high ROEs and their accompanying high levels of debt to more conservative and quality companies. Many companies I invest in still have high return metrics and that is good and some also have the negative side of significant debt levels. However, comparing the quality of companies in my portfolio today (listed below) to those 5 years ago or 10 years ago they are striking differences.
“Winning is one thing, but out of lossing I always learned more”
Nikki Lauda
Many of the lessons I’ve learned were not from personal experience but from the losses of others or the comparison to my wins. For example, I wouldn’t count a stagnate investment as a loss, but it is a learning opportunity. The lesson from that exact same experience can be different case to case. Sometimes it demonstrates that even a significantly undervalued company can remain undervalued indefinitely. Other times the expected growth engines did not pan out. Sometimes a failure is not really a failure. Investing is for the long term and many get impatient and short-sighted. Over the long term investing in quality companies at reasonable valuations, it is probable to be successful.
Watchlist Update:
Portfolio Update:
For access to the full spreadsheets and linked deep dives go here.
Until Sunday,
Soren