BIG

MISTAKES
by MICHAEL BATNICK

01 . Warren buffett and the availability heuristic.

Availability Heuristic theory: A mental short cut that relies on
immediate examples that comes to someone's mind when
making an important investment decision. One shoe company
with high moat investment followed by another shoe company
with low moat investment. Second will fail.
lesson:
be extra careful when investing in a company that appears to
be a similar to a previously successful investment you have
made.
02. mark twain and the law of the holes.
Stop digging deep if you keep digging deep. Admit defeat
before it is too late.
if you find yourself in one ,quit digging.
lesson:
decide beforehand how much you are willing to lose.
03. bill ackman and ego.
one of the most successful activist investor = putting pressure
on top management to take action in a certain direction.
lesson:
the purpose of investment is to make money, not to be proven
right ,be careful about expressing opinions publicly.
04. stanley druckenmiller and investing that "fits".
Investing that fits. Dont venture too much out in the
unknown .Stay in circle of your competence. Expert macro
investor that dipped toes in tech and failed.
lesson:
there will be times when your style of investing is out of
favour ,when others are making more money than you ,but
that is just part of the game.
05. benjamin graham and leverage.
Went all in and some leverage money in great depression,
thinking stocks were cheap.Stocks fell.
lesson:
an investor must construct a portfolio so that you will capture
enough of the upside in a bull MARKET ,and so that you'll
survive a bear market.