1/ Short Selling 101

With the markets continuing to rally, there has been more talk of “shorting” or “short selling” stocks.

But what does that mean and how does it work?

Here’s a quick educational primer: Short Selling 101

Dollar Cost Averaging 101

Many of the brightest minds in the investing world share one common trait: they recommend dollar cost averaging as an investment strategy.

But what is dollar cost averaging and how does it work?

Here's Dollar Cost Averaging 101!

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1/ Dollar cost averaging, or "DCA" for short, is a simple investment strategy in which an investor splits the total amount to be invested in a given asset across regular periodic purchases.

The regular purchases occur regardless of price, volatility, or economic conditions.

2/ The goal is to remove the complexities of market timing from the process, allowing an investor to build their desired position without concern for external factors.

Its simplicity removes behavioral and psychological biases from the equation.

Let's look at an example.

3/ Imagine you want to build a $10,000 position in bitcoin. You have done your research and believe in the long-term story.

You aren't sure if it will go up or down in the near-term, so you decide to dollar-cost average.

Great decision! How will you do it?

4/ You split the $10,000 up into 20 pieces ($500 each). You could have done any number of pieces, but 20 felt right.

You decide on a weekly DCA, so every Monday, you buy $500 of $BTC, regardless of price. After 20 weeks, you have built your desired $10,000 cost basis position.

The @JeffBezos Regret Minimization Framework is a simple yet powerful mental model for making important decisions and unlocking growth in your career, startup, business, relationships, or life.

A short thread on how it works and how it can change your life...

Jeffrey Preston Bezos is an American entrepreneur and technologist.

He is most well known as the founder and CEO (soon-to-be executive chairman) of Amazon and the founder of Blue Origin.

A legendary figure today, he may have remained anonymous if not for one key decision.

In 1994, at age 30, Jeff Bezos was a star at D.E. Shaw, a successful quant-focused hedge fund.

He was on a lucrative path.

But he had become obsessed with a new thing called "the internet" and its power to change the world.

He had a vision of participating in that future.

Bezos had a decision to make.

Stay at D.E. Shaw - with a high likelihood of wealth creation and "success" - or leave and pursue his speculative, crazy new idea.

He developed a framework for making this (and many future) decisions:

The Regret Minimization Framework.

The Regret Minimization Framework is simple.

The goal is to minimize the number of regrets in life.

So when faced with a difficult decision:
(1) Project yourself forward into the future.
(2) Look back on the decision.
(3) Ask "Will I regret not doing this?"
(4) Act accordingly.

To outperform, you need serious problem-solving skills.

Fortunately, these skills can be learned.

THREAD: A simple, powerful mental model for thinking clearly and solving complex problems:

When solving problems, the human mind is wired to think in linear, logical, forward terms.

But as the problems get increasingly complex, this forward, logical process often fails.

Enter our simple, powerful mental model: inversion.

What is inversion?

Inversion is a mental model and thinking tool used by some of the world’s greatest thinkers and problem solvers.

Simply put, it says that when problems become challenging to solve forwards, they may be more readily solved backwards.

Inversion as a general thinking tool has been around for millennia.

Stoic philosophers had premeditatio malorum - “the pre-meditation of evils” - an exercise in which they would imagine the worst case scenario ahead of time.

It allowed them to make plans to avoid this outcome.

The formal mental model was popularized by German mathematician Carl Jacobi in the mid-1800s.

When faced with difficult problems (which happened frequently in his field of elliptic functions!), he had a strategy: “Man muss immer umkehren.”

Translation: “Invert, always invert.”

20 ideas I can’t stop thinking about:

The Feynman Technique

To learn anything:

Step 1: Identify a topic
Step 2: Try to explain it to a 5-year-old
Step 3: Study to fill in knowledge gaps
Step 4: Organize, convey, and review

True genius is the ability to simplify, not complicate.

Simple is beautiful.

Intellectual Sparring Partners

Most of us need fewer friends and more intellectual sparring partners.

Friends are easy to come by.

Intellectual sparring partners are harder to find.

They will call you on your BS, question your assumptions, and push you to think deeply.

Boredom Alpha

Experiencing regular periods of boredom is a competitive advantage.

Your most creative moments come during bouts of boredom.

In the shower, on a walk, at a dinner by yourself.

You’re bored, your mind wanders, and creative insight strikes.

Boredom creates alpha.

Paths Open vs. Closed

Black Lines = paths closed
Green Lines = paths open

We spend too much time focusing on what might have been (black) and not enough time focusing on what may be (green).

Never underestimate the density of opportunity that lies ahead.

(h/t @waitbutwhy)