How to Get Rich (without getting lucky):

Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.

Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.

Ignore people playing status games. They gain status by attacking people playing wealth creation games.

You’re not going to get rich renting out your time. You must own equity - a piece of a business - to gain your financial freedom.

1/ My most popular tweets of 2020 by month (thread)

January:

A reminder of @morganhousel cash strategy.

For every $1,000 in cash:

More: ⬇️⬇️⬇️⬇️⬇️

2/ February

If you've truly found the next $AMZN, $AAPL, or $NFLX and can hold for years, it's nearly impossible to overpay.

But finding them is hard.

3/ March

Millennials have seen tech crash, 2008, and now #COVID19

I'm worried that many of them will swear off the stock market -- the greatest wealth-building device ever -- for life.

4/ April

Want to see the checklists used by

Buffet
Dalio
Fischer
Graham
Greenblatt
Klarman
Marks
Munger

and

5/ May

When the P/E ratio is:

Useless (Stage 1, 4) - $MDB, $SHOP, $PINS, $GME, $JCP

Semi-useful (Stage 2) - $TTD, $NFLX

Useful! (Stage 3) - $MSFT, $AAPL, $V

In determining valuation

My investing style: Buy and hold high-quality businesses

Here are 15 traits that tell me I've found a great business ⬇️

1/ Recurring Revenue

Types:

Business Services $MCO
Contracts $AMT
Consumables $MNST
Exchange $MKTX
Franchise $WINA
Membership $TDOC
Platform $ETSY
Razor/blade $DXCM
Real Estate $STOR
SaaS, PaaS, IaaS $TWLO, $NOW, $FSLY
Subscription $NFLX
Tollbooth $BIP

2/ Recession-Proof Demand

Great companies sell products/services that are in-demand in good times and bad

That allows them to grow regardless of what is happening in the broader economy

3/ Organic Growth

"Organic" growth: Growing by increasing sales of internally developed products/services

"Inorganic" growth: Growing from mergers & acquisitions

Organic Growth > Inorganic Growth

4/ High & Expanding Gross Margin

Indicates that the company’s products/services create a huge amount of value for the customer

Rising gross margin also indicates pricing power

🚨🚨 2021 Stock Picks 🚨🚨

Below are 10 stocks I like heading into 2021.

As a long term investor, I don't aim for 12-month returns.

However, I believe that these stocks are positioned to succeed both in 2021 and beyond.

Not recommendations (do your DD).

// Thread //

🔽

Teladoc Health $TDOC

Trading at less than 15X fwd EV/Sales, far too cheap given TAM and upcoming revenue growth.

Wall St. isn't appreciating Livongo addition - which will change when upcoming quarters reveal numbers.

Ark has been loading the boat... 🤔

🔽

Facebook $FB

Has become a political target, which has kept a leash on the stock.

Political issues a non-worry IMO with investors in a win-win scenario. Spinning off assets would create immense value for investors (Instagram).

Huge presence in VR provides future upside.

🔽

Skillz Inc. $SKLZ

Wall St. currently sees a gaming platform, but hidden underneath is a "pick and shovel" model to monetize mobile games.

Wonderful business economics (95% GM) despite the rawness of the business model.

Little to no competition with a large and growing TAM.

🔽

Roku $ROKU

A winner in 2020 that I think will keep winning.

Powerful industry tailwinds in the streaming space and Roku is a leading beneficiary due to market share.

Additions of HBO Max and Peacock on the platform were late in 2020, so 2021 numbers should see an impact.

🔽

BTC has likely created more millionaires (10,000+?) and deca millionaires (1,000+?) than any company or startup in history. these are individual “retail” investors realizing these returns, not institutions, which may drive the Rise of Retail...

1) retail interest in speculative (high-risk/high-reward) investments will continue to sky rocket. BTC’s meteoric USD-denominated value climb sets a new benchmark. everyone is already chasing the next dragon.

2) more speculative public equity is being purchased by retail investors who are increasingly becoming key driver of public offering events (through SPACs, direct listings, and IPOs syndicated to retail investors. instead of a handful of “strong” institutional investors).

3) banks, exchanges, funds that make it easier for retail to participate in public offerings will benefit. imagine an online-only brokerage as the sole book runner on an IPO, syndicating only to their retail accounts. if it worked, every IPO may soon follow.

4) many of these speculative public companies will likely fail to perform over time, but all it takes is a handful delivering 10-100x returns to keep interest strong. the likely reaction will be diversification, which will further drive demand.