Copart: a wonderful company at a wonderful price (I bought it, of course) open.substack.com/pub/undisc…

Companies that look like they're wasting capital are far more likely to see explosive growth. Investors roll their eyes every time a CEO with bad returns on capital says "we're investing for growth" (at least I do). This chart says they should roll them a little slower.

Innovative Aerosystems $IA just won its 3rd Liberty contract in 1 year. It's the first one specifically for its UMS, after 10+ years of waiting. We analyzed it all in depth: open.substack.com/pub/undisc…

400 stocks went to zero. Yet the portfolio that held them beat the market by 2.5% a year for 30 years. With an absurdly simple strategy: buy stocks after 70% drawdowns and leave them alone. As someone who reads way too many annual reports, I find this mildly offensive.

Who cares how big the pie gets if you can't tell who'll survive long enough to get a slice? Buy and hold works, except in the revolutions you're most tempted to buy and hold. Neoclouds are the example playing out right now.

I want some of whatever sell-side analysts are drinking. Analysts expected about 30 companies to grow earnings 20%+ a year for 10 years straight. Guess how many made it. 0. From 1997 to 2022, no company in the MSCI World managed it.

Walter Schloss beat the S&P 500 for 45 years. He wrote down his whole method, condensed into a 16-point checklist:

Never buy a stock in a large drawdown without this blue line in your head.

Wall Street has spent centuries inventing new ways for smart people to lose money. Point72 wants its analysts to study them, so they don't reinvent one on their own.)

What a wonderful chart. Analysts keep raising their earnings forecasts while investors pay less for each dollar of them. Mr. Market doesn't believe its own expectations.

Take 10 small cap funds and invest 10% in each fund’s biggest conviction, and you’ll likely outperform all of them. Don’t thank me, thank them.

A portfolio with 2% in Walmart in 1972 and 98% in stocks that all went to 0 still beat the S&P 500 over the whole period. Is this a textbook argument for diversification, for concentration, or survivorship bias?

Hang it in the Louvre. Please.

Professional investors would have made more money rolling dice to pick which stocks to sell. Imagine spending weeks researching a great stock, only to pay for it by selling the wrong one. The best part is they don’t even realize it.

Friendly reminder: short interest is the strongest known predictor of stock market returns. Stay safe.

So many things in 1 chart: - The birth of buybacks - M&A cycles - Relatively stable R&D despite the technological revolutions - 2 minutes with this chart and you’ll find plenty more. All of this happened in 1 investing career. A beginner in 1970 couldn’t have drawn it on day 1, and a beginner today is starting the next version. He’ll need a big eraser.

Your patience has a physical address: right behind your forehead. It’s the prefrontal cortex, a highly plastic region that you can maintain or let wither, like a muscle. Every time you delay a reward, or even the anticipation of a reward, you recruit neural networks in this area. Repeated activation of these circuits changes them deeply. Over months and years, this leads to: - Synaptic strengthening = stronger and more stable connections between neurons - More synapses and dendritic complexity = more complex branching of neural networks and deeper processing - Myelination of the pathways involved = faster and more efficient electrical signal transmission Practice, and your neurobiology will change. Stop practicing, and it goes back to how it was: connections get pruned, the efficiency of signal transmission drops, and the more impulsive pathways regain their dominance. Every drawdown you go through without selling, every bout of FOMO you resist, every time you stop yourself from imagining a 10x when you buy is one more repetition. In its infinite generosity, investing offers us training opportunities every day. You just have to know how to recognize them.

Being #1 in an industry is worse than a coin flip for margins: 56% of industry leaders earn a below-median margin. Market share explains only about 4% of the differences in profitability. Worth remembering the next time a stock is called safe because it’s #1.