Naval is one of my favorite thinkers I’ve ever come across. His tweets and podcasts have had a tremendous impact on how I look at the world as well as investing. If you don’t follow him on Twitter, I highly recommend it. It is filled with almost effortless wisdom and short statements that generate a lot of thoughts. He hasn’t done a guest podcast in quite some time so I was thrilled to see him hop back on with Tim Ferris, as both have had a tremendous impact on me. I’ve paraphrased some quotes from the podcast and explain how they relate to some of my success and pitfalls in my own investment journey. Hopefully, it can help you too.
“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.”
In order to compound your capital, you need to invest. The earlier you start the better. Earning a monthly salary is great, but if it just sits in your bank account you’re on a linear path to mediocrity. The potential for exponential growth over time is what makes the stock market one of the greatest wealth creation machines of all time.
“If you can’t prove it false, it isn’t scientific. You should be able to challenge science at all times. It should make risky predictions that are not obvious, and those predictions should then be tested. You shouldn’t be able to after the fact change the goalposts”
I’ve found building a thesis around a company is important when it comes to investing. The ability to test that thesis over time is even more important. When it comes to buying or selling, you need to have goalposts to measure whether or not a company lives up to your expectations from the time you entered a position. Whether it be a quarterly revenue number or a new product launch, if you can’t confirm that your investment is on the right track, you’ll end up holding on to hope.
“The lottery is for losers. Lotteries are just a tax on people who can’t do math. Get rich quick schemes are just other people getting rich off of you”
I fell into this trap when I first started “investing”. I tried to buy countless penny stocks that were going up the most because some “guru” was pumping it. You can get lucky, but luck isn’t sustainable. I always say the fastest way to go broke is to try and get rich quickly. I’ve experienced it first hand and it isn’t fun. If you can’t stay in the game, your money doesn’t have the chance to compound.
“The goal of the media is to make every problem, your problem. That’s how they get attention”
As someone who used to watch CNBC every waking minute of the trading day on my thinkorswim platform, I can honestly say it made me a worse investor. Sure being up to date on what’s going on is important to some extent, but constantly being attached to the narratives they control is a dangerous game. It may be subtle, but I’ve found that it had a tremendous effect on my bias, fear, and greed. The ability to tune out the noise is important if you want to make sure you’re not being seduced into ideas that aren’t your own. This is why I love Commonstock. Less noise, more signal, with people who actually have skin in the game.
“Long-term thinking gets you long-term results. In business, you want to play long term games with long term people”
It’s easy to get wrapped up in the gyrations of stock prices on a day-to-day basis. I’m guilty of this, no doubt. Sometimes it helps to take a step back and think longer term. You can’t allow one bad day to completely ruin your investment strategy. When it comes to selecting companies to invest in as well, I would always rather invest in a founder-led company. I like to look for management who own a significant portion of the stock to make sure their incentives are aligned with mine.
There are so many gems in this podcast I could go on and on. From meditation, philosophy, and the world of crypto, Naval has a way of articulating things in a way I find fascinating. I hope you check out the podcast and comment if you share anything in common with my experience.
