A Dozen Things from Nassim Taleb about Optionality/Investing

Sharing from the 25IQ found interesteing

1. ”Optionality is the property of asymmetric upside (preferably unlimited) with correspondingly limited downside (preferably tiny).” SYVenture capital, when practiced properly by a top tier firm, is a classic example of a business that benefits from optionality. All you can lose financially in venture capital is what you invest and your upside can be more than 1000X of what you invested. Another example of optionality is cash held by a disciplined patient value investor with the temperament to not buy until Mr. Market is fearful. As just one example, Warren Buffett did exactly this during the recent financial panic and earned $10 Billion by putting his cash to work. Seth Klarman, Howard Marks and other value investors use dry powder in the form of cash to harvest optionality since Mr. Market is bi-polar.

2. ”‘Long volatility’ in trader parlance, has positive optionality.” As an example, the optionality of cash allows the holder to buy assets from people who were “short volatility” when a crisis hits. The wise value investor sits and waits patiently for Mr. Market to deliver a fearful market and when the intrinsic value of a company’s shares presents a “margin of safety” buys in quantity. Continue reading “A Dozen Things from Nassim Taleb about Optionality/Investing”

Deep Value Investing

Recently Chris White of Green-stone Capital Management Partners shared his views on the topic, I thought of jotting and Asharing some points which I found interesting to share.

Like other investing related terms, deep value investing is a much used, but perhaps less well understood term. So, first and foremost we were interested to learn more about what deep value investing really is.one of the many keen observations from Chris is that deep value investing requires strict price discipline on the part of the investor.

But, of course, it doesn’t stop there. Like other investing styles, deep value investing is as much art as it is science. Continue reading “Deep Value Investing”