It is a very simple idea to use the power of compound interest

It is a very simple idea to use the power of compound interest  Smart people are easily attracted by complex things, and underestimate the great influence and importance of simple ideas. But Monish Pabrai is a full pragmatist, and he will not fall into this trap. "It is a very simple idea to use the power of compound interest, a very simple idea to imitate, and a very simple idea to be honest." He said. However, when you apply some powerful ideas with great enthusiasm, the cumulative effect is "incomparable".

In investment, there is a strategy called "do nothing"

 There is a strategy called "do nothing"

We are always looking for cheap investments that are both in line with our preferences and understandable, but the deep value will only appear when the market falls or extreme events occur. When there are no attractive investment opportunities, cash should be king. According to Seth Karaman, holding cash is a safe way to do nothing until attractive investment opportunities emerge. It provides a very limited but positive rate of return, complete security of principal, and completely immediate liquidity. In the absence of better investment options, cash with small positive returns and little risk is not a very bad investment object. The reason for this approach is not because investors made a top-down asset allocation decision and decided to hold cash, but based on the result of looking for cheap investment from bottom to top.

However, holding cash is easier said than done. Knowing that you should hold cash without better investment opportunities is one thing, but actually putting this idea into practice is another. When others make a lot of money because of speculation, it is difficult for ordinary people to be indifferent. Seth Karaman found that what drives speculation is not the temptation of speculation, but the desire to do something.

Doing nothing is also a strategy: doing nothing means looking for potential investments and excluding those that do not meet the criteria. The difficulty is that doing nothing seems like having nothing to do, which makes people feel uncomfortable, inaction, imagination, and passion, and may lag behind the market for some time.


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