Rather than causing mental atrophy, AI can be a 'prosthesis for your attention.' It can actively combat the natural human tendency to forget by scheduling spaced repetitions, surfacing contradictions, and prompting retrieval. This enhances cognition instead of merely outsourcing it.
Average drawdown is superior to metrics like standard deviation because it measures both the magnitude and duration of a portfolio's decline. This combination better reflects the actual emotional discomfort clients experience during a market downturn, making it a more practical gauge of risk.
Inspired by Charlie Munger, this investment strategy is built on three common-sense pillars: maximizing earnings growth, maintaining valuation discipline, and focusing on downside risk. The goal is reliability and avoiding major mistakes rather than chasing spectacular, high-risk wins.
Market-cap-weighted indexes create a perverse momentum loop. As a stock's price rises, its weight in the index increases, forcing new passive capital to buy more of it at inflated prices. This mechanism is the structural opposite of a value-oriented 'buy low, sell high' discipline.
Major tech companies view the AI race as a life-or-death struggle. This 'existential crisis' mindset explains their willingness to spend astronomical sums on infrastructure, prioritizing survival over short-term profitability. Their spending is a defensive moat-building exercise, not just a rational pursuit of new revenue.
The AI investment case might be inverted. While tech firms spend trillions on infrastructure with uncertain returns, traditional sector companies (industrials, healthcare) can leverage powerful AI services for a fraction of the cost. They capture a massive 'value gap,' gaining productivity without the huge capital outlay.
Some tech companies have doubled the depreciable life of their AI hardware (e.g., from 3 to 6 years) for accounting purposes. This inflates reported earnings, but it contradicts the economic reality that rapid innovation is shortening the chips' actual useful life, creating a significant red flag for earnings quality.