Business/Investing Principles

1. Invest for the long haul.
2. Wealth is not grown by renting out time, but by owning equity.
3. Focus first on not losing money.
4. Avoid big mistakes and shun permanent capital loss.
5. Insist upon proper compensation for risk assumed.
6. Using beta and volatility to measure risk is nonsense.
7. Stay out of the stock market unless you can watch your stock holding decline by 50% without panic.
8. Consider totality of risk and effect. Look always at potential second-order and higher-level impacts.
9. Diversification is protection against ignorance.
10. Invest in great companies and businesses with strong moats.
11. Only invest in businesses within your circle of competence.
12. Be a business analyst; not a market, macroeconomic, or security analyst.
13. Avoid trying to predict the direction of the stock market, the economy, inflation, interest rates, or elections - but be aware of them.
14. Don’t fall in love with an investment. Be situation-dependent and opportunity-driven.
15. Never interrupt compound interest unnecessarily.
16. A watched stock never rises.
17. Leverage reduces the investor’s critical asset, which is patience.
18. Time is the enemy of the poor business and the friend of the good business.
19. Great companies almost always prefer pain today to gain tomorrow. Business disasters are often rooted in the pursuit of immediate gratification.
20. Disrupters look for trouble and find it. Great business models are built on avoiding trouble and competition.
21. Never take action for action's sake and avoid unnecessary transactional taxes and frictional costs.
22. Don't believe in any law that says cheap stocks cannot become cheaper.
23. The advice you never go broke taking a profit is foolish. Make few good decisions and let them run.
24. Be fearful when others are greedy and greedy when others are fearful.
25. Use market volatility as a tool of opportunity.
26. You don't have to make money back the same way you lost it.
27. Never use the price at which you bought a stock as an anchor.
28. Don't quibble over eighths and quarters.
29. The best way to learn how to value a company is to do case study after case study.
30. It's dangerous to rely on growth to justify present value.
31. Forecasts may tell you a great deal about the forecaster. They pretty much tell you nothing about the future.
32. There are two kinds of depreciation: 1) things wear out, and 2) things change.
33. You can calculate everything yet still not know how investors are going to feel.
34. Do not make an investment decision based on correlations. Pretty much all correlations in the market, whether real or illusory, will shift or disappear.
35. Pick business partners with high intelligence, energy, and, above all, integrity.
36. Individual incentives must always be aligned with overarching goals.
37. Don't buy a stock based on you liking the "tone" of its annual report.
38. This time is never different.
39. Don't buy into promotional companies.
40. Relative valuation is often a trap.
41. Deep value is often a trap.
42. Turnarounds seldom turn.
43. Venture capital is a game of home runs, not averages.

Life Principles

1. Principles outlive tactics.
2. More important than the will to win is the will to prepare.
3. Develop into a lifelong self-learner through voracious reading. Cultivate curiosity and strive to become a little wiser every day.
4. Enjoy the process along with the proceeds, because the process is where you live.
5. Prefer being a fox over a hedgehog.
6. Remember there is no "best" practice in domains with multiple dimensions.
7. Be alert for the arrival of luck.
8. The way to minimize risk is to think.
9. Embrace reality and deal with it.
10. Cultivate acceptance. Avoid getting worked up on things not to worry about.
11. Remember that reputation and integrity are your most valuable assets. Both can be lost in a heartbeat.
12. Guard against the effects of hubris and boredom.
13. Embrace accountability and take risks under your own name. Society will reward you with responsibility, equity, and leverage.
14. Don't sweep troubles under the rug. Small leaks sink great ships.
15. Don't pay too much attention to things that matter too little. Everything looks bigger up close.
16. Don’t overlook the obvious by drowning in minutiae.
17. What's safe in the short run can be risky in the long run.
18. It's better to be bold than risk triviality.
19. Keep control of your time, which you can’t unless you say no very often.
20. Never schedule anything you wouldn't be willing to do or attend tomorrow.
21. Play iterated games. All returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
22. Play long term games with long term people.
23. Objectivity and rationality require independence of thought.
24. In times of interpersonal conflict, make the choice that will leave you more equanimous.
25. Standing between 2 relatively equal choices, take the path that’s more difficult and more painful in the short term.
26. Good ideas are rare. When the odds are greatly in your favor, bet - or allocate - heavily.
27. Much success can be attributed to inactivity.
28. Determine value apart from price; progress apart from activity; wealth apart from size.
29. Know that people are wired very differently.
30. Avoid dealing with people of questionable character.
31. Don't partner with cynics and pessimists. Their beliefs are self-fulfilling.
32. You don’t have to deal with anyone you don’t want to.
33. What you do not wish for yourself, do not do to others.
34. Hatred is a curse that does not affect the hated.
35. Ignore those playing status games. They gain status by attacking people playing wealth creation games.
36. Frequently ask what people you admire would do.
37. Mimicking the herd invites regression to the mean.
38. Take the job you'd take if you were already independently rich.
39. Don't think in terms of career. Focus rather on developing skills and doing what you want to do at a particular time to get paid.
40. Choose endeavors where you’re tracked on the outputs rather than the inputs.
41. Set direction over speed. But lose no time.
42. What you do, and how you do it, is much more important than how hard you do it.
43. Become the best in the world at what you do. Keep redefining what you do until this is true.
44. Be passionate about one thing at a time, and be indifferent towards everything else.
45. Ambitious goals are achieved by focusing one’s resources.
46. If you secretly despise wealth, it will elude you.
47. Stuff doesn't produce happiness. Time control does.
48. Not wanting something is as good as having it.
49. Chains of habit are too light to be felt until they are too heavy to be broken.
50. If something doesn't feel right to you, it won't be right for you.

Learning Principles

1. The most important investment you can make is in yourself.
2. Hold opinions loosely.
3. Seek and reconcile disconfirming evidence.
4. Continually challenge and willingly amend your best-loved ideas.
5. Learning must build on what is already known. Start from first principles.
6. Always keep asking why, why, why?
7. Think both forward and backward. Invert problems.
8. Develop fluency in mental models from major academic disciplines.
9. Evolving is life’s greatest accomplishment and its greatest reward.
10. A fundamental law of nature is that in order to gain strength one has to push one’s limits, which is painful.
11. Great expectations create great capabilities.
12. Weaknesses don’t matter if you find solutions.
13. Reading is faster than listening. Doing is faster than watching.
14. Judgment requires experience but can be built faster by learning foundational skills and other's experiences.
15. Solve the big no-brainer questions first.
16. It's better to remember the obvious than to grasp the esoteric.
17. Be careful to exclude unneeded information or slop.
18. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.
19. Operations should be based not on optimism but on arithmetic.
20. Never fool yourself, and remember that you are the easiest person to fool.
21. Resist the craving for false precision, false certainties, and so on.
22. It's better to be approximately right than be precisely wrong.
23. Make decisions as expected value calculations.

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Our principles act as the second level in our Decision Levels framework that we use at Junto Investments to make sense of observations and make important decisions. The last level of the framework is through the use of checklists.