My Investing Manifesto

My wife and I took a money management class when we were in our twenties, and it was one of the best investments we made. Norman, the fellow who taught our class, became our financial advisor, and he gave us a lot of good advice over the years.

Here are some nuggets of Norman wisdom:

  • When we asked him whether we should go back to school and get our MBAs: “An investment in yourself is the best investment you can make. Education is an investment in yourself.”
  • When we asked him how much to spend on our first home: “Always buy as much house as you can afford.”
  • When we asked him how much we should save for college: “Save as much as you can, but don’t be overwhelmed with saving 100% of tuition costs. Somehow, you’ll find a way to make it through.”

Norman’s common-sense philosophies have stuck with me throughout life, and they’ve served as useful guides.

This week, we launched Bitcoin Market Journal, which helps ordinary folks enter the exciting new world of bitcoin investing. Norman is now retired, so I thought it would be useful to put together some common-sense rules of thumb to help guide new folks into this new world.

Call it “A New Investing Manifesto.”

A New Investing Manifesto

We can use our money to do positive things in the world.

This does not just include giving to charity. Helping businesses succeed — businesses that we believe in — is also a positive way of using our money for good.

When you invest in a company that you love, like Amazon or Apple, you are saying, “I believe in what you’re doing. I want to be a part of it.” That’s using your money to better the world.

Those companies use your money to create more jobs, to create better products, to create more value. When you invest with this mindset, you’re making the world better.

We don’t believe in short selling, betting against the market, or any of the other investing tricks that are essentially a bet that someone else will fail. That’s not adding value.

We believe in actively seeking out value. Warren Buffett has advised, “Find an outstanding company at a sensible price.” In the new world of bitcoin, we say, “Find an outstanding team and technology at a sensible price.” Do your homework.

We believe in investing in the long term. If you really believe in a company, stick with it. Spartans hold.

We believe in making a limited number of large investments, not a lot of small ones. Charlie Munger said to imagine you only get to make 20 investments over your entire life. Choose wisely.

At the same time, we believe in diversification — not just among bitcoin investments, but among all our investments. We don’t put our lunch money into the next hot trend, because you can’t eat bitcoin.

We believe in disciplined investing. That means putting aside money every month to invest. That means doing your research before you invest. That means sticking with your convictions, even when the rest of the market is manic-depressive. If an investment is good, it’s good.

We don’t invest more than we’re willing to lose. This time is like the early days of the internet, with tremendous hype and irrational behavior. Many companies and many ideas will not succeed, and much money will be lost.

At the same time, the flow of investment into these companies is essential, to help this new financial ecosystem grow. So we accept some loss as part of the process, seeing it as “tuition paid.” We learn from failure, but we still try to keep our “educational expenses” to a minimum (scholarships are available).

Finally, we have fun! This is one of the greatest times to be alive. It is the new Gold Rush.

This manifesto will be baked into our new Bitcoin Market Journal site. If you agree with these ideas, we’d love to hear from you. Check out the site, and let us know what you think.

We hope Norman will approve.