Investing Lessons from Nick Maggiulli

Investing Lessons from Nick Maggiulli

Nick Maggiulli is one of my favorite writers.

Here are the nine things I've learned from Nick. 

1. Wanna Get Rich? Think Fractally.

Yesterday's gains are today's capital.

Compound interest works like a fractal. Each piece of interest eventually earns its own interest. Fractals are powerful because their complexity comes from SIMPLE actions repeated over and over again.

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2. Warren Buffett loses money 25% of all years.

Berkshire Hathaway has temporarily declined in value 30–50% MULTIPLE times in the last few decades. Even with optimal investing behavior, you won’t always make money.

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3. Change your beliefs when necessary

Sam Walton founded Walmart. 

He created more wealth in the 20th century than almost anybody else.

What’s his secret?

A willingness to change his beliefs. Success mattered more than being right.

Walton was so obsessed with retailing that he wasn’t worried about destroying his old beliefs if he found new evidence that contradicted it.

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4. Behavior trumps math.

Don’t sell during a panic. Increase your savings rate. Acquire income-producing assets on a regular basis. 

This will do wonders for your investment success. 

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5. There’s a war between fear and evidence. 

20th-century events in America:

  • Two World Wars
  • The Great Depression
  • ~12 recessions and financial panics
  • Oil shocks
  • Flu epidemic

But the Dow rose from 66 to 11,497.


6. Price is Information

The price you pay is the most important piece of information when buying an asset.

Even over longer holding periods, initial purchase prices matter. Higher purchase prices imply lower returns.

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7. Long-term trends tend to converge. 

Historically, the U.S. stock market has had long-term positive real returns for most of its history (regardless of valuation).

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8. Market behavior in a sentence. 

Quick drops.

Slow recoveries.

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9. Start saving early.

The earlier you start saving, the better. 

At first, the benefits will be hard to notice.

But they’ll be impossible to ignore in the long run.

Good behavior and compounding can lead to huge results. 

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