And who has time to read these days? And you must surely know, no book will teach you how to be a great investor — you have to get out there and startinvesting. Like learning to ride a bicycle. A book can only do so much. The learning comes from doing. But what is the best way to become a good investor — to build a structured approach, to build your foundation, and to build a strong core? Maybe this book can help.
The business of venture capital not only presents basic principles, checklists, and frameworks, but also shares philosophies and wisdom of the ages. At its very core, an investor has the ability to understand risk and then make a probabilistic bet against that risk. On the face of it, the business sounds easy. I mean — how hard can this be? As they say, any fool can write a check. The sands of time keep shifting. Entropy prevails. All that is valuable is being eroded by the new waves.
Your role as an investor is to make sure you can stay balanced, find music in this cacophony, and find the right signal.
You invest in a stock that has a high level of buy—sell activity. This momentum drives the price. In a frenzy, everyone jumps in and the price starts to go up, but very few pause to step away from the herd.
They are well trained to make several short trades and know when to get in, when to get out. The intellectual effort for understanding value is much more different and strenuous than the herd mentality momentum-based trade. Bear in mind that we are not here to make moral judgments against momentum trades nor demonstrate superiority of any kind — we are merely choosing a path, based on our strengths to get to a destination.
I was a herd trader, too, until I could develop my own muscles and confidence. Success can come from many paths, and you have to choose what works best for you. I have tried both approaches and can tell you one is far easier than the other, but the rewards of a well-planned strategy are immensely gratifying — both intellectually and financially.
The sands of time keep shifting. Entropy prevails. All that is valuable is being eroded by the new waves. Your role as an investor is to make sure you can stay balanced, find music in this cacophony, and find the right signal. You invest in a stock that has a high level of buy—sell activity. This momentum drives the price. In a frenzy, everyone jumps in and the price starts to go up, but very few pause to step away from the herd.
They are well trained to make several short trades and know when to get in, when to get out. The intellectual effort for understanding value is much more different and strenuous than the herd mentality momentum-based trade. Bear in mind that we are not here to make moral judgments against momentum trades nor demonstrate superiority of any kind — we are merely choosing a path, based on our strengths to get to a destination.
I was a herd trader, too, until I could develop my own muscles and confidence. Success can come from many paths, and you have to choose what works best for you. I have tried both approaches and can tell you one is far easier than the other, but the rewards of a well-planned strategy are immensely gratifying — both intellectually and financially.
It is like a game of chess — only in this case, you have n number of opponents. One of the primary goals of this book is to help you to build the muscle — manage risk effectively, shield yourself from all the biases, and get to the promised land. The second goal is a bit more subtle — what kind of a person will you become in this journey? As a venture capitalist, we are not just trading stock — we work with people.
That indomitable human spirit in founders comes to you. They bring their dreams, their life-time aspirations — if we cannot look beyond their fancy PowerPoint decks, we are to blame. Those dreams are a part of this package. If we only chase financial outcomes, are we being short-sighted and self-serving? Wall Street may choose to operate that way, not Sand Hill Road. Not venture. A typical VC interacts with the portfolio founder multiple times a week — a Wall Street trader may never know the name of the management team members.
Of such dreams will come a better tomorrow.
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