Rule Du Jour: Rule #4: Inverted Thinking (Patreon)

My new segment - top rules to live by. Let's see if I can share one a day for 300 days. Here goes #4.

Rule Du Jour: Rule #4: Inverted Thinking

I called this thinking, which I learned from Charlie Munger or also putting yourself other peoples shoes. Always try see a discussion or argument from the other person's point of view..

How this Applies to Investing?

• Avoiding Losses Instead of Seeking Gains:

  • Traditional investment strategies often focus on maximizing returns. However, using inversion, you think first about how you can AVOID LOSS. Ask yourself the Q What could cause me to lose money on this crypto/stock? This shift in perspective helps you identify and mitigate risks.

• Focus Not Only on the Good, but also the Bad!

  • When evaluating an investment opportunity, instead of solely focusing on the potential success factors, inverted thinking encourages you to consider what could lead to failure. For example, losing Elon! For example w SOL - a SOL killler. This is how I identified SOL in the first place to protect my ETH bag. The Compendium Model and SCP Profiler helped me identify the so called ETH Killer. If I was only looking at the good I would never have noticed the bad. Now I dont even own any ETH. TO BE CLEAR NOT SAYING ETH IS BAD BUT SOL IS BETTER.

• Challenging Confirmation Bias:

  • Investors often fall prey to confirmation bias, where they seek information that supports their existing beliefs. Inverted thinking can help counteract this by encouraging you to actively seek out DATA that contradicts your investment thesis. This is why I build models to make sure all my decisions are data driven and kept up to date. Emotions can be quite powerful hence my philosophy is data first. The Data Don't Lie!