16 life lessons from investing

16 Life Lessons Learned From Quant Investing

5 Minute Read

09 April 2021

By Shane Monks O'Byrne

I have drawn many parallels, and learned many life lessons from my investing experience. I thought I would share with you some of those principles. I hope they help you in however you decide to apply them.

These are not just investing rules. These are principles for a better life.

1. Be contrarian, to do better than others, you have to do something different to others. In fact, it is often better to do the exact opposite!

2. Compound interest applies to all areas of life, practice good habits frequently, forever.

3. Think Long-term. Premeditate on your goals. We often overestimate how much we can get done in the near-term, but greatly underestimate how much we can get done in the long-term.

4. Quantify everything“If you can’t describe what you are doing as a process, you don’t know what you are doing” – W. Edwards Deming

contrarian, habits, long term, quantify

Contrarian, habits, long term, quantify

5. Think in bets. Our job in life is decide which path of decisions will likely be the best

6. Focus on your circle of control. Concentrate on process, not outcome. 

7. Consistency is key. Small daily improvements are key to staggering long-term results. Consistent habits compound.

8. Occam’s razor – Simplicity trumps complexity. 

think in bets, circle of control, consistency, simplicity

Think in bets, circle of control, consistency, simplicity

9. Give yourself a margin of safety – things won’t go as smoothly as you expect.

10. No risk, no reward. The fishing is best where the fewest go.

11. Give a discount rate to your opinions, you might be wrong.

12. Always be aware of mean reversion; if things aren’t going your way – hold fast, they soon will. Conversely, in the good times prepare for the worst.

Margin of safety, no risk no reward, discount rate, mean reversion

Margin of safety, no risk no reward, discount rate, mean reversion

13. Always have an exit strategy. Under what circumstances will you stop doing what you are doing?

14. Use loss aversion to your benefit. Add monetary consequences if goals are not met.

15. Don’t be a ticker watcher in your own life. There’s no need to check every minute. Think long-term. Inspired by “Thinking in Bets” by Annie Duke. Set it, and forget it. Once you commit to a goal, follow through.

16. Be a sceptic. Trust evidence, not opinion

Exit strategy, Loss aversion, set it and forget it, sceptic

Exit strategy, Loss aversion, set it and forget it, sceptic

And that’s just about all the investing-life parallels I have for the moment. At Aikido, we’re quant to the core. You check out some of our long term quantitative investment strategies here.

Until next time!