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Investors Therapy #6: Staying cool, what's wrong with financial statements, difference between a cycle and bubble, and much more!

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Hey Tribe,Every now and then one of your stock investments will run into trouble. For whatever reason
 

Investors Therapy

April 29 · Issue #6 · View online
The best investors focus on improving their thinking habits before investing in the market. Investors Therapy is a monthly newsletter that covers all forms of investing and helps investors understand their psychology to make better investment decisions. If you're ready to take the next step in your investment journey, subscribe!

Hey Tribe,

Every now and then one of your stock investments will run into trouble. For whatever reason the market will turn on it and assume the worst. The business press will begin to write doom and gloom pieces and wall street analysts will begin the down grade drum beat. It’s very easy to get swept into this fervor, but you need to keep yourself calm and ask yourself the right questions before making an investment decision.

During these times you need to ask yourself the following questions:
  • Will anyone care about what happened 1 year from now? How about 5 or 10 years from now?
  • Has the company’s core offering been permanently damaged by the event?
  • The company’s product serves a fundamental need for its customers. Has the fundamental need gone away? (McDonald’s serves hamburgers, but at the fundamental level it provides calories to humans so we can fill our caloric need. Starbucks provides high expensive coffee but on a fundamental level it satiates our need for a caffeine boost so we can get through the workday)
  • Has a competitor come into the market and found an irreplicable way to serve your companies customers at a much cheaper price while maintaining the same or higher service standards?
  • For the vocal people that are canceling their memberships or swearing never to use the product,  do they speak for a majority of users or are they a vocal sub group? Of those who are vocal, how many actually followed through? For the majority of users, how many of them are aware of what’s going on? And how many them actually care?

Tough questions to answer, but well worth the mental exercise before making a financial decision.
Cheers,
Jordan



How most of us learned econ.
Investor Psychology
Decision Making – The Waiter's Pad
The Difference Between a Bubble and a Cycle · Collaborative Fund
Paradox Of SKill
Why So Many High-Profile Digital Transformations Fail
Stocks
Amazon Shareholder letter
Why Financial Statements Don’t Work for Digital Companies
The Easy Pickings
Headline Risk
Startups/VCs
The Scale Anticipation Fallacy – Andreessen Horowitz
Jeff Bezos convinced 22 investors to back his new company Amazon in 1994. Their returns? Mind-boggling | South China Morning Post
The Importance of Time Value of Money for Startups
Economy
Why the Automation Boom Could Be Followed by a Bust
America’s new great migration in search of lower property taxes - MarketWatch
Freddie Mac: Boomers, Gen Xers less interested in buying a home | 2018-04-04 | HousingWire
Real Estate
Zillow Group will start buying and selling homes, taking on Opendoor and expanding real estate footprint – GeekWire
Multifamily Strength, Affordability Issues to Persist in 2018: Freddie Mac
California rent-control limits repeal set for November election. - Curbed SF
As Storms Get Stronger, Building Codes Are Getting Weaker - Bloomberg
California tax break measure could help ease state's housing crunch
10 Lethal Mistakes to Avoid on Your First Real Estate Investment
This cheap 3D-printed home is a start for the 1 billion who lack shelter - The Verge
Careers, Society, and Personal Development
The Big Sort | The Economist
The League and other selective dating apps may worsen inequality - Bloomberg
Understanding Speed and Velocity: Saying "NO" to the Non-Essential
On Analog Social Media - Study Hacks - Cal Newport
Some Thoughts on "Cradles of Eminence: Childhoods of More Than 700 Famous Men and Women" - Intelligent Fanatics
Cisco commits $50 million to Silicon Valley homelessness crisis - Business Insider
North Korea's 'biggest' export - giant statues - BBC News
A Moelis & Co staffer sent a brutal email to colleagues - Business Insider
Weekly Thoughts: Successories | Chenmark Capital Management
Watch/Listen
Nassim Taleb Says Investors Need 'Insurance' From Market Drops - YouTube
Thanks for reading this month's reading list
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