A&B #2

Hey everyone,

Over 500 people signed up for the A&B newsletter last week so I wanted to say hello to all of the new readers. Welcome to the best book newsletter on the web.Yesterday my friend hosted a charcuterie. If you don't know what that is don't worry, neither did I. It basically involved a lot of cheese, meat, and wine. Two things I learned: Mozerella wrapped in prosciutto is delicious and if you're looking for a tasty cheap wine get a bottle of Baron Herzog - Jeunesse Cabernet Sauvignon.Alright enough about that, let's talk dive in!

Podcast Update:My podcast episode with Morgan Housel about The Psychology of Money is my most downloaded episode ever. If you're interested in becoming a better investor or learning about finance, this book is a must-read. 

You can listen to our podcast here or watch it on YouTube here.

Recent Reads:

I covered a few lessons from The Psychology of Money in last week's newsletter but because there are so many great lessons, I have to share some more:1) Don't get greedyOne of the most important lessons from the book is to stop wanting more. Know when enough is enough. Bernie Madoff was actually a great investor whose business made $25-50 million a year before he started his Ponzi-scheme. But he got greedy and wanted more. Now he's in jail for the rest of his life. As Warren Buffett said, "Never risk what you have and need for what we don’t have and don’t need.”2) Let compounding work it's magicSpeaking of Warren Buffett, did you know that $81.5 billion of his $84.5 billion net worth came after his 65th birthday. In other words, he built 95% of his net worth after he turned 65. There are many investors out there, like Jim Simons, who have much better returns on their investments (66% compared to Buffett's 22%), but Buffett has one advantage–time. It's not enough that you get good returns, you have to let it compound. Another example, it took me 3 years to gain 1,000 followers on Twitter, but less than a year to go from 1k to 10k. 3) You Only Have To Win Half The TimeIf you were to randomly pick 10 stocks, chances are 4 would go to zero. But, you could still make great returns. Why? Tail ends drive everything. In other words, a majority of the results come from a minority of the effort. Buffett has made about 500 investments over his life but 10 of them are responsible for the majority of his returns. And out of those 10,  one (Apple) is responsible for the majority of those returns. Actionable Advice:

• Stop comparing yourself to other people or otherwise, you'll always want more.

• Don't risk what you have for something you don't need.

• The earlier you invest the better.

• You can be wrong half the time and still make a fortune in investing.

Weekly Quote:"It is one thing to own a library; another to use it wisely."–John Lubbock

Photo of the Week:

 A visualization of the compound effect by my friend

It took me 36 months to go from 0-1k followers on Twitter but only 9 months to go from 1k-10k. Similarly, it took 36 months to go from 0-20k followers on Instagram but only 9 months to go from 20k to 50k. Don't give up.

Thank you for your support everyone, I'll see you next week.Read on,Alex W.