Tutorial 1-5 Recap

1) PRESERVE CAPITAL - You'll notice that all of the Investment Masters prioritize downside protection. Losses hinder compounding, which is essential for investment success. In addition, profits and losses are not symmetrical: if you lose 50%, it takes a gain of 100% to recover. The majority of investment funds available today aim to outperform an index without an explicit objective to preserve capital.

2) COMPOUNDING - The secret to long term investment success is compounding. It's essential to grasp the sheer power of compounding and recognize how even a small increase in annual return can significantly impact wealth over time. Investors must ensure they don't undermine this power, as the key detractor to compounding is capital loss, making capital preservation a central focus for the Investment Masters. Understanding compounding reveals why the idea of doubling your money every year, for example, is unrealistic.

3) ART OR SCIENCE? - The Investment Masters typically consider investing an Art rather than a Science. Very few Business Schools study the great investors yet all Arts schools study the Great Masters [Picasso, Monet, Leonardo Da Vinci, Raphael etc] or History. If Investing was a science, results could be replicated and taught in a textbook. All of the great investors would be PHD’s in finance or CFAs. They are not.

4) EDUCATION AND SMARTS - Many of the great investors don’t believe you need to be a rocket scientist to succeed in investing. In fact, many believe that traditional schooling methods are detrimental to investment success. Key mental models, multidisciplinary disciplines, investor insights and financial history are overlooked in favour of quantitative models with no history of success.

5) MAGIC FORMULAS - There are no magic formulas for investment success, so don’t waste your time buying books that promise otherwise. Nonetheless, the track record of the Investment Masters shows that it's possible to compound capital at high rates of return over time, yielding astonishing results.