Investment lessons from Chamath
I have heard Chamath P talk about these 3 topics repeatedly across multiple podcasts:
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No one can predict the future. Interest rates in the future might become zero, go negative, or become high again. You need to invest your capital in companies that can do well both in an inflationary and deflationary world. He talked about how people will always buy things Amazon, no matter what is the Government’s financial policy decision. For me, the takeaway was that in an uncertain financial or political future invest in a company that is resilient. So I put a lot of money in Reliance and HDFC Bank. Reliance will continue to well irrespective of whether BJP or Congress runs India in the future. HDFC Bank is the best bank in India in spite of its sucky tech. There is a lot of upside still. No matter what happens in the future, people will continue to bank with HDFC.
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Think about who can allocate your capital better. Chamath has mentioned in multiple interviews that he liquidated his FB position after his exit from the company and put in a lot of money in Amazon because Bezos was the best capital allocator he knew. Also how he bet on himself while starting Social Capital and put a lot of his net worth in his first fund on Peter Thiel’s advice. If you think you are the best capital allocator out there and have high conviction then let your money do the talking; bet on yourself.
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Consider cycle time and manageable guardrails for all asset classes. In VC, guardrails are pretty much defined but has long cycle time (10 years to get returns). In crypto, cycle time is fast, but guardrails are indeterminate. Invest thinking these two parameters in mind.
Listen to this amazing podcast to understand the above more. BTW Capital Allocators is an amazing podcast.
Related read: Chamath’s archive.