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Buffett said the most important thing in investing is not IQ

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guess what he said matters most

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not information

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not connections

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and not experience either

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his exact words were

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investing is not a game where a 160 IQ beats a 130 IQ

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once you have basic intelligence

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what you really need

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is the temperament to control your impulses

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I think the word temperament is translated too lightly

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after mulling it over for years

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I think a more accurate term is quality of consciousness

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hey there

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hello everyone

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this is Leo Wang

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today I want to talk about a question that has bothered me for years

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why can two investors holding the same information

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end up with long term returns a hundred times apart

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I have done angel investing for more than a decade

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and backed over three hundred early stage projects

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looking back at all of them

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the finding that stuck in my throat most was this

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my best and my worst decisions

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had almost no difference in information quality

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industry analysis done

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due diligence done

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long talks with the founders done

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competitive landscape fully mapped out

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and yet the outcomes were worlds apart

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one investment is still vivid in my memory

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it was a robotics project

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the founder was technically excellent

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the team was solid

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and the timing was ripe

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but that day I was in terrible shape

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the day before I had gotten bad news on another project

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and my mood was low

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through the whole meeting a voice in my head kept telling me

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do not take the risk

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your luck has been bad lately

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I hesitated for two weeks

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and by the time I made up my mind and reached out

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the allocation was long gone

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later on

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that project became a unicorn

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and the other way around

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one investment that lost me a fortune

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was made exactly when I was most excited

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I had just hit a few good deals in a row

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and figured I was on a hot streak

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everything looked like an opportunity

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one project had obvious holes in its business model

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but my winner mindset automatically filtered out every warning sign

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the two deals had comparable information quality

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but my state of consciousness was completely different

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that made me start to suspect

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maybe the ultimate variable in investing is not information at all

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there is an old Wall Street saying that information is money

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but look at today

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you open your phone

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earnings reports meeting minutes research notes satellite images of any listed company on earth

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are seconds away

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AI can digest in minutes what takes a human analyst a week to read

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the cost of getting information is approaching zero

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yet the gap in investment returns has not narrowed

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it keeps widening

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what does that tell us

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information is not the key variable

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or at least not the only key variable

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so what actually separates people

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over more than a decade I boiled it down to one formula

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investing ability equals information quality times quality of consciousness

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now that information quality is converging

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the real multiplier comes from quality of consciousness

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so what is quality of consciousness

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let me hold off on the definition

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and describe a scene you have probably lived through

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you buy a stock

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and it starts falling right after you buy

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down five percent

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you tell yourself it is fine

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just normal volatility

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down fifteen percent

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your heart starts racing

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you still insist out loud that you are in it for the long term

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down thirty percent

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now you check the account the moment you wake and before you sleep

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you say you are not panicking

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but every cell in your body is screaming

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run

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until one day you see a piece of bad news

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or hear that a friend sold everything

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and you finally break

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you panic sell

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and the moment you are out what you feel is not pain

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it is relief you finally do not have to stare at that blinking number

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and usually

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that exit price lands right near the bottom

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this story played out in the 2008 financial crisis

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it played out in the covid crash of March 2020

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and it played out again in 2022

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March 2020 left the deepest impression on me

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US stocks hit four circuit breakers

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the whole world panicked

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several veteran investors around me

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normally talk about long termism and value investing

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be greedy when others are fearful all of it beautifully argued

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but when the crash actually came they still could not help selling out

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when the market rebounded a month later and they bought back in

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they were already down twenty or thirty percent

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knowledge did not help

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reasoning did not help

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what was actually working in that moment

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was something else entirely

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so let me ask you

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what were you missing at the moment you sold

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was it information

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you knew the fundamentals of the company had not changed

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you knew that after every historic crash the market eventually recovers

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you knew everything

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you just could not do it

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what you lacked was not information

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it was the ability to keep your mind from collapsing under enormous uncertainty

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this is the thing Buffett was talking about

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and it is what I call quality of consciousness

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this is not mysticism

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neuroscience has a concrete explanation

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under enormous financial stress

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your amygdala reads the signal as a threat to survival

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it bypasses the prefrontal cortex that handles rational analysis and long term planning

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and fires fight or flight chemistry straight through your whole body

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cortisol spikes

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your heart races

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and cognitive bandwidth narrows sharply

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in that state

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your brain literally loses the ability to judge complex probabilities

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reason goes offline

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instinct takes over

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this is not weak willpower

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it is your hardware running on factory settings from a million years ago

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those settings were optimized for dodging predators on the savanna

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not for making optimal decisions in a market crash

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in other words

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at the moment of that panic sell

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the one making the decision is not you

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it is the caveman inside you from a million years ago

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he does not understand stocks

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he does not understand valuation

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he only knows a danger signal has arrived

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so run

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the people who stay calm through a crash

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are not born with stronger willpower

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their nervous systems have been trained

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research teams at Harvard and Massachusetts General Hospital found

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that long term meditators have a noticeably thicker prefrontal cortex

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and a stronger functional connection between the prefrontal cortex and the amygdala

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which means when stress hits

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the rational system does not get fully hijacked

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the fear is still there

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but it no longer holds dictatorial power

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you can have the fear present

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and still bring your analytical mind online

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so how do you train that

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the answer might surprise you

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Bridgewater founder Ray Dalio

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ran the largest hedge fund in the world

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he has practiced transcendental meditation since 1968

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nearly sixty years without a break

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he says meditation is the most important thing he has ever done

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nothing else comes close

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in Principles he wrote

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that meditation gave him an ability

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to observe his own emotions and thoughts from a higher vantage point

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instead of drowning in them

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think about what that means

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a man who once managed hundreds of billions of dollars

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faced stress and uncertainty thousands of times greater than an ordinary person

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and he says the most important tool for handling all of it

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was not a better trading model

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not faster data

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it was meditation

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Steve Jobs practiced Soto Zen when he was young

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his teacher Kobun Chino was a Zen master who came from Japan to America

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Jobs even seriously considered becoming a monk

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but Kobun urged him to stay in the ordinary world

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and practice through creating

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the product philosophy Jobs built later

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that drive to strip away everything until only the essence remains

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is structurally the same as the heart of Zen

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the intuition that cut through noise straight to the essence in his product decisions

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was not a shot in the dark

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it was trained

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Munger approach is even more interesting

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he called his investing philosophy sit on your ass investing

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you literally sit there and wait

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doing nothing most of the time

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until a truly outstanding opportunity appears

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does that not sound like the Zen practice of sitting and watching the mind

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doing nothing most of the time

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for someone managing hundreds of billions of dollars

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what that takes is not laziness

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it is enormous composure

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can you hold still while everyone else is moving

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can you sit through what looks like doing nothing

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and carry the anxiety of possibly missing out

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Buddhism has a precise term for this capacity samadhi

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meaning concentration

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it is not a blank mind

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it is not the absence of thought

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it is a mind that is not carried off by circumstances

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the wind blows

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the flag moves

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but your attention does not chase the flag

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so look at this

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the temperament Buffett described

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the meditation Dalio practiced

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the Zen Jobs studied

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the sit and wait method Munger used

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four men walked four completely different paths

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and they all point to the same thing

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training the mind to stay stable inside uncertainty

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my own experience says exactly the same

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in my first years of angel investing

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reviewing my deals revealed one clear pattern

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my best decisions came when I was clearest and most at ease

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not when I had the most information

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but when my mind was most settled

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in that state I could listen to a founder tell the entire story

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without rushing to judge

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without rushing to look professional

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just listening quietly

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letting the information organize itself in my head

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the investments I made in that state

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hit at a far higher rate than average

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and my worst decisions almost all share one trait

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either they were driven by anxiety

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feeling like everyone was piling into this sector

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and if I did not move now it would be too late

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or they were driven by excitement

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some project numbers looked too beautiful

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dopamine took over

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and I wanted to sign on the spot

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anxiety and excitement look like opposites

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but they share one thing

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both take the prefrontal cortex offline

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so I started spending twenty minutes a day on mindfulness practice

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not to become a buddha

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just to train one ability

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to see an emotion as it rises and label it

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instead of being led around by it

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about six months later I noticed a change

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I had not gotten smarter

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and I still could not predict the market

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but the space around my decisions had gotten bigger

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there was now a pause between stimulus and response

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let me give you a concrete example

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one time a stock I held dropped hard after hours

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earnings had missed expectations

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my first reaction was the same as always

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heart racing

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palms sweating

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a picture flashing through my head sell it at the open tomorrow

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but unlike before

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I could see the reaction happening

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I said to myself

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hold on a second

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that is the amygdala talking

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not the prefrontal cortex

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so I turned off my phone

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took a shower

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and looked at the numbers again the next morning

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one figure in the report had indeed come in below expectations

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but the growth trend of the core business had not changed

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I did not sell

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two months later that stock hit a new high

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that pause may last only a fraction of a second

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but inside that fraction of a second

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you get to ask yourself one more question

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the decision I am making right now

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is it based on analysis or based on emotion

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there is a line I love

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between stimulus and response there is a space

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and in that space lies our freedom to choose our response

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it has been widely quoted for many years

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and the original source is untraceable

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but that space is not there from birth

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it is something you train

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what meditation actually does

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is stretch that space wider bit by bit

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now let me raise a question that may be even more fundamental

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why do I say quality of consciousness matters more today

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than in any other period in history

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because AI is wiping out the information gap

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in the past

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much of a top investor moat came from information asymmetry

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you knew more people

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you could get data others could not

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you had faster information channels

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but today

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a college student with AI tools can spend one hour

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and generate a research report

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no worse in quality than a professional analyst

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the information barrier is collapsing

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when everyone can get roughly the same information

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the axis of competition shifts

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from acquiring information to processing it

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and the bottleneck in processing is not compute

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that is AI strong suit

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the bottleneck is this

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when the information tells you something you do not want to hear

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can you actually take it in

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when the data says sell the stock you love most

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can you avoid being hijacked by sunk cost and the endowment effect

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when the market gives you a counterintuitive signal

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can you keep confirmation bias from filtering it out

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AI cannot help you with any of that

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because in the end you are the one pressing the buy and sell button

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you are the one deciding the position size

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you are the one lying awake at three in the morning wondering whether to cut losses

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AI can hand you perfect analysis

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but it cannot bear the uncertainty for you

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and investing is fundamentally the game of deciding under uncertainty

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your quality of consciousness

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determines how much uncertainty you can carry without breaking

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and that is the ultimate moat AI cannot replace

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I am not saying everyone should sit in meditation or study Zen

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meditation is just one way to train quality of consciousness

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some people get a similar effect from long distance running

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some from journaling and reviewing

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some from regular sessions with a therapist

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the point is not the specific method

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the point is whether you are deliberately training

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that ability to create space between stimulus and response

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there is one thing I especially want to say here

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a lot of people listening to this are probably thinking

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I understand all of it

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I just cannot do it

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pay attention here

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not being able to do it is not the problem

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knowing that you cannot is where change begins

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the real danger is never realizing you cannot

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you think you are making a rational decision

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when the amygdala already made it for you

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noticing that you are being hijacked by emotion

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is itself the first step of quality of consciousness

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you do not need to become perfectly still overnight

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you just need to pause three extra seconds before your next investment decision

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and ask yourself one question

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the thing pushing me to press this button right now

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what exactly is it

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if you spend hours every day studying charts earnings and macro data

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but never spend even ten minutes noticing your own inner reaction patterns

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then all your effort in investing

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is like someone frantically upgrading his software

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while never checking whether the hardware is overheating

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sooner or later

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the hardware crashes at the most critical moment

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there is a fascinating paradox here

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the harder you try to suppress emotion with willpower

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the more violently that emotion rebounds

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you tell yourself do not panic

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and you end up panicking more and more

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because suppression is itself a fight

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00:13:11,326 --> 00:13:13,335
and fighting burns cognitive resources

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which makes you break down faster

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what actually works is not suppression

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it is awareness

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you do not need to make the fear disappear

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you only need to see that the fear is there

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and then choose not to follow it

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those two things sound almost the same

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but in practice they are completely different

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one is wrestling with your emotion

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the other is standing beside it watching it come and go

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let me close with a recent observation

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I have found that the people who survive longest in the market

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are not necessarily the smartest

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00:13:40,445 --> 00:13:42,815
but they always have the best relationship with their own emotions

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it is not that they feel no fear

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it is that when fear arrives

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fear is not the boss

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it is only a signal

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they can receive the information the signal carries

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without being hijacked by the signal

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Buffett said investing does not run on IQ

387
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Dalio said meditation is the most important reason for his success

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00:13:59,962 --> 00:14:04,491
Jobs found in Zen the ability to cut through noise straight to the essence

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00:14:04,762 --> 00:14:08,332
Munger spent a lifetime proving that composure is the greatest weapon

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00:14:08,923 --> 00:14:11,371
four men walked four completely different paths

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and they all arrived at the same place

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the ultimate moat in investing

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was never what you know

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it is whether when everything you know is drowned in fear

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you can still see clearly

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at the end of the day

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every investment methodology in the world

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00:14:26,042 --> 00:14:29,402
value investing trend investing quantitative investing

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00:14:29,402 --> 00:14:31,612
all of them assume the executor is rational

400
00:14:31,682 --> 00:14:34,242
but if the executor quality of consciousness is not up to it

401
00:14:34,243 --> 00:14:37,652
even the best methodology warps at the critical moment

402
00:14:38,162 --> 00:14:39,492
methodology is the map

403
00:14:39,522 --> 00:14:42,492
quality of consciousness is how steady the hand holding the map is

404
00:14:42,802 --> 00:14:43,392
if the hand shakes

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00:14:43,723 --> 00:14:45,532
no map is accurate enough to save you

406
00:14:45,843 --> 00:14:47,071
and whether those hands are steady

407
00:14:47,363 --> 00:14:48,112
is not talent

408
00:14:48,402 --> 00:14:49,291
it is training

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00:14:50,150 --> 00:14:52,639
so in your own investing experience

410
00:14:52,790 --> 00:14:54,659
how big a role has quality of consciousness played

411
00:14:55,270 --> 00:14:59,139
have you ever made a decision you deeply regret because your emotions took over

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00:14:59,671 --> 00:15:00,139
if you have

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00:15:00,431 --> 00:15:01,659
how did you deal with it afterward

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00:15:02,150 --> 00:15:04,679
share your real thoughts in the comments

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this is Leo Wang

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see you next time