Ask AI, “How do investors go bankrupt?”
And then do the opposite
Perplexity told me the toxic combo is:
– concentrated positions in
– illiquid assets employing
– leverage and
– compounding losses
Great, so the answer is the opposite:
– diversified portfolio in
– liquid assets
– without leverage and
– compounding profits
That’s what we do
But what astounds me is that the “Nostradamus of AI”, Léopold Aschenbrenner, didn’t appear to use AI in this simple way to compensate for his lack of “experience”
Defined by Ken Griffin in a 2024 podcast interview with Nicolai Tangen as “The price paid in losses and pain that converts into wisdom”
Which his clients paid and are now left with a less liquid portfolio
Forget his age, we can all learn from the mistakes of others – that interview was 2years ago
It all comes down to what else Ken said
“Some people to be blunt, they’re just not good risk takers. You can put the facts right in front of their face – you have a portfolio of extraordinarily highly concentrated large positions and you cannot demonstrate a clear and concise competitive advantage in why you own those positions”
I guess most fund investors are so focussed on returns, they ignore the risk taken to get those returns
Yet sites like Trustnet & Morningstar have most of what you need
There’s a risk tab with a graphic “Risk vs Category”, “Return vs Category”
and periods – 3yr, 5yr & 10yr
Note “Risk vs Category” is 1st
I wondered if any of these risk management lessons were discussed at the “panels and breakout sessions” that were apparently scheduled at his wedding
But it seems not because less than 2 weeks later
His fund made a $400 million investment in a one year old chip start up – “It plans to develop new machines, equipment and software for manufacturing AI chips to challenge Dutch firm ASML Holding” The Wall Street Journal
Sounds hopeful – ASML spends $5.5bn on R&D a year
Then again, with some poetic license & reference to Ken’s view
“A leopold can’t change its spots”
#valueinvesting
#investing
#numbersnotnarrative
#marketingcommunication
Disclosure
Ranmore Global Equity Fund has no position in any of the securities mentioned
This is not advice, do your own work
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