profile

Steady Compounding

Advice for the Kids by The Humble Dollar, Benedict Evans Presentation on AI, Oaktree's Howard Marks on Current Markets — 3-Bullet Sunday

Published 6 months ago • 3 min read

Hey Reader - Thomas here.

Good day to my fellow compounders!

In 3-Bullet Sunday, I share with you the three most interesting piece of article, video or podcast I came across for the week on investing and growth philosophies.

Enjoy!

Stomach Volatility or Accept Mediocre Returns

The most eye-opening research in this week's 3-Bullet Sunday comes from Michael Mauboussin's study on drawdowns and recoveries—and it should fundamentally change how you think about investing.

Here's the reality: the median stock experiences an 85% drawdown that lasts over two years. Even more striking, research shows that a theoretically perfect portfolio—one constructed with godlike foresight of future winners—would still suffer drawdowns exceeding 50%.

Charlie Munger captured this truth perfectly: if you can't handle 50% declines, you deserve mediocre results. He understood that market fluctuations aren't bugs in the system—they're features. The investors who panic during inevitable downturns will consistently underperform those who maintain their composure.

But here's the crucial caveat: this assumes you've chosen quality businesses trading at reasonable prices. The ability to stomach volatility only pays off when you're right about the underlying value and the market has temporarily overreacted.

This is what makes investing both brutally challenging and intellectually rewarding. Success requires the rare combination of analytical rigor in selection and emotional fortitude in execution.

This week's 3-Bullet Sunday explores this theme further with insights on AI investing, decision-making frameworks, and Mauboussin's complete research.

Compound steadily,

Thomas

​

I. Advice for the Kids by The Humble Dollar

The article "Advice for the Kids" from HumbleDollar offers timeless financial lessons for younger generations.

It emphasizes saving early, living within your means, and investing consistently. The author also highlights the value of avoiding debt, cultivating good spending habits, and understanding that financial success is a marathon, not a sprint.

These principles serve as a guide for building long-term wealth and stability.

​>> Click here to read Advice for the Kids by The Humble Dollar​

II. Benedict Evans Presentation on AI

Every year, Benedict will produce a big presentation exploring macro and strategic trends in the tech industry.

For 2025, ‘AI eats the world’.

​>> Click here to read Benedict Evans Presentation on AI​

III. Oaktree's Howard Marks on China Opportunities, Trump's Cabinet, Market Sentiment

video preview​

Howard Marks interview with Bloomberg:

  • Be less aggressive, but don’t exit the market. Nobody can time the market. Instead, calibrate your behavior between aggressiveness and defensiveness.
  • You can be right about the events but wrong about how the markets react.
  • There are many speculations about the new administration, but the truth is, nobody knows how it will play out.
  • He doesn’t think things are crazy high now and doesn’t believe it is time to get out of the market.
  • China is trying to calibrate the right amount of stimulus. They’re wary of overshooting.
  • Howard Marks sees the Chinese market as a bargain right now.
  • The problem with the property surplus will take time to be absorbed. It doesn’t just disappear with new policies. He believes the government will do what it takes to digest these excess properties and implement policies to prevent this from happening again.
  • When people say China is uninvestable, it becomes music to their ears.

That's all I have for you today!

Till next week.

Thomas

Founder of Steady Compounding

Connect with me:
​

Steady Compounding

by Thomas Chua

I write about investment concepts, business breakdowns and timeless lessons from super investors. Featured on Business Times, Channel News Asia (CNA) and more. Read by over 10,000 investors.

Read more from Steady Compounding

This week's exclusive Steady Compounding Insider Stocks report reveals how Amazon's business model—built on Bezos's timeless customer principles—is positioned to thrive. Below is a preview of my comprehensive Amazon analysis. Deeper insights—including my thoughts on valuation work, insights on Amazon's AI strategies and portfolio changes—are reserved for members. >> Click here to unlock complete by joining Steady Compounding Insider Stocks Compound steadily, Thomas Jeff Bezos once shared a...

3 months ago • 11 min read

Despite 2023’s strong market performance, 2024 has presented compelling opportunities to acquire high-quality businesses at attractive valuations. As we’ve seen repeatedly, investor time horizons compress to zero during drawdowns, and "hopium" stretches to infinity during bull cycles. This phenomenon captures how investors often lose sight of the bigger picture in turbulent times while becoming overly optimistic in bull markets. This recurring behavioral bias creates opportunities for...

5 months ago • 1 min read

Hey Reader - Thomas here. Good day to my fellow compounders! In 3-Bullet Sunday, I share with you the three most interesting pieces of articles, videos, or podcasts I came across for the week on investing and growth philosophies. Enjoy! Stomach Volatility or Accept Mediocre Returns The most eye-opening research in this week's 3-Bullet Sunday comes from Michael Mauboussin's study on drawdowns and recoveries—and it should fundamentally change how you think about investing. Here's the reality:...

6 months ago • 5 min read