Business

Producing goods and services is how all wealth is created. Business is a catch all word we invented to describe everything needed to sell goods and services.

A person could spend a life time studying “business” and not learn a thing. Most people do this.

There are 1000’s of people (some of my fav’s here) better than me at describing the skills to create wealth. We call these skills: entrepreneurship, manufacturing, marketing, sales, etc.

Most Business books are a waste of time and money. My list of books about epic stories of companies here.

High Output Management summarizes 90% of what anyone needs to know about getting a company to produce goods or services and make a profit.

Everything I’ve learned that I think matters.

Make something People Want.
There is no skill called business - Sales, marketing, production, operations, engineering, game theory, microeconomics, and human phycology. These are the necessary skills to create wealth.
The beating heart of the economy is producing goods and services. If you were alone on an island with noone and no technology, the only thing that matters is producing useful things and performing useful services to survive. Bankers, Lawyers, Economists, etc would be useless.
The essential task of a business is to create wealth; the dimension of wealth you have most control over is how much you improve peoples lives: and the hardest part of that is knowing what to make for them. Once you know what to make, it’s mere effort to make it, and most decent entrepreneurs are capable of that.
A simple, but very helpful explanation of How the Economic Engine works by Ray Dalio.
People can sell goods and services in many ways - as a person, partnership, company, or more recently a network. See my writing on companies here
The product or service must be compelling to the market. Nothing else matters. How to build a compelling product or service is the right question.
Limited Liability is what makes companies unique. Governments give limited liability protection to people, via a company, so they will try and produce more goods and services for more money - aka “take risks”
The history of how we’ve formed companies is essential to understanding why Limited Liability is important.
Accounting is the language of business. Learn to speak it.
Sales - Costs = Profit. If you understand how companies do this, you understand 90% about the world.
All sales and marketing is propaganda. It just depends are you producing or consuming the propaganda.
90% of all businesses fail. 70% of all start ups fail because of partner splits.
The fate of all businesses is to die a hero, or live long enough to become the villain.
The death of all businesses is by a thousand group decisions.
Technology innovation creates all future wealth.
The rewards for creating a business are great because we have too much money, chasing to free ideas (interest rate is basically a sign people are not productive with capital). Thus creating new businesses (startups), is the only way to grow the economy. Interest rate is essentially how productive we are. If you can be more productive with capital, you won’t lend it out i.e. interest is higher.

The most limited resource on earth is people with the entrepreneurial mindset. People with the desire to create a world they want.
Every industry ever has been disrupted. Ever. The once disrupters have always become the disrupted.
Companies adopt technology if it makes something better, faster, cheaper. i.e. It makes you more money, saves you costs, or makes your life easier.

On the Stock Market & Macro Economics

There are surely better economists than I am. Matter of fact, I pride myself on ignoring most discussions on macro economics. Al be it, they are fascinating, they just never go anywhere and cannot yield an action.

Macro economics is something we made up. It’s a social science. Micro Economics - game theory, consumer behaviour, etc are better for companies to understand. Learn your industry, know it well. Yes you need to understand the world. No you don’t need to obsess over it. Keynesian Economics doesn’t hold true, study Austrian Economics.
GDP is the best measure of value and wealth creation we have on earth. It’s flawed, but it’s the best.
Total Factor Productivity growth measures our progress and efficiency using our wealth.
There is no such thing as a “stock” - The “stock” is just a tool by which humans place a bet. 2 bets you can place. 1/ The company will fail. 2/ The company will win. The 1st bet is that the company will eventually fail > Because you are betting that it will eventually fail you command that capital generated be taken out of the business in the form of dividends, stock buy backs, etc > distributing the capital to shareholders rather then reinvesting it > and thus creating the path to eventually not existing. The 2nd bet is the company will succeed > By default, you will loose all your money. This is the expectation. The upside to this is a 1000x in the rare event a company succeeds. When you are investing in companies that use new technologies to change products or services and advance their utility to people, you are taking a bet on the future.
No businesses has remained in the top of the S&P 500 for longer than 30 years. Since we started recording.
George Soros Theory of Reflexivity explains more about the world than 1000 text books.
History may not repeat, but it sure rhymes. The Changing World Order by Ray Dalio maps the broad history of the worlds economics for the last 1000+ years. It describes how and why nations succeed and fail. They all follow the same cycle.
"The investor who says, 'This time is different,' when in fact it's virtually a repeat of an earlier situation, has uttered among the four most costly words in the annals of investing." - –Sir John Templeton
“In the short run, the market is a voting machine but in the long run, it is a weighing machine” - Benjamin Graham.
Technical Analysis & Day Trading does not describe how the world works or those companies make money. They are derivative services. Short term investing and day trading is equivalent to speculative voting for stocks based on popular sentiment of the time. Over a long enough period of time, popular sentiment will align with fundamentals of selling goods and services.
The efficient market hypothesis is a lie

At best it is a very lossy heuristic
The best things in life occur where EMH is wrong
In many cases it's more accurate to model the world as 500 people than 8 billion
"Most people are other people

There is no correlation between real economic output, and stock market success.
“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”. - John Maynard Keynes.