How I Think About Investing at 14

People are surprised that someone my age follows the market. To me it is the most honest classroom there is. It does not care how old you are, who your family is, or how confident you sound. It only reflects whether your reasoning was correct, and it tells you eventually, whether you want to hear it or not.

The first principle I hold to is time. The single biggest advantage I have is not capital or information, it is decades. Compounding rewards patience more than it rewards cleverness, and almost every mistake I have seen comes from someone trying to make ten years happen in ten weeks.

The second is understanding what I own. If I cannot explain in plain language how a company makes money, who its customers are and what would cause it to stop working, I have no business owning it. A ticker symbol going up is not a thesis.

The third is risk before reward. Before I think about what a position could return, I ask what has to go wrong for it to be a serious loss, and whether I could live with that outcome. Position sizing is a decision you make in advance, when you are calm, not during a bad week.

The fourth is separating price from value. Price is what the market feels today. Value is what the business is actually worth over time. Those two things drift apart constantly, and the gap between them is where patient investors make their returns.

The fifth is keeping a record. I write down why I bought something and what would make me change my mind. Memory is generous to itself; notes are not. Reading old entries is humbling, and it is the fastest way I have found to improve.

None of this is advice, and I am not telling anyone what to buy. It is how I approach it: slowly, in writing, with a long horizon and a clear idea of what I could afford to be wrong about.