🧠 What Our WORST Investments Have in Common


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Welcome to Long-Term Mindset, the Wednesday newsletter that helps you invest better.

Today's Issue Read Time: <2 minutes

  • Lesson: Licking our wounds
  • Timeless Content: Why "skin in the game" matters
  • Thread: Why Individual Investors Have an Advantage Over Wall Street
  • Resource: Advice for New Graduates in the Age of A.I.
  • And more!

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Join us next Tuesday (July 1st) for an investing masterclass:

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Five Moats Every Investor Must Know

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Here’s the agenda:

  • The five types of economic moats that protect companies from competitors
  • How to avoid companies with fake or fading moats
  • Real-world examples of each moat in action
  • Q&A

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If you're an individual investor, you'll love this session.

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To register for this free event instantly with 1 click, click this button:

Friends,

In hindsight, my (Stoffel, here) naivete was almost comical. It was early 2015, and I was putting a good chunk of my portfolio into GoPro.

My reasons:

  • Sales were growing rapidly (up 42%), and gross margin was expanding.
  • The company had lots of cash, no debt, and was spitting out free cash flow.
  • It was a founder-led business, and the founder owned TONS of stock.

Despite checking a lot of boxes, it ended up being one of my worst investments ever, falling 70% before I sold out. (It's currently down another 90% from that point!)

But it wasn't a total loss. I paired what I learned from GoPro with some of my other worst investments. And when I did, they all shared two important traits:

  1. Total Addressable Market: In most cases, I didn't consider that a company could already be pushing up against the limits of its addressable market. While GoPro cameras were popular, it turns out that not everyone considered them a "must-have" gadget.
  2. Moat: More importantly, in every single one of my losers, I had overestimated the strength of the company's moat. Even if a company has a huge addressable market, investors won't be winners unless the company has a sustainable competitive advantage.

The only advantage GoPro really had was brand value...which turned out to be a fake moat, not a real one.

At the end of the day, it turned out most people didn't care if GoPro or their iPhone recorded their adventures. Choosing an iPhone made more sense: you could do 1,000 other things with it that weren't possible with GoPro.

If we could go back and tell our younger selves just one thing, it would be this: spend most of your time researching if a company has a moat.

As long-term investors, nothing has helped us accumulate more wealth than investing in wide-moat businesses.

Want to know how to spot the five types of moats (and avoid the fake ones)?

Join us next Tuesday, July 1st, for a free webinar.

We'll share everything we've learned about spotting real moats (and fake ones).

Wishing you investing success,

Brian Feroldi, Brian Stoffel, & Brian Withers

Long Term Mindset

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We love to invest in founder-led companies or when the CEO has an outsized share of company stock. Check out why Stoffel prefers companies where leadership has "skin in the game."

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Don't have a Twitter/X account? Click here to view the thread.

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Joanna Stern, Emmy award-winning tech journalist and Wall Street Journal columnist, has been writing about the tech space for nearly two decades. Check out her five rules for new college graduates to thrive in the age of A.I.​

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Brian Feroldi

Brian Stoffel

Brian Withers

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Long-Term Mindset

I teach investors how to analyze businesses. Each Wednesday, I share six pieces of timeless content that can be read in less than 2 minutes. Read by 100,000+ investors from a16z, Amazon, Google, Microsoft, and more.

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