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What is the number one rule in buffet?

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Marina

Feb. 04, 2024
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According to Buffet you can sum up investing in two pithy sentences… “Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1." Given the elevated volatility of markets I’ve been thinking quite a bit about those two rules.

Here’s a bit of truth: right now is the best chance I’ll ever have to succeed at investing. I have a decent chunk of change, bear market sale prices on assets, and I’m young enough that if I can compound my bankroll I’ll wind up with proper steak dinner money. I don’t want to be hyperbolic, but I will almost certainly never get another opportunity like this. If I fail, I’m done. If I can’t make this work I’m enrolling at a trade school to learn how to repair air conditioners. Being the best read air conditioner technician this side of the Mississippi wouldn’t be a bad life, but I would prefer to make it as a dollar slinger.

Here’s a quote from Radigan Carter’s latest article. “This is why the best investors are ones with substantial amount of their own money at risk and treat their capital as irreplaceable because if you lose that money, you cannot get the years back it took to earn it.”

I am not the best investor, but I can aspire to that. Here’s another truth: to enjoy long term success you have to survive. The ladies and gentlemen who do this their whole lives, Howard Marks comes to mind, preserve capital. I want to be like Howard Marks. I don’t necessarily have ambitions to become a billionaire, but I would very much like to be relevant in fifty years.

The point?

I’m attempting to organize my thinking with this post, to make sense of the thoughts that have been haunting my cortex for the last week or two. Survive, don’t lose money.

My position in TLT is down 10%, that’s not very smart is it? Am I the dumbest man alive for buying bonds in an inflationary environment? Sure, you could argue that. I think there’s an 80% chance that within the next 6 to 12 months this trade will be profitable. I believe that a lot of treasuries are getting sold out of desperation, and that this trend will reverse. However, I think the better point is: why buy TLT when the risk/reward is all out of wack?* There are other market sectors with more promising returns.

*Funny, ain’t it, how buying the “world’s safest” risk-free asset is now a risky trade. Welcome to our brave new world

My position in oil equities and precious metal miners is about even. Given that both of these sectors continue to get the beat down, I think that’s all fine. I’m still cautiously dollar cost averaging into both sectors on every dip.

70% of my AUM remains in cash. That’s proven to be a good call so far, although it hasn’t necessarily been easy. I’ve found it difficult to keep so much cash in the face of all these bear market rallies, especially that epic summer rally. However, the bear case appears to be 5x stranger than the bull case. In fact, I don’t even know what the bull case is at this point. Maybe it’s that everything won’t be quite as horrible as we think? Or that the Fed will pivot soon? Perhaps. Assuming that the Fed doesn’t pivot in the next month or two though, which is my base case, I think the market is going to shreds. That’s why I have the cash.

The future

I’ve been getting mentally lost in the short term volatility. I’ve been spending too much time on Twitter, too much time staring at the charts even though I’m not day trading. Lost in the trees, no forest for me this October. In my moments of clarity, as is the case now, I remind myself to think about the bigger picture. To the maximum extent possible, follow Buffet’s two rules. I still want to be writing these articles five years from now (and beyond). I want to get through this and end up in a good position to benefit from the bull market to come.

That’s all I have for now, so I’ll end this rambling post with another excellent quote from Radigan. Enjoy.

“As always, I distill down events with my own experience and then try to determine if it changes anything in my personal life as I try to do the best I can to be a wise steward of my savings in what seems like an increasingly insane world as I continue to learn.”

Etiquette Tips for Eating at a Buffet

Buffet etiquette finds its place toward the casual end of the dining etiquette spectrum.  When you're mindful of the situation and show consideration to others, it's difficult to do it wrong.

During the pandemic buffets were suspended and they may never make a full return.  Time will tell. However, as with any social situation, knowing what to do makes it easier to feel comfortable and to extend that feeling of comfort to other people, too.

Smorgasbord?  Serve yourself affair?  Salad bar?  All you can eat?  Each of these fall into the category for which buffet etiquette applies.

What You Should Do

  • Servers will be serving you. 
  • There are usually many item choices, but it's better to maintain decorum and not stack your plate high with food just because it is offered.  You can always make a second round through.
  • If it’s a one-time-through buffet, accommodate accordingly.
  • If you return to the line, leave your plate behind and get a clean plate. The same goes for beverages if you need a refill.
  • Carry food and drinks separately to the table to avoid a potentially hazardous balancing act.  (Sometimes drinks are served and you won’t have to worry about this.)
  • When you sit down you can begin eating.  However, if you are at a gala affair and your table has been invited to the buffet line, you will arrive back at your table along with others.  As a courtesy, wait until two or three table companions arrive before eating.
  • Service staff always appreciate hearing “Thank you!”  Wear a smile.

Buffet Etiquette Faux Pas

  • Please do not cough or sneeze near the food.  Step out of the line or turn away and sneeze into your elbow to cover mouth and nose.
  • Don’t be a space invader, reaching around or in front of someone who is serving himself, or standing too close.  Respect personal space.
  • Eating begins when you sit down at the table — not in the buffet line.
  • Try not to hold up the line by asking lengthy questions about how the food was prepared.  Better to skip it and not keep other hungry people waiting.
  • And lastly:  no doggie bags!

Attending buffet events can be fun and adventurous when there are many new foods to try.  
Bon appetit!



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What is the number one rule in buffet?

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