Arkham Capital

You can never know everything and part of what you know is always wrong. Perhaps even the most important part. A portion of wisdom lies in knowing that. A portion of courage lies in going on anyway. - Wheel Of Time

"Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you've won." — Charlie Munger

@torontolife I guess your staff didn't do your research on Jim. He's into engagement baiting and craps all over hard working Canadians.

Jim Chuong, a former engineer, retired at 40 with $2 million in cash. Here, he breaks down how he did it torontolife.com/memoir/a-40-ye…

@realroseceline All the best to you in your recovery!

I’m out of surgery 🙏 They’re saying the probability of a success operation is about 85%, so I like the odds that my heart is fixed. I was born with a rare condition called WPW, Wolff Parkinson White syndrome, but unfortunately there is not way to tell if it’s fully fixed yet. We’ll know in about 2 weeks 🤞 I like the odds, but I don’t love how I feel right now, but hey that’s life and sometimes in life you have to suck it up and not act like a little 🐝. Ironically same is true in the investing game, albeit under a different set of circumstances that at times also tends to increase people’s heart palpitations. They’re keeping me in the hospital for a few days. My heart feels weird. It’s hard to explain, not super painful, just… off. Strange but I guess that’s part of the process. I was lucky to have a legendary heart doctor, and we kind of became friends through all of this. Something funny just happened. He came by to check on me, explained all the medical stuff, and as he was leaving he asked if he could ask me one question. I said of course… He said he just wanted to know what’s it mean “advertising doubled” and “margins are growing gangbusters”. Apparently I spent almost the entire 7 hour surgery mumbling about advertising, and the merit of $NFLX margin expansion. Even in pain and feeling off coming out of anesthesia, that made me smile. I guess you can take the investor out of the operating room, but you can’t take the investor out of the investor. Or maybe that’s what happens when you throw down with a management for over a decade. Grateful to be on this side of this ordeal now. One day at a time. Hope y’all don’t mind me posting a little more than usual, but it’s boring here at 2am in the hospital. I am bored so feel free to ask me whatever you want, about investing, life, wisdom or whatever your heart desires, writing this post distracted me for the time being so that quite lovely. 🌹 Ps I appreciate all the kind words on my previous post, quite lovely and encouraging to read, thank you 🙏

What makes $CSU special isn’t any one product. It isn’t even the specific businesses they’ve acquired, as important as those are. It’s the skill of acquiring itself. The culture, the process, and the discipline around capital allocation. That is an extremely rare elite skill. Markets compress time emotionally but businesses expand time economically. A 40% drawdown feels like an event. To the business, it’s noise. Customers still rely on the software. Cash will com in and get redeployed. The only thing that changes is the volume of opinions. Moments like this don’t test intelligence. They test temperament. Knowing facts gets you into positions. Understanding what you own decides whether you stay in them. We live in a market that demands explanations every quarter and certainty every week. That’s not how compounding works. Great businesses don’t announce themselves. They just show up years later having done the work quietly. Growing earnings is impressive. Growing earnings while respecting ownership is something else entirely. Dilution is easy but discipline is hard. $CSU clearly chose discipline. Over the next twenty years, I expect this company to acquire many more businesses. The targets will change and perhaps environment will change. Even tools will change, even the playing field may even tilt. But the game stays the same. There are always risks. Just like walking outside and something falling out of the sky. That’s life… What I don’t see going away is the rare ability to acquire businesses at an elite level and compound capital without dilution. That’s not something you copy overnight. And it’s not something that’s easily replaceable. 2/2 🌹

@ShaziGoalie Most folks have said to me the following reasons 1) overpriced crap 2) smaller and smaller portions 3) persons serving them and/or making the food are not locals and 4) wallets are tight right now

A friend in St. Catharines says fast food chains are running buy one get one free deals. Demand is drying up.

@RobTheDirector @JimChuong Jim is not about nuance. He's about the clicks and views. He leaves out all the details. For example, his wife still works 9-5.

@JimChuong lol u guys and these posts. U gotta define ‘life changing’ a $20k cash gift for an operation can be VERY life changing. Be specific

$100K is not life changing money unless you’re in high school.

@amobear @CarolCCarroll @Ross__Hendricks @SullyCNBC @grok is this true?

Inclusion of SV40 (Simien Virus 40) from monkeys in the vaccines as well as suppression of the P53 gene which is the body's primary defense against cancer. This has been known for four years but the media and social media are censoring this information which is why the medical community and public is not making the connection (I'm being nice and giving benefit of the doubt).

Lost another friend to cancer. Early 50s. Fit. Nonsmoker. So many I know getting aggressive cancer, having strokes, out-of-the-blue seizures, etc. Weird, fast moving problems. I know 50 ain't young but is it that old? God bless everyone dealing with health issues out there. Always happy to hear YOUR stories. #beatcancer #nomorestrokes

@JimChuong Your wife ?

Nobody who sells their entire life away for a salary is rich. That’s literally the definition of middle class poverty. Time > money.

@DonovanBond @Tablesalt13 It's not closed to anyone. Anyone can sign.

@Tablesalt13 Nearly 12K now. Wow.

🚨NEW Change .org petition calling for Michael Ma to resign (only open to his constituents) has nearly 10,000 signatures in less than a day Its TIME to STOP being passive, Canada. FORCE this man to resign for his betrayal. change.org/p/demand-mp-mi…

@Tablesalt13 there is no real system control on limiting it to his constituents very easy to get around it. You know that.

@almondmilk @joecarlsonshow Should be a profitable short for you then.

@joecarlsonshow Its not just retailers, its payment processors and platforms. They lose take rate. There is no future world where Visa and Mastercard exist in its current form.

I have gained a unique audience. One where the vast majority is extremely smart with their money, they invest well, into great profitable companies, the "risk" they take is investing in companies that are slightly more volatile, or paying a slightly too high PE. Overall, my audience makes a lot of money. Then I take a look at Caleb Hammer's channel, and it highlights what a LOT of people are actually like. They're completely idiotic with their money, to the point where they're actively destroying their chances of wealth. The self-inflicted wounds people do to their finances are deep. So we can argue if Mastercard is a better buy than Visa, those are fine arguments to have. But just remember if you're even considering these types of debates you're better off than 95% of people.

$CSU.TO but the cult doesn't realize it yet.

Not a bad reminder:

@hoomansv @jbulltard1 thought you would enjoy this 😂

$AMZN tough to deny this might be the 🐐 of all DDs

@PythiaR Thanks for taking the time to respond with a nuanced response!.

This is a good question and I don’t know. Some depends what else there is out there, like can I recycle it into other stuff at similar IRRs? Can I hedge it or collar it cheaply instead of selling outright? What else is in the port than can offset (eg was I 20% in one position in industry A and 10% in another and now I’m 35+10? Or is this 35% “on its own” and uncorrelated with others?). What type of biz is it? Is it a narrow range of outcomes (say bull vs bear IRRs are 20% and 7%) or big (bull is a 10x, bear is -75%)? Also depends on port size relative to income. The larger my port gets the less tolerance I have for position sizes above about 30% really. And I don’t have tolerance for binary large positions that large for sure.

Alright so long post time: Over the past 2 years I’ve experimented with extreme levels of concentration (70-90% in a single stock) In one case, I lost about 40% of my investment, in the other, I’ve roughly doubled my money. Just wanted to be transparent with some learnings. 1) initially I had a lot of comfort with the positions, Twitter GCs with alt data, people doing extreme levels of due diligence. Was great, except it didn’t really mean much in either case (the Fungus stock cratered, CLPT had a near 50% drawdown). You can do all the work and have it not work out. This is why diversification exists. 2) what I underestimated is the psychological toll of concentration that exerts itself in a few ways: a) when you only have one thing and it’s not working or going down *while everything else is going up* it is excruciating. That pain makes you want to sell at the bottom. b) losses on a hugely concentrated position then put you in the position, or at risk, of trying to swing hard at something else to make up the loss. You invest not from a place of strength but desperation. This obviously is not good. c) you see lots of other interesting things that you have to pass on. Stuff that you might make 1 or 3% positions, and you can’t participate because your capital is tied up in something in a drawdown you don’t want to sell. Missing out on those, let’s call them “exploratory” positions has actually cost me a lot of money over the past 2 years. d) life outside investing isn’t always kind. You need to optimize position size not only for the risk of your portfolio, but for the risk you eg go through a messy breakup and a flood at both your office and at home and have to move and have to cut off half your family because they threaten your dog and you can’t mentally handle one more fucking thing going wrong and then your port goes into a 50% drawdown and you go insane. That insanity affects everyone around you, but also makes you more prone to even further destructive portfolio management decisions. What I learned about myself, and of course everyone is different, is that: 1) I need at least 3-4 big uncorrelated bets going on at any one time for my own sanity. Both on a day to day basis, but also in case life throws shit at you. 2) I need the ability to have like 5-10 trades based on hunches/gut feel/twitter recs/“invest and then investigate”. My hit rate on those is actually quite high, and the small wins add up. 3) while big position sizes are hella fun on the way up, it’s not worth it. Max 20% for me. Now interesting to think: shouldn’t you have learned this the first time? What I learned the first time was never bet on Swedish pharma shitcos. What I learned with CLPT was even with relatively high quality compounders, 90% of your portfolio in one stock puts you in a fragile position mentally when shit comes at you in the rest of your life.

Napoleon's definiton of a military genius was "The man who can do the average thing when everyone else around him is losing his mind." Same in investing.

@CDInewsletter @CDNValueInvestr I have an allocation for the best in class. CNQ and TOU. For me I add when prices are down and then lighten up when prices are high. It's a Peter Lynch approach to cyclical stocks.

I'm long a couple of oil sands giants but at portfolio weightings where I can tune out what happens to oil. Think it's a reasonable portfolio diversifier. But have you seen some of the guys who are long oil in size? Somebody farts in the Middle East and they're predicting $10 higher oil. It's nuts.

I can't imagine a worse form of hell than having the majority of your portfolio in oil stocks: - Zero pricing power - Way more volatile than the rest of the market - Long-term returns for most are crummy - Constantly worried about an unpredictable commodity Ugh. Never.

@Tablesalt13 Order in councils can be searched and found here. It's not a secret. orders-in-council.canada.ca

🚨NEW Ive obtained a copy of the Order in Council where Carney claims to have repealed the carbon pricing "immediately" turns out, his signature was total THEATRE, and the Governor General has to sign it, which will take until March 31st. Also, business must STILL report emissions.

@PythiaR At this point I'm not sure why he's even pretending who his true hero is. It's Sardar Biglari obviously.