651 Legendary Investor Bill Gurley on Investing Rules, Finding Outliers, Insights from Jeff Bezos and Howard Marks, Must-Read Books, Creating True Competitive Advantages, Open-Source Strategies
This is a Google Bard AI summary of the Tim Ferriss Podcast #651- visit www.TinyTim.blog for more AI summaries, or www.Tim.blog for the official Tim Ferriss Podcasts.
In this article, legendary investor Bill Gurley shares his insights on investing. He discusses his rules for investing, how to find outliers, and what he has learned from other successful investors, such as Jeff Bezos and Howard Marks.
**Gurley's Investing Rules**
Gurley shares five rules for investing:
1. **Focus on the long term.** Don't try to time the market. Instead, focus on finding companies that you believe in and that have the potential to grow over the long term.
2. **Invest in companies with strong management teams.** The management team is responsible for executing the company's strategy and delivering results. Make sure you invest in companies with management teams that you trust and believe in.
3. **Invest in companies with large addressable markets.** The size of the market is important because it determines the potential for growth. Make sure you invest in companies that are operating in large and growing markets.
4. **Invest in companies with sustainable competitive advantages.** A sustainable competitive advantage is something that gives a company an edge over its competitors. Make sure you invest in companies that have sustainable competitive advantages.
5. **Invest in companies that are priced attractively.** Don't overpay for stocks. Make sure you invest in companies that are priced attractively relative to their fundamentals.
**Finding Outliers**
Gurley also discusses how to find outliers. He argues that outliers are the companies that have the potential to generate outsized returns. To find outliers, Gurley looks for companies that have:
* A large addressable market
* A sustainable competitive advantage
* Strong management
* A reasonable valuation
**Insights from Jeff Bezos and Howard Marks**
Gurley also shares insights from two other successful investors, Jeff Bezos and Howard Marks.
Bezos has said that he looks for companies that have "a big flywheel." A big flywheel is a self-reinforcing feedback loop that can drive rapid growth. For example, Amazon's flywheel is its Prime membership program. Prime members are more likely to shop on Amazon, which generates more revenue, which allows Amazon to invest in new products and services, which makes Prime members even more likely to shop on Amazon.
Marks has said that he looks for companies that have "margin of safety." Margin of safety is the difference between the price you pay for a stock and the intrinsic value of the company. Marks argues that you should only invest in companies where the margin of safety is large.
**Conclusion**
Gurley's article is a must-read for anyone who is interested in investing. He shares his insights on investing rules, how to find outliers, and what he has learned from other successful investors. If you are serious about investing, you should take the time to read this article.
Here are some additional key points from the article:
* Focus on the long term.
* Invest in companies with strong management teams.
* Invest in companies with large addressable markets.
* Invest in companies with sustainable competitive advantages.
* Invest in companies that are priced attractively.
* Look for companies with a big flywheel.
* Look for companies with margin of safety.
651) https://tim.blog/2023/01/25/bill-gurley/
