Masters of Compounding
@masterscompounding.bsky.social
Professional investor sharing investing insights while my portfolio compounds.
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Innovation often outruns customer demand.
Products end up overshooting what people need or will pay for.
At that stage, competition moves away from performance and toward speed, flexibility, and execution.
$GOOGL #OpenAi
Products end up overshooting what people need or will pay for.
At that stage, competition moves away from performance and toward speed, flexibility, and execution.
$GOOGL #OpenAi
January 16, 2026 at 11:00 PM
Innovation often outruns customer demand.
Products end up overshooting what people need or will pay for.
At that stage, competition moves away from performance and toward speed, flexibility, and execution.
$GOOGL #OpenAi
Products end up overshooting what people need or will pay for.
At that stage, competition moves away from performance and toward speed, flexibility, and execution.
$GOOGL #OpenAi
The Mag 7 are basically everywhere.
$NVDA $GOOGL $AAPL $MSFT $AMZN $META $TSLA
$NVDA $GOOGL $AAPL $MSFT $AMZN $META $TSLA
January 16, 2026 at 9:03 PM
The Mag 7 are basically everywhere.
$NVDA $GOOGL $AAPL $MSFT $AMZN $META $TSLA
$NVDA $GOOGL $AAPL $MSFT $AMZN $META $TSLA
We only see the 1% who made it. We totally ignore the 99% who used the exact same "strategy" and went bust.
That’s Survivorship Bias. You see the guys on yachts, but not the silent graveyard of people who took the same bet and lost everything.
That’s Survivorship Bias. You see the guys on yachts, but not the silent graveyard of people who took the same bet and lost everything.
January 16, 2026 at 7:00 PM
We only see the 1% who made it. We totally ignore the 99% who used the exact same "strategy" and went bust.
That’s Survivorship Bias. You see the guys on yachts, but not the silent graveyard of people who took the same bet and lost everything.
That’s Survivorship Bias. You see the guys on yachts, but not the silent graveyard of people who took the same bet and lost everything.
Stop judging decisions by the outcome.
A moron can bet the house on a meme coin and win, but it’s still a trash decision.
If history played out 1,000 times, how often would they actually survive?
Don't study the winner, study the process.
Outcome ≠ Quality.
A moron can bet the house on a meme coin and win, but it’s still a trash decision.
If history played out 1,000 times, how often would they actually survive?
Don't study the winner, study the process.
Outcome ≠ Quality.
January 16, 2026 at 7:00 PM
Stop judging decisions by the outcome.
A moron can bet the house on a meme coin and win, but it’s still a trash decision.
If history played out 1,000 times, how often would they actually survive?
Don't study the winner, study the process.
Outcome ≠ Quality.
A moron can bet the house on a meme coin and win, but it’s still a trash decision.
If history played out 1,000 times, how often would they actually survive?
Don't study the winner, study the process.
Outcome ≠ Quality.
The "Inspector Gadget" problem:
Someone makes a killing in a bull market and suddenly thinks they're the next Buffett.
The mission succeeded because of luck and invisible helpers, but the "hero" is convinced it was all skill.
Stop confusing a streak with a strategy.
Someone makes a killing in a bull market and suddenly thinks they're the next Buffett.
The mission succeeded because of luck and invisible helpers, but the "hero" is convinced it was all skill.
Stop confusing a streak with a strategy.
January 16, 2026 at 7:00 PM
The "Inspector Gadget" problem:
Someone makes a killing in a bull market and suddenly thinks they're the next Buffett.
The mission succeeded because of luck and invisible helpers, but the "hero" is convinced it was all skill.
Stop confusing a streak with a strategy.
Someone makes a killing in a bull market and suddenly thinks they're the next Buffett.
The mission succeeded because of luck and invisible helpers, but the "hero" is convinced it was all skill.
Stop confusing a streak with a strategy.
We love a good success story. We love "self-made" gurus.
But the truth is most of them are just lucky idiots who happened to be in the right place at the right time.
They aren’t geniuses; they’re just survivors of a random process.
Fooled by Randomness by @nntaleb: 👇
But the truth is most of them are just lucky idiots who happened to be in the right place at the right time.
They aren’t geniuses; they’re just survivors of a random process.
Fooled by Randomness by @nntaleb: 👇
January 16, 2026 at 7:00 PM
We love a good success story. We love "self-made" gurus.
But the truth is most of them are just lucky idiots who happened to be in the right place at the right time.
They aren’t geniuses; they’re just survivors of a random process.
Fooled by Randomness by @nntaleb: 👇
But the truth is most of them are just lucky idiots who happened to be in the right place at the right time.
They aren’t geniuses; they’re just survivors of a random process.
Fooled by Randomness by @nntaleb: 👇
Surprising finding: Creative destruction is fairly stable over time, whether there’s a technological revolution or not.
January 16, 2026 at 3:03 PM
Surprising finding: Creative destruction is fairly stable over time, whether there’s a technological revolution or not.
Have a great and disciplined day.
January 16, 2026 at 12:58 PM
Have a great and disciplined day.
Here’s how $GOOGL built its empire:
“Alphabet” comes from “Alpha” + “Bet”.
For a company that’s arguably one of the best capital allocators of all time, they really picked the right name. $GOOG
“Alphabet” comes from “Alpha” + “Bet”.
For a company that’s arguably one of the best capital allocators of all time, they really picked the right name. $GOOG
January 15, 2026 at 9:04 PM
Here’s how $GOOGL built its empire:
“Alphabet” comes from “Alpha” + “Bet”.
For a company that’s arguably one of the best capital allocators of all time, they really picked the right name. $GOOG
“Alphabet” comes from “Alpha” + “Bet”.
For a company that’s arguably one of the best capital allocators of all time, they really picked the right name. $GOOG
US workers are getting a historically small share of the value created.
Owning assets is the simplest way for them to capture a larger share of it.
Owning assets is the simplest way for them to capture a larger share of it.
January 15, 2026 at 5:02 PM
US workers are getting a historically small share of the value created.
Owning assets is the simplest way for them to capture a larger share of it.
Owning assets is the simplest way for them to capture a larger share of it.
This is an industry map.
I own a company in this space that’s quietly sitting in the “Other” bucket.
One of the perks of being a small-cap investor: understanding the company’s environment is actually manageable.
$BA $AIR $GE $UPS $HON
I own a company in this space that’s quietly sitting in the “Other” bucket.
One of the perks of being a small-cap investor: understanding the company’s environment is actually manageable.
$BA $AIR $GE $UPS $HON
January 15, 2026 at 3:02 PM
This is an industry map.
I own a company in this space that’s quietly sitting in the “Other” bucket.
One of the perks of being a small-cap investor: understanding the company’s environment is actually manageable.
$BA $AIR $GE $UPS $HON
I own a company in this space that’s quietly sitting in the “Other” bucket.
One of the perks of being a small-cap investor: understanding the company’s environment is actually manageable.
$BA $AIR $GE $UPS $HON
Have a great and disciplined day.
January 15, 2026 at 12:56 PM
Have a great and disciplined day.
There is always a “good” reason to sell, and 2026 looks set to be packed with pent-up reasons to do it.
It’s going to be an interesting year.
It’s going to be an interesting year.
January 14, 2026 at 11:04 PM
There is always a “good” reason to sell, and 2026 looks set to be packed with pent-up reasons to do it.
It’s going to be an interesting year.
It’s going to be an interesting year.
US companies ate the world in a century.
The Mag7 ate US companies in two decades.
$NVDA + $GOOGL + $AMZN + $MSFT are worth more than the bottom 400 companies in the S&P 500 combined.
The Mag7 ate US companies in two decades.
$NVDA + $GOOGL + $AMZN + $MSFT are worth more than the bottom 400 companies in the S&P 500 combined.
January 14, 2026 at 8:57 PM
US companies ate the world in a century.
The Mag7 ate US companies in two decades.
$NVDA + $GOOGL + $AMZN + $MSFT are worth more than the bottom 400 companies in the S&P 500 combined.
The Mag7 ate US companies in two decades.
$NVDA + $GOOGL + $AMZN + $MSFT are worth more than the bottom 400 companies in the S&P 500 combined.
Probability of finding a one-year multibagger by market cap.
January 14, 2026 at 6:56 PM
Probability of finding a one-year multibagger by market cap.
Have a great and disciplined day.
January 14, 2026 at 12:58 PM
Have a great and disciplined day.
4/ Four principles of good capital allocation.
Look for management that:
- Builds budgets from scratch, not off last year’s baseline
- Prices projects against a real opportunity cost
- Exits value-destroying businesses
- Uses M&A, buybacks, and equity only when price vs. value makes sense
Look for management that:
- Builds budgets from scratch, not off last year’s baseline
- Prices projects against a real opportunity cost
- Exits value-destroying businesses
- Uses M&A, buybacks, and equity only when price vs. value makes sense
January 13, 2026 at 8:59 PM
4/ Four principles of good capital allocation.
Look for management that:
- Builds budgets from scratch, not off last year’s baseline
- Prices projects against a real opportunity cost
- Exits value-destroying businesses
- Uses M&A, buybacks, and equity only when price vs. value makes sense
Look for management that:
- Builds budgets from scratch, not off last year’s baseline
- Prices projects against a real opportunity cost
- Exits value-destroying businesses
- Uses M&A, buybacks, and equity only when price vs. value makes sense
3/ Governance, incentives, and time horizon.
Capital flows to whatever the organization optimizes for.
Ask:
- Is the North Star long-term value per share?
- Do incentives reward ROIC, free cash flow, and durability?
- Is management paid over a real compounding horizon?
Capital flows to whatever the organization optimizes for.
Ask:
- Is the North Star long-term value per share?
- Do incentives reward ROIC, free cash flow, and durability?
- Is management paid over a real compounding horizon?
January 13, 2026 at 8:59 PM
3/ Governance, incentives, and time horizon.
Capital flows to whatever the organization optimizes for.
Ask:
- Is the North Star long-term value per share?
- Do incentives reward ROIC, free cash flow, and durability?
- Is management paid over a real compounding horizon?
Capital flows to whatever the organization optimizes for.
Ask:
- Is the North Star long-term value per share?
- Do incentives reward ROIC, free cash flow, and durability?
- Is management paid over a real compounding horizon?
A company can grow fast and still destroy value if ROIC < cost of capital.
The compounding machines are the ones that reinvest incremental capital at high returns for a long time.
The compounding machines are the ones that reinvest incremental capital at high returns for a long time.
January 13, 2026 at 8:59 PM
A company can grow fast and still destroy value if ROIC < cost of capital.
The compounding machines are the ones that reinvest incremental capital at high returns for a long time.
The compounding machines are the ones that reinvest incremental capital at high returns for a long time.
2/ Use ROIC and ROIIC to read the business.
You’re not just buying growth; you’re buying returns on each dollar of capital:
- First compare ROIC with the cost of capital and peers.
- Then look at ROIIC to see whether new investment is actually creating value.
You’re not just buying growth; you’re buying returns on each dollar of capital:
- First compare ROIC with the cost of capital and peers.
- Then look at ROIIC to see whether new investment is actually creating value.
January 13, 2026 at 8:59 PM
2/ Use ROIC and ROIIC to read the business.
You’re not just buying growth; you’re buying returns on each dollar of capital:
- First compare ROIC with the cost of capital and peers.
- Then look at ROIIC to see whether new investment is actually creating value.
You’re not just buying growth; you’re buying returns on each dollar of capital:
- First compare ROIC with the cost of capital and peers.
- Then look at ROIIC to see whether new investment is actually creating value.
1/ Follow the money.
Great allocators show their skill in the cash flows.
Track how cash has been used:
- invested in the business (CapEx, R&D, M&A)
- paid out (dividends, buybacks, debt paydown).
Great allocators show their skill in the cash flows.
Track how cash has been used:
- invested in the business (CapEx, R&D, M&A)
- paid out (dividends, buybacks, debt paydown).
January 13, 2026 at 8:59 PM
1/ Follow the money.
Great allocators show their skill in the cash flows.
Track how cash has been used:
- invested in the business (CapEx, R&D, M&A)
- paid out (dividends, buybacks, debt paydown).
Great allocators show their skill in the cash flows.
Track how cash has been used:
- invested in the business (CapEx, R&D, M&A)
- paid out (dividends, buybacks, debt paydown).
Most investors obsess over growth. Michael Mauboussin argues the real edge is judging management’s capital allocation.
Here’s his simple checklist to spot great capital allocators. 👇🧵
Here’s his simple checklist to spot great capital allocators. 👇🧵
January 13, 2026 at 8:59 PM
Most investors obsess over growth. Michael Mauboussin argues the real edge is judging management’s capital allocation.
Here’s his simple checklist to spot great capital allocators. 👇🧵
Here’s his simple checklist to spot great capital allocators. 👇🧵
Some “expensive” tech stocks look cheaper once you treat R&D and marketing as long-term investments rather than pure expenses.
$NVDA $GOOGL $MSFT $AMZN $META $TSLA
$NVDA $GOOGL $MSFT $AMZN $META $TSLA
January 13, 2026 at 6:58 PM
Some “expensive” tech stocks look cheaper once you treat R&D and marketing as long-term investments rather than pure expenses.
$NVDA $GOOGL $MSFT $AMZN $META $TSLA
$NVDA $GOOGL $MSFT $AMZN $META $TSLA
Three pieces of advice follow from this chart:
- Own assets.
- Preferably equities.
- Live long enough to see whether the numbers still hold in the next century.
- Own assets.
- Preferably equities.
- Live long enough to see whether the numbers still hold in the next century.
January 13, 2026 at 5:01 PM
Three pieces of advice follow from this chart:
- Own assets.
- Preferably equities.
- Live long enough to see whether the numbers still hold in the next century.
- Own assets.
- Preferably equities.
- Live long enough to see whether the numbers still hold in the next century.
Li Lu’s Investing Book Recommendations.
Bookmark it for later.
Bookmark it for later.
January 13, 2026 at 3:09 PM
Li Lu’s Investing Book Recommendations.
Bookmark it for later.
Bookmark it for later.