The Dawning of Wisdom
Investor Education: Angel Investors
An angel investor is an individual who provides backing to start-ups or early-stage companies. Angel investors typically invest their own capital rather than capital from institutions because the companies are too small for venture capital firms to be interested. In exchange for their funding, angel investors generally receive company equity, allowing them to participate in the future success and profits that the company generates. The amount of equity an angel investor receives can be negotiated between company executives and will depend on the amount of risk the angel investor is undertaking.
Read our overview of Angel Investors Here!
The Dawning of Wisdom
“Acknowledging what you don’t know is the dawning of wisdom.” —Charlie Munger
Last week, we started with the depositors at two banks being rescued. And then, another big bank, Credit Suisse, was looking like it might be in a little trouble until the Swiss National Bank gave it a lifeline. But then it looked like maybe there were still issues and that it would need more than just a lifeline, and possibly be acquired, which may or may not have happened in the short time between when we finished writing and publishing this newsletter.
And then, yet another bank, First Republic, went from being in trouble, to being rescued, to then maybe potentially being in trouble again.
The market followed the volatility of the news. After some ups and downs, the S&P 500 climbed 1.4% during the week, and the Nasdaq gained 4.4%.
As we mentioned last week, we thought a drastic move was possible, and that’s what we got when the government essentially stepped in to back deposits of any size.
How this continues to play out is unclear. The problems at the banks so far have been mistakes of duration and risk management, not major credit quality issues as we saw in 2008.
But things are never clear. Markets involve people, and people are messy, and they change their minds, and they cause bank runs, and they stop bank runs. Knowing that we can’t know how the future will unfold is the first step in positioning ourselves for the unknown unknowns we’re always destined to run into eventually.
“We are too narrow-minded a species to consider the possibility of events straying from our mental projections, but furthermore, we are too focused on matters internal to the project to take into account external uncertainty, the ‘unknown unknown,’ so to speak, the contents of the unread books.” —Nassim Taleb
“It is often said that ‘is wise he who can see things coming.’ Perhaps the wise one is the one who knows that he cannot see things far away.” —Nassim Taleb
“If I have any advantage, it’s probably that I know when I know what I am doing, and I know when I don’t know what I am doing. That’s key in the securities business.” —Warren Buffett
Tweets of the Week
Mike Pruitt Foundation Baseball Clinic
Founder of Co/Investor Club, Mike Pruitt hosted the 16th annual Pruitt Foundation baseball clinic this week. The Pruitt Foundation is dedicated to the advancement of youth baseball in Horry County, SC. The Coastal Carolina University baseball team led and instructed 150 kids in hitting, base-running, fielding, and throwing fundamentals. Thank you to all who support this cause!
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A Bit of Optimism Podcast: Down A Rabbit Hole with Seth Godin
Press Release: Sanofi to acquire Provention Bio, adding to portfolio TZIELD, the first disease-modifying treatment for the delay of Stage 3 type 1 diabetes (T1D)
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