This is an article written by both FJ Research and The Few Bets That Matter.
The objective of this article is to share the common lessons we learnt through our years of investing to help new investors or those with lower returns than expected, to up their game, and realize some harsh truth of investing.
Lessons that took us years of mistakes to learn, framed in a small article.
Introduction
For years, my results were mediocre. Not terrible. Mediocre, which is worse, because mediocre lets you believe you’re close. It lets you believe it’s possible, without letting you realize that only drastic changes will allow you to reach your goals.
I was doing what I’d been taught from books and investors who made a fortune in the 1950s. Find good companies. Buy cheap. Hold. Be patient. It took me too long to see the real problem: I wasn’t playing the right game.
Truth is, the world isn’t what it used to be anymore. Markets changed. And the ways to make money in it also changed. But this will only be obvious in the next years, when this decades’ top investors write their own books with their own methods. While those will already be outdated then…
Innovation accelerated, capital allocation changed, liquidity increased, stocks became accessible to everyone, new tools emerged, risk management isn’t the main concern anymore…
Nothing is as it used to be.
The market became a competition to find good stocks, not good companies. Those are widely different concepts, and understanding the gap between them cost me years in mediocre returns.
This piece is written with FJ Research; two investors who made most of the classic mistakes, some less classic ones, corrected them, and landed on the same handful of lessons from different roads. No theory here. Practical lessons, real life experiences and how we actually pivoted to increase our returns.
1. The market isn’t an intelligence contest
The market is a psychological and emotional game where opinions are exchanged for dollars.
Each opinion relies on different objectives, capacities, plans, data sets… No two investors buy for the same reason with the same end goal. Some don’t even know why they buy.
Every data set is valuable, but should never be used in and of itself. Fundamentals and valuation exist for a reason, but if they were enough traders wouldn’t succeed. On the contrary, price action or option flows are filled with information, but if they were enough day traders would be kings. Hunting cheap stocks spending hours readings 10Qs or building better models won’t cut it, just like using complex Ichimoku structures won’t be enough by itself.
Math is useful. Data is important. But don’t underestimate guts.
If it was all formulas, all mathematicians would be billionaires.
Niels Nygaard
TFBTM - I have seen this play both ways.
Many investors still today argue that Adobe and PayPal are two of the cheapest companies with the largest potential in the market. It might be true, but while most AI hardware names with large narrative rest on 1,000%+ returns the last two years, both are down 22% and 36% over the past years - more on the last five.
On the contrary, I have personally made a lot of returns on crypto and Strategy. I think we can all agree that both aren’t the strongest fundamentally speaking. And yet, the market bought the assets and pushed their price higher. Greed and emotions rule the market.
How to improve: Treat the market as what it is: a psychological game. There are a thousand ways to win. Find the one that fits you, not the one you read in a book, and most importantly do not dismiss any data set because someone told you this isn’t the right way to invest. Every data set can be used to generate alpha. Find out how.
An investor is judged on one thing: outperformance over years. If he beats the market, he’s good. Regardless of how.
2. No two positions are equal
There is a unilateral truth in the market saying that all positions should follow the same patterns. If you invest on fundamentals, you should only do this and treat all of your positions the same way.
But this isn’t true.
Some come with higher conviction. Some better price action. Some more upside, some less risk. Some can be held decades but others shouldn’t be looked at for more than a month. None are equal, so none should be sized or held equally. Each stock should be bought, held and sold on its own plan.
Know what you own, and know why you own it.
Peter Lynch
TFBTM - My best example would be Hims, one of the rare perfect trades since I write this Substack. I bought it on the start of the GLP-1 compounding rumors and rode it until the first signs of crackdown and deceleration. From the low teens to the $60s. I sold while most social media were still extremely bullish but my thesis was gone, GLP-1 was slowing down - factually, and the market bought this narrative, no others. While many chose to diamond hands, I let it go. I bought with conditions to hold. Conditions broke. I sold.
FJR - I run two types of positions and I treat them differently.
Core positions – long-term holdings. I only buy them at a price I can live with and after the market has already shown some confirmation. Once they are in the portfolio I want to leave them alone as long as the business keeps delivering.
Swings – shorter-term positions. I buy them with a clear idea of what I want to extract and I am willing to sell when that performance is reached or when the thesis stops working. Rivian is a good recent example of how I think about a swing.
In the past I mixed the two. I treated some positions like it had to become a 10Y holding or treated a core idea like a trade and sold it too early. Both mistakes cost me.
How to improve: Split your positions, mentally or practically. Have a different framework and conditions for each or own different assets with different strategies on different brokers to avoid mixing your liquidity.
3. No position is sacred
You will make mistakes. What matters is how fast you admit one. The faster the better, and the more impact on your returns. When something breaks, whichever data set used, accept it and act. No in-between, no “let’s see”.
Rule No. 1: Never lose money. Rule No. 2: Never forget Rule No. 1.
Warren Buffett
TFBTM - Intuitive Machines cost me a lot. While the space trade was raging I decided to buy the first pullback we’d had in a while. My condition to close the stock was the usual one: a weekly close below current support. When it happened, I was so sure it would bounce back I would just wait for it. My conditions were met but I didn’t execute. What should have been an 8% loss became a 24% loss.
FJR - New Fortress Energy was the clearest example. I knew deep down it was a mistake the first time I looked at the guy running it. Still, I stayed. I listened to the story. I watched the interviews. I wanted it to work. It went to zero. That one still stings because it was pure self-inflicted damage. I held it because I hoped it would come back. I had positions that were clearly broken but I kept telling myself the thesis was still intact.
How to improve: Have a plan before you buy. There are thousands of ways to make it in the markets but all of them can come with a plan. If you invest on fundamentals, know which data breaks the thesis. If you invest on price action, know which level is too low. There's always a line. Draw it, and respect it.
4. Treat your winners like gods
Here’s a contradiction. Losers aren’t sacred. But winners are. Hold them longer than feels comfortable and as long as they hold to your plans. The market isn’t made of math, it’s made of emotion. Winners usually run far past any model you built for them. Don’t clip its wings because a spreadsheet told you it reached “fair value”.
It never was my thinking that made the big money for me. It was always my sitting.
Jesse Livermore
TFBTM & FJR - Palantir left scars on both of us. We both bought in the teens and both sold at different levels because “multiples are stupid, it has to slow down”. It never did, and what could have been ~18x returns today became a few hundreds.
We caught the first wave and handed away the ocean because “we thought” it was too beautiful to be true, even if the thesis was still holding.
How to improve: The contradiction ends here. You have to treat your winners exactly like your losers. Same discipline, inverted. You bought with invalidation levels. Thesis probably got updated during the run. As long as they hold, do nothing.
Sitting is the skill.
5. Size is the real game
Stock picking is overrated. Your returns aren’t decided by which names you pick, they’re decided by how much you buy. A large position in a solid blue chip beats a tiny one in an obscure small cap. Your returns are defined by your ability to size up.
This is the one place math actually rules the market.
Position sizing is probably 70 to 80% of the equation. It’s not whether you’re right or wrong, it’s how much you make when you’re right and how much you lose when you’re wrong.
Stanley Druckenmiller
TFBTM - Palantir and Hims both come again, as, despites selling the first too early, I still made a great trade. But it didn’t count as I didn’t size it properly. I should have multiple times more money today not by better stock picking, but by better sizing.
This is what I changed the most over the last years. Back in early 2026, I made two large bets on great narrative and price action: Silicom and Soitec. Both combined now weight ~50% of my net worth and returned 100% and 150%. Those mattered, those increased my net worth significantly.
The stock picking was right, but the size made the difference.
FJR - What “sizing heavily” actually meant in my case: at one point Oscar Health was the only stock I owned. It was roughly 80% of my entire net worth.
That is extreme and I am not recommending anyone copy that level of concentration. It is simply what I did after fifteen years of trial and error.
The position was large enough that if the business worked it would meaningfully change my financial situation. That is the standard I now use for a core position.
How to improve: The fear of sizing usually comes from the fear of losing too much. This brings us back to planning. If you know your risk, you can size up. Not knowing your risk is exactly why people build small positions. And why returns remain low.
6. Less is more
Buying and selling constantly brings nothing but headaches.
Being everywhere, Trying to know everything, watch every headline dilutes your attention and your capital. The right number of trades is the fewest possible. The right number of stocks is the fewest possible.
Investing is counter intuitive and might be one of the only places where doing more doesn’t lead to better results or faster improvements. On the contrary.
The big money is not in the buying and selling, but in the waiting.
Charlie Munger
TFBTM - Soitec. Silicom. Nebius. Arista. Bitcoin. If I had focused on these five assets, which have always been some of my favorite assets on the market, My returns would have been much better. Add Palantir to it, and “much better” becomes “top 5%”.
I didn’t. I diluted my attention/liquidity to space. To healthcare. To SaaS. To sportswear even at a point. I kept following those, but had I done fewer transactions, less news and fewer stocks, I’d have done better.
How to improve: You only need one trade to set yourself for life. You certainly do not need 10,000. Tune out the feeds and the news outside of your framework. You’ll miss on some narratives. It doesn’t matter.
Just like you can’t be everywhere in life. You can’t be everywhere in the market either.
Final words
Over time the pattern became obvious. The largest chunk of our returns and net worth increase came from a handful of concentrated bets on businesses we understood deeply and sized properly. Everything else was a distraction.
These simple lessons took us years not only to understand but also to build an investing system around, as integrating them won’t be enough to improve your returns. You won’t need more work to set it up, but you will need work. On yourself.
Still, they could hold on a very small sheet of paper.
Every investor invests differently. Every purchase comes with a plan. Every plan is different. Every positions aren’t equals. Every loser should be cut according to the plan. Every winner should be held according to the plan. Every position should be sized to matter. Doing everything won’t do better.
That single shift in mindset is worth more than any valuation framework.
The Few Bets That Matter and FJ Research are aligned on this. We both believe that a small number of high-conviction positions, sized properly and held with discipline, beats owning twenty interesting ideas. And both invest that way. Most investors spread themselves too thin and then wonder why the results stay average. Others find the right idea, size it well, and still sell it just as the compounding starts.
You only need one trade to set you for life. Don’t miss it.
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Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.
Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.