Could the best investment quote of all time come from Napoleon? Quite possibly. It was in the unlikely place of Napoleon Bonaparte’s personal diary that I found one of the best investment passages I’ve read. Bursting with investing wisdom, it would be understandable to mistake Napoleon for Warren Buffett. Although he’s writing about the art of war, the insights apply to investing just as well.
Below I dissect Napoleon’s journal entry to ascertain its valuable investing insights.
Importance of mathematics & probabilities:
To be a good general a man must know mathematics; it is of daily help in straightening one’s ideas. Perhaps I owe my success to my mathematical conceptions
Beware of forecasts. Buffett & Munger don’t invest in a company if they can’t see its strength displayed through history:
a general must never imagine things, that is the most fatal of all.
Eliminate psychological biases & crude heuristics which skew one’s perception of reality:
My great talent, the thing that marks me most, is that I see things clearly;
Identify the main issues and ask the right questions:
it is the same with my eloquence, for I can distinguish what is essential in a question from every angle.
Practice Bayesian updating:
The great art in battle is to change the line of operations during the course of the engagement; that is an idea of my own, and quite new.
Keep it simple. Stick to the fundamentals and common sense:
The art of war does not require complicated maneuvers; the simplest are the best and common sense is fundamental. From which one might wonder how it is generals make blunders; it is because they try to be clever. The most difficult thing is to guess the enemy’s plan, to sift the truth from all the reports that come in. The rest merely requires common sense;
Stay curious. Do a lot of reading & research lots of companies. Eventually you’ll come across a good idea:
it’s like a boxing match, the more you punch the better it is.
Know how to read financial statements:
It is also necessary to read the map well.”
“La victoire appartient aux plus persévérants.”