#207 Adam Karr: The Investing Blueprint
The Knowledge Project with Shane Parrish
Deep Dive
Why is it important to clearly define the game you're playing in investing?
Defining the game helps you approach investing differently based on your time horizon. For example, day traders focus on short-term catalysts, while long-term investors take a four to five-year view. Aligning your strategy with your chosen game ensures you play to your strengths and avoid mismatches in skills and environment.
How does Adam Karr identify obsessed CEOs?
Karr looks for CEOs who demonstrate a track record of obsession and action. He asks generative questions about culture and success, such as what advice they would give to a new employee, to gauge their passion and authenticity. Obsessed CEOs often show a deep commitment to their company's success.
What role does culture play in Adam Karr's investment decisions?
Culture is a critical factor in Karr's investment decisions. He believes that a strong, aligned culture can drive long-term success and resilience. CEOs who prioritize culture and can articulate its importance are more likely to build sustainable businesses.
How does Adam Karr handle short-term pressures in long-term investing?
Karr focuses on aligning with clients who share a long-term perspective. He structures fees to be performance-based and refundable during underperformance, which helps clients tolerate volatility. This alignment allows him to focus on long-term outcomes rather than short-term pressures.
What is the 'blueprint' methodology in investing, and how does it work?
The blueprint methodology involves studying successful role models in your field, imitating their strategies, and adapting them to your own style. Karr emphasizes the importance of having a clear blueprint, starting with imitation and evolving into a unique approach over time.
Why does Adam Karr value writing as a tool for thinking?
Writing helps clarify thinking by distilling complex ideas into key points. Karr believes that the ability to write clearly is a strong indicator of having clarified one's thinking. It also helps in tracking decisions and improving over time.
What is the 'magic in the last 5%' in investment research?
The 'magic in the last 5%' refers to the deep, often overlooked insights that come from thoroughly understanding a business. Karr emphasizes the importance of pushing past the obvious and standard analysis to uncover unique, often counterintuitive insights that can drive investment success.
How does Adam Karr handle being wrong in his investment decisions?
Karr tracks his investment decisions by writing down the reasoning behind them and regularly reviewing them. He believes in cutting losses early when the data suggests a thesis is off. However, he also acknowledges the endowment effect, where he sometimes holds onto positions longer than he should.
What lessons has Adam Karr learned from his mentor, Alan Gray?
Karr learned the importance of intellectual ambidexterity from Alan Gray, the ability to hold strong convictions while actively seeking disconfirming evidence. Gray also emphasized the value of turning rocks (seeking new ideas) and the importance of survival and adaptability in decision-making.
How does Adam Karr define success?
Success for Karr is about having a meaningful pursuit and helping others achieve their dreams. He finds fulfillment in using his skills and experiences to support others who have a hunger to succeed but may not know how to get there.
- Importance of defining your life's "game"
- Continuum of investment styles from short-term to long-term
- Need for alignment between game, skills, and environment
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