Explore key insights from Paul Marshall's '10½ Lessons From Experience' on risk management and market dynamics applied to concentrated equity portfolios.
That line about “humility and conviction”landed. This piece feels more perceptive than most content on risk management.I'm curious how you think about that tipping point in long term positions, when conviction starts to blur into stubbornness
That’s the hard part. It’s tough to recognize your conviction turning into stubbornness. When the reasons you first own a position start to change, that is a good sign.
Writing out your initial reasons why you own a stock and the factors that would make you sell a position is important. It gives you an objective reference point and an action plan when things change.
That makes sense. I’ve tried that kind of pre-commitment checklist, but the hard part for me is recognizing when conditions have changed in ways that actually matter. Curious how you decide what qualifies as a real shift versus noise
It's a stock-by-stock issue. I tend to focus on deteriorating moats. You can do this qualitatively. The best advice is to talk to someone who doesn't own the stock or recently sold it but is researching the company as a possible investment. They'll tend to have less bias. Qualitatively, assess the trend of ROIC and see if their ROIIC (Return on Incremental Invested Capital) is declining. If both are trending down, then management is investing in suboptimal projects and/or its moat is shrinking. You want to avoid both.
I agree, especially on talking to someone outside the position. It's easy to get trapped in your own bias when you're tied to the stock.Lately I’ve tried watching whether top competitors are getting stronger. If a quiet player starts showing higher capital efficiency and rising customer traction, it may not impact market share right away, but to me it feels like a sign of early moat erosion.Do you think that’s a useful signal, or is it too indirect?
This is a masterful synthesis of risk and resilience applied to quality investing. Paul Marshall’s lessons, especially on structural prudence and psychological balance, map perfectly onto the mindset required for concentrated long-only portfolios. Loved how you tied reflexivity, humility, and portfolio-level discipline into one coherent framework timeless wisdom, practically applied.
That line about “humility and conviction”landed. This piece feels more perceptive than most content on risk management.I'm curious how you think about that tipping point in long term positions, when conviction starts to blur into stubbornness
That’s the hard part. It’s tough to recognize your conviction turning into stubbornness. When the reasons you first own a position start to change, that is a good sign.
Writing out your initial reasons why you own a stock and the factors that would make you sell a position is important. It gives you an objective reference point and an action plan when things change.
It’s not full proof but it helps.
That makes sense. I’ve tried that kind of pre-commitment checklist, but the hard part for me is recognizing when conditions have changed in ways that actually matter. Curious how you decide what qualifies as a real shift versus noise
It's a stock-by-stock issue. I tend to focus on deteriorating moats. You can do this qualitatively. The best advice is to talk to someone who doesn't own the stock or recently sold it but is researching the company as a possible investment. They'll tend to have less bias. Qualitatively, assess the trend of ROIC and see if their ROIIC (Return on Incremental Invested Capital) is declining. If both are trending down, then management is investing in suboptimal projects and/or its moat is shrinking. You want to avoid both.
I agree, especially on talking to someone outside the position. It's easy to get trapped in your own bias when you're tied to the stock.Lately I’ve tried watching whether top competitors are getting stronger. If a quiet player starts showing higher capital efficiency and rising customer traction, it may not impact market share right away, but to me it feels like a sign of early moat erosion.Do you think that’s a useful signal, or is it too indirect?
This is a masterful synthesis of risk and resilience applied to quality investing. Paul Marshall’s lessons, especially on structural prudence and psychological balance, map perfectly onto the mindset required for concentrated long-only portfolios. Loved how you tied reflexivity, humility, and portfolio-level discipline into one coherent framework timeless wisdom, practically applied.
Thank you so much for the kind words and I’m glad you enjoyed the post.