Non-consensus investing from Rupal Bhansali

Thoughts and quotes from Rupal Bhansali in Non-consensus Investing. 

"The signature element of an upside down investment process: it focuses on what can go wrong, not just what can go right." 

Great comment. Focus on the downside as well as the upside.

"You are exposed to a litany of risks with passive investing that are being glossed over.

• crowded trade risk
• valuation risk
• redemption risk
• liquidity risk
• front-running risk
• permanent impairment of capital risk 
• behavioral risk
• momentum risk"

Passive investing is not riskless investing.

"Investing is not a confidence game: it is about being more correct, not being more confident."

You can talk about the odds, but the main issue is always about being correct.

"Volatility is an opportunity because it only affects the stock price, while risk is a threat because it impacts the intrinsic worth of the business."

Volatility is a measure of risk not the actual risk. The risk is about what may happen different form what you expect.

"Investing not only must you be right, you must prove everyone else is wrong." 

Being right with the crowd does not help you.

"There is a difference between risk experience and risk exposure. You cannot really measure what you have not experienced." 

The real risk is what we have not experienced. 

"Margin of safety = heads I win, tails I do not lose."

Nice way to describe the margin of safety.

"The cost of the decision is not the same as the risk of the decision." 

Risk as measured by volatility does not tell you the cost of that risk. Need strong analysis of exposures. 

The idea that you have to be different from the crowd is critical.

Rupal provides a nice table on what you want to look for in quality firms.