Day 969 - The 20-Slot Life
Lab Notes: The Punchcard, the Four Ms, and One Small Bet You'll Thank Yourself for Later
Most investors swing at too many pitches. A few never swing at all. The sweet spot is rarer than either, and there's a 70-year-old mental model that explains exactly what it looks like. Plus: the one exception to the rule that past-me learned the very expensive way.
Two recent editions of this newsletter told the stories of two investments I identified and didn’t make. One was a London-listed fintech with a durable competitive moat. The other was a distressed bond with a six-month countdown clock and extraordinary return asymmetry. Different instruments, different analysis, different failure modes. Same outcome: I didn’t act when I should have.
This edition isn’t a retelling. It’s the framework underneath both misses, and the single mental model that, had I internalised it properly, would have made the decision easier each time.
The Four Ms
Phil Town’s Rule #1 investing is Buffett and Munger made legible. The central claim is simple: you don’t need to be a genius to invest well. You need to buy wonderful businesses at fair prices, and then leave them alone.
Town distils this into four filters. Run any business through all four and very few survive. That’s by design. The framework is a culling mechanism.
Meaning
Do you understand the business?
Not what it does, but what it does. How it actually makes money. Why customers keep coming back. What gives it pricing power when competitors push back. Whether the revenue model holds up under pressure.
If you can’t explain it clearly to someone with no finance background, you don’t understand it well enough to own it. This isn’t about intelligence. It’s about the quality of your conviction. Fuzzy understanding produces fuzzy decisions. When a stock drops 30%, and eventually they all do, you need to know whether that drop is an opportunity or a warning. You can only know that if you genuinely understood the business before you bought it.
Meaning is the first filter because it’s the most honest one. A lot of investing mistakes begin here, dressed up as something more sophisticated.
Moat
Does the business have a durable competitive advantage?
Buffett’s image is a castle surrounded by a moat that protects it from competitors. The question isn’t whether the business is good today. It’s whether it will still be good in ten years, after motivated competitors have thrown capital and talent at taking its market share.
