Venture capital partners review seven investment pitfalls: Inability to analyze independently leads to becoming a passive investor

Former partner of The Spartan Group, Jason Choi, has compiled a list of mistakes he has made in investment decisions over the past few years. He emphasizes that blindly following others instead of conducting independent analysis will ultimately lead to becoming a bag holder for someone else or missing out on another high-return investment.

The following content is compiled from the Twitter account of Jason Choi, former partner of the venture capital firm The Spartan Group. For more details and discussions, please refer to the original link.

Learning from My Past Mistakes

Here are some of the most embarrassing mistakes I've made in my investing career, hoping that some of these faults can serve as cautionary tales.

1. Confidence

Early in my career, I valued others' perspectives more than my own analysis.

While having a diverse range of viewpoints can be useful, it can lead to a flawed investment decision-making process, where you end up being a bag holder for someone else or missing out on another high-return investment like $FTT.

2. Shooting in the Dark

In 2020, I was captivated by the frenzy of DeFi, and I could hardly believe my arguments actually materialized a year later.

I mistakenly thought of myself as a genius and began to lose discipline. When DeFi started to decline, I suffered heavy losses.

Afterward, I spent weeks analyzing every decision I made at that time and implemented a decision-making process to ensure my investments are not influenced by emotions. This is how I dealt with the collapse of the DeFi hype and how I recently managed a downturn in my personal investment portfolio.

3. Choose Your Battles

Great investors are rarely day traders, and vice versa, don't try to do everything.

It took me 6 months and significant losses to realize that I don't have the characteristics for low-timeframe, day trading. While the game is fun, I only have so much time.

4. Don't Be a Jack of All Trades

During a bull market, trying to capitalize on every opportunity in the market is very tempting. Nowadays, every exchange has a venture capital division, and every VC firm has an exchange division.

In hindsight, maximizing Enterprise Value, EV, is about doing one thing exceptionally well.

Author's note: The author references Derek Sivers' work "Hell Yes or No," which mentions a donkey dying from indecision between hay and water, urging to focus on one direction.

5. Thinking in Percentages

There was a time when my individual trades were severely imbalanced with the size of my investment portfolio. I would hesitate at seemingly large bets and converting them into actual dollar amounts made me fearful.

What we should do is separate investment capital from "net assets" and view them in percentages.

6. Confidence in Scale

Early on, I didn't have a decision-making process based on the size of each investment.

Over the past year, watching others profit more from my analysis made me realize that I need to adjust the amount of each investment based on my level of confidence.

Recommended reading: Soros' Levels of Conviction

7. Professional Burnout

Most important of all.

There was a time when I was constantly focused on the market, and whatever leisure I did to relax was just stealing bits of time from a state of hyper-focus, impacting my health and decision-making abilities.

Expanding the team by bringing in four new analysts helped, but more importantly, recognizing that you cannot predict and control everything is crucial.

If your system requires you to monitor your investment portfolio 24/7, some changes need to be made.

8. Recommended Reading

• "Mastering the Market Cycle" - Howard Marks
• "Fooled by Randomness" - Nassim Taleb
• "The Psychology of Money" - Morgan Housel

That's all for now. I believe I will mess up more things in the future in updated and unexpected ways. My current goal is to ensure the above situations do not recur.