ruin

Naval’s core investment principle: avoid total loss. “The one thing you have to avoid is the risk of ruin. Ruin means stay out of jail. So, don’t do anything that’s illegal. It’s never worth it to wear an orange jumpsuit. And stay out of total catastrophic loss.”

Modern society has unlimited upside, limited downside. But ancient wiring makes us fear small losses more than we should. Naval overrides this programming through first principles thinking.

“You have to watch your health. And stay out of things that can cause you to lose all of your capital, all of your savings. So, don’t gamble everything on one go. But take rationally optimistic bets with big upside.”