Will MacAskill

• The Bottom Line: Will MacAskill's philosophy provides a powerful mental toolkit for value investors, urging them to adopt an extremely long-term perspective, make decisions based on probabilities, and focus on investments with durable, real-world impact.
• Key Takeaways:
• What it is: The application of philosophical concepts like longtermism and effective altruism—championed by philosopher Will MacAskill—to the world of investing.
• Why it matters: His frameworks promote the kind of rational, unemotional, and deeply considered decision-making that is the bedrock of value_investing.
• How to use it: By extending your time horizon to decades, using expected value calculations to assess potential investments, and filtering for opportunities with lasting significance.

Imagine you're building a house. You could hire a master carpenter who knows every joint and every type of wood. That's like your typical stock analyst—an expert in the specific, technical details of a company. Now, imagine you first consult an architect and a structural engineer. They don't tell you which nails to use. Instead, they talk about the foundation, the load-bearing walls, and how the house will stand for the next hundred years against storms and earthquakes. They provide the fundamental principles of sound construction. Will MacAskill is that architect and engineer for your investment thinking. He isn't a stock-picker or a Wall Street guru. He is a Scottish philosopher at Oxford University and one of the key figures behind a global movement called Effective Altruism. His work, particularly in his book What We Owe The Future, focuses on a simple but profound idea: longtermism. This is the view that future generations have moral worth, and that one of the most important things we can do is ensure humanity has a long and flourishing future. So, what does a philosopher thinking about the year 2525 have to do with your investment portfolio today? Everything. MacAskill's work provides a set of powerful mental models for making rational decisions under uncertainty, whether you're choosing a charity to support or a company to invest in. He doesn't offer stock tips; he offers a way of thinking that helps you build a robust, resilient, and principled investment philosophy. He provides the “why” and the “how-to-think,” which are far more valuable than a fleeting “what-to-buy.”

“The future is big. There are generations to come. This is a bedrock moral truth. And the stakes are astronomical.” - Will MacAskill ¹⁾

By applying his ideas, an investor can move beyond chasing quarterly earnings reports and start thinking like a true business owner—one who is building an enterprise meant to last for generations.

The ideas of Will MacAskill resonate so deeply with value investing because they are, in many ways, the philosophical extension of the principles laid out by Benjamin Graham and Warren Buffett. A value investor who internalizes MacAskill's framework can significantly sharpen their decision-making. Here’s why it’s so crucial:

• It Defines the “Ultimate” Long Term: Value investors famously say their favorite holding period is “forever.” MacAskill's longtermism gives this idea a profound intellectual and ethical foundation. It pushes you to ask questions that cut through short-term market noise. Instead of “Will this company beat earnings next quarter?”, you start asking:
  • “Is this company providing a product or service that will be essential for a flourishing society in 2050?”
  • “Does its business model have the resilience to withstand technological shifts, climate change, and geopolitical turmoil over decades?”
  • “Is this company solving a real problem, or is it just a temporary fad?”

This line of questioning naturally leads you to identify businesses with immense durable competitive advantages and reject speculative ventures.

• A Framework for Radical Rationality: At its core, value investing is a battle against emotion. Benjamin Graham's allegory of “Mr. Market”—the manic-depressive business partner who offers you wildly different prices every day—is a lesson in maintaining your own rational assessment of intrinsic_value. MacAskill's work provides the tools for this fight. The principles of effective altruism demand that you follow evidence, think in probabilities, and constantly question your own beliefs. This “scouting mindset” is the perfect antidote to the “soldier mindset” that causes investors to fall in love with their stocks, ignore disconfirming evidence, and suffer from confirmation bias.
• It Transforms Risk Management: Value investing isn't about avoiding risk; it's about intelligently managing it, primarily through the principle of margin of safety. MacAskill’s emphasis on expected value calculation offers a more sophisticated way to think about this. Instead of a simple gut feeling about risk versus reward, you are prompted to map out a range of potential outcomes, assign rough probabilities to them, and calculate a weighted average. This process forces you to confront the real possibility of failure and ensures you only invest when the potential upside overwhelmingly compensates for the risks involved. It turns risk management from a vague concept into a concrete, analytical exercise.
• It Aligns Financial Goals with Real-World Value: A common caricature of a value investor is someone who only cares about buying cheap assets, regardless of what the company does. MacAskill's philosophy implicitly argues that the most durable, long-term value will be found in companies that create genuine, positive, and lasting benefits for society. This isn't about “feel-good” investing; it's a pragmatic recognition that companies solving the biggest problems (e.g., sustainable energy, breakthroughs in healthcare, efficient infrastructure) are the ones most likely to thrive over the long run. It provides a powerful lens for what is now commonly called ESG Investing, but roots it in long-term value creation rather than a simple checklist.

Applying MacAskill's philosophy isn't about a new formula or a complex financial model. It's about adopting a superior way of thinking. You can integrate his ideas into your investment process by focusing on three core methods.

1. 1. Adopt a “Longtermist” Time Horizon: This is the foundational step. Before analyzing any company, consciously adjust your mental timescale.
   • Action: When you read an annual report, don't just focus on the last year's performance. Go back 10 or 20 years. Read the earliest shareholder letters you can find. Did management's vision from two decades ago play out?
   • Key Question: Write this question down and put it at the top of your investment checklist: “What is the plausible bull case for this company still being a dominant force in its field 30 years from now?” If you can't articulate a convincing answer, you may be looking at a trade, not a true long-term investment.
2. 2. Think in Probabilities (Use Expected Value): This moves you from simple “story-based” investing to a more rational, probabilistic approach. The goal isn't to be perfectly precise, but to be directionally correct.
   • Action: For a potential investment, create a simple table with three to five potential future scenarios. Assign a probability to each scenario (they should add up to 100%) and estimate the potential return for each.
   • Formula: `Expected Value = (Probability of Outcome 1 * Payoff of Outcome 1) + (Probability of Outcome 2 * Payoff of Outcome 2) + …`
   • Example: You're considering a biotech stock.
     • Scenario A: The main drug fails trials (60% probability, -90% return).
     • Scenario B: The drug gets approved but is a minor success (30% probability, +100% return).
     • Scenario C: The drug is a blockbuster (10% probability, +1,000% return).
   • Calculation: `EV = (0.60 * -0.9) + (0.30 * 1.0) + (0.10 * 10.0) = -0.54 + 0.30 + 1.00 = 0.76` or a 76% expected return. This structured thinking helps you see if the potential for a huge win compensates for the high chance of a near-total loss.
3. 3. Apply a “Cause Prioritization” Filter for Themes: The Effective Altruism movement uses a framework to decide where to focus its efforts: Scale, Neglectedness, and Tractability. Value investors can adapt this to find promising investment themes or sectors.
   • Scale (How big is the problem/opportunity?): Look for themes that address massive, global markets. Think about fundamental human needs: energy, health, food, communication, computation. A company making a slightly better mousetrap has a small scale; a company pioneering grid-scale energy storage has an enormous scale.
   • Neglectedness (How crowded is the space?): This is the classic contrarian part of value investing. Is everyone else overlooking this sector? Is it considered “boring”? Great value is often found in areas the market has forgotten or misunderstood, not in the hot themes everyone is chasing.
   • Tractability (Can I solve this problem?): For an investor, this translates directly to circle of competence. Is this a sector where I can realistically understand the business models, competitive dynamics, and technology? Can I actually analyze the companies and determine their intrinsic value? It doesn't matter if a sector has scale if it's utterly impenetrable to you.

Adopting this way of thinking will fundamentally change the composition of your portfolio and your behavior as an investor. You will find yourself naturally gravitating towards businesses with:

• Simple, understandable, and enduring business models.
• Strong balance sheets and a history of prudent capital allocation.
• Management teams that think and act like long-term owners.
• Products or services that are deeply integrated into the economy.

Conversely, you will be far less tempted by:

• Story stocks with exciting narratives but no profits.
• Companies in rapidly changing industries where dominance is fleeting.
• Businesses that rely on financial engineering or unsustainable debt.
• “Hot” IPOs and speculative fads.

The “result” of this process is not a number, but a state of mind: one of calm, patient, and rational confidence in the long-term prospects of your well-chosen investments.

Let's apply the MacAskill framework to an investment decision in the critical sector of water infrastructure. Imagine you are comparing two companies:

• “AquaFuture Tech Inc.”: A venture-stage company with a revolutionary, proprietary technology for desalination. They claim their method will cut energy costs by 70%. They have no profits, are burning cash, but have a massive potential market. The stock is popular with tech blogs.
• “Bedrock Water Utility Co.”: A long-established, regulated water utility serving a slow-growing but stable population center. They own reservoirs, pipelines, and treatment plants. They pay a steady dividend and are considered “boring” by the market.

^ Company ^ AquaFuture Tech Inc. ^ Bedrock Water Utility Co. ^

Let's analyze this through the MacAskill lens: 1. The Longtermist Time Horizon:

• AquaFuture: Its entire existence depends on its one technology succeeding and scaling. Technological risk is immense. A competitor could invent a better method, or its own tech could prove unscalable. Its 30-year survival is a low-probability bet.
• Bedrock Water: People will always need water. Its assets (pipelines, reservoirs) are irreplaceable physical infrastructure. Barring extreme mismanagement or political upheaval, it is almost certain to exist and be essential in 30, 50, or even 100 years. It is a true “forever” asset.

2. Expected Value Thinking: Let's build a simple probability table for a 10-year holding period.

• AquaFuture Tech:
• Scenario A: Fails completely. (70% probability, -100% return)
• Scenario B: Moderate success, bought out by a larger firm. (25% probability, +300% return)
• Scenario C: Dominates the market, becomes the next Tesla. (5% probability, +5000% return)
• Expected Value: `(0.70 * -1.0) + (0.25 * 3.0) + (0.05 * 50.0) = -0.70 + 0.75 + 2.50 = +2.55` or a 255% expected return.
• Bedrock Water Utility:
• Scenario A: Stagnates, low growth. (20% probability, +30% total return)
• Scenario B: Steady, predictable growth as per history. (70% probability, +120% total return)
• Scenario C: Faster growth due to population influx. (10% probability, +200% total return)
• Expected Value: `(0.20 * 0.3) + (0.70 * 1.2) + (0.10 * 2.0) = 0.06 + 0.84 + 0.20 = +1.10` or a 110% expected return.

On the surface, AquaFuture's EV looks higher. But a value investor adds a crucial layer: the margin of safety. The -100% outcome for AquaFuture is catastrophic and highly probable. The EV is entirely dependent on the tiny chance of a massive win. For Bedrock Water, even the “worst” case scenario involves a positive return. The probability of a permanent loss of capital is near-zero. A value investor prizes the avoidance of loss above all else and would favor Bedrock's high-certainty outcome. 3. Cause Prioritization Filter (Scale, Neglectedness, Tractability):

• Scale: Both address a problem of massive scale—the global need for clean water.
• Neglectedness: Bedrock Water is clearly the more neglected asset. The market is pricing it for predictability, not excitement. AquaFuture is the opposite of neglected.
• Tractability: The business of a water utility is far easier for a non-specialist investor to understand than a revolutionary desalination technology. Bedrock Water is squarely within most investors' circle_of_competence.

Conclusion: The MacAskill framework makes the choice clear for a value investor. Despite the lower headline “expected value,” Bedrock Water Utility Co. offers a far superior risk-adjusted return, a near-certainty of long-term survival, and an understandable business model. It's the rational, durable choice.

• Promotes Deep Rationality: It provides a robust philosophical framework to combat the emotional decision-making and cognitive biases that derail most investors.
• Extends the Investment Horizon: It forces a focus on truly sustainable business models and durable moats, which is the ultimate goal of long-term investing.
• Integrates Ethics and Pragmatism: It shows that considering a company's long-term societal impact is not just an ethical exercise, but a powerful tool for identifying high-quality, resilient businesses that are built to last.
• Provides a Framework for Uncertainty: The use of expected value and probabilistic thinking is perfectly suited for the inherently uncertain future of financial markets.

• Difficulty in Quantification: The primary weakness is that the inputs are subjective. Estimating the probability of a technological breakthrough in 10 years or the state of the world in 50 years is highly speculative. The goal is not precision but structured thinking.
• Risk of Analysis Paralysis: The philosophical depth and complexity can be overwhelming. An investor could spend so much time pondering the distant future that they fail to act on good opportunities today. The framework must be a tool, not a trap.
• Not a Standalone Strategy: This is a mental model, not a complete investment system. It must be paired with rigorous financial analysis. You still need to read the balance sheet, perform a discounted cash flow analysis, and assess management quality. It's a layer of thinking on top of fundamental analysis, not a replacement for it.

• long_term_investing
• behavioral_finance
• circle_of_competence
• margin_of_safety
• intrinsic_value
• risk_management
• esg_investing