“The trick in life, generally speaking, is knowing what not to do, knowing what not to read, knowing what advice not to take. Because if you can do that, you have eliminated a very large subset of what you ought to be looking at, et cetera. So that’s how I started. I started by exclusion, and I still believe that very strongly.”- Anthony DedenThere was a recent NBA clip shared from the early part of the Lakers season, where Lebron James is sitting next to his son (also on the team) Bronny on the bench, and Lebron is mic’d up. He says the following:‘See the intensity right? Just play carefree though. Don’t worry about mistakes, just go out and play hard.’This was excellent advice.My guess is, when Bronny steps on the court, he’s going to want to do everything. Score points, make good plays, defend well, look like he knows what he’s doing, and many other things. But the best way for him to play, especially early in his career as a role player, is to eliminate nearly all the things he wants to do, and just focus on one thing at a time. Get low on defense. Then run hard up and down the floor. Crisp passes. Hustle to your spots. Follow through on your shot. The rest of his game will then take care of itself.Some NBA players can do it all. Like Bronny’s dad. Others, and some of the best, just focus on doing 1-2 things incredibly well, and have long and successful careers.Bruce Bowen played 13 seasons in the NBA. It’s likely very few people outside of hardcore fans know who he is. Bruce is an interesting player because he couldn’t handle the ball, couldn’t create his own shot, didn’t pass well, and never made any highlight reels. Yet, Bruce is a three-time NBA champion and 8-time All-Defensive Player. He did two things exceptionally well, only one of which shows up in the box score. He played great defense, and he made open threes. In 2003, as a member of the Spurs, he won an NBA title. Bruce shot 44% from the three-point line, an all-time great percentage. Ray Allen, one of the greatest shooters in NBA history, has only two seasons where he shot greater than 44% (I feel the need to point out that Steph Curry has five). Would the Spurs give Bruce the ball at the end of a close game? Absolutely not. Did it matter? Absolutely not. Doing two things well resulted in 13 years in the NBA and three NBA championships. Two things.This is an important principle for investors.So much of our careers revolved around trying to do everything at once, or trying to constantly do more. We study more companies, search for more ideas, meet with more management teams. I recently heard a well known investment firm cite as one of their competitive advantages that they have 2,500 - 3,000 management meetings per year. The firm employs 10 investment professionals. Assuming all 10 are involved in the management meetings, which is unlikely, that works out to 0.75 meetings per day at the mid-point of that number. I’m sure some of these are repeat / check-in meetings, but it takes time to prepare for management meetings in order to get anything useful out of them, so how much time is spent moving from company to company? I think that’s an interesting way to execute an investment process. There is an argument to be made for gaining experience and strengthening pattern recognition, and it’s been said that ‘he who turns over the most rocks, wins’. But in investing, the trick, as the quote above states, is knowing what not to do. Anthony Deden has done few public facing interviews, but was kind enough to sit down with Ian Cassel of MicrocapClub to discuss all things investing. The interview was incredible and if you haven’t had a chance to read the transcript, I’d highly recommend it. It can be found here.Among all the wisdom shared, and among all the things Anthony said, I found his principle of exclusion to be the most powerful. He talked about exclusion as it relates to idea generation and knowing where to focus, which takes the shape of knowing what he is looking for and waiting to find it. As investors, it’s important to remember that we can’t be everything to everyone. My long only strategy for example tries to do one thing, and do it well. I miss out on a lot of investments with this approach, which is fine. It simplifies my life, is a very light way to operate, and I don’t feel the need to have an opinion on every topic, industry, or company. The chaotic nature of markets and persistent news flow often makes us feel like we need to understand everything and have an opinion on everything, all at once. This is damaging to an investment process, and even more damaging to your psyche. Exclusion is a great way to filter for, and clear out the noise.But it’s best not to think of it as ‘missing out’. The core idea here is risk avoidance. Exclusion allows investors to avoid the risks not worth taking and then by extension have the freedom to choose the risks worth embracing. The tangible example here would be Deden’s discussion surrounding gold, and the ‘risks we do not take by owning it’. The absence of unwanted risk should be the center of any strong investment process. Asking oneself what are the unwanted risks you want to avoid can save you from many headaches. Curiosity and learning are extremely important, but good judgement often requires space, and almost boredom. The best investors know very well which opinions, insights, and facts are worth having. It's quality and depth over quantity that is most effective.Knowing your businesses well, avoiding management teams who lack skin the game, steering clear of value destructive business models and industries, are all ways to avoid unwanted risks. There are plenty of businesses you could offer me for absurdly cheap valuations, and I would still pass. My evolution as an investor over the years has moved from a focus on cheap stocks and undervaluation to better businesses and uncovering the qualitative aspects of a company and management team, with a focus on maintaining a long runway for compounding. That definition lends itself to a wide number of businesses, but if I had to whittle down my criteria to two components, it would be durability and quality people. Filtering for those two attributes results in a short list of quality businesses that have endured and will endure, and sensible, aligned people running them. Everything else is excluded. For good reason. And I don’t care about what I’m not investing in.Deden’s framing using an art collector analogy fits perfectly here.‘I don’t think they’re lacking anything. Think of it as an art collector. If I told you there are 25 million artists in the world and 100s of millions of paintings, would you be interested in all of them? No. Depending what kind of art you collected, you would focus on that art. So what anybody else made, would be uninteresting to you. And out of the things you’re interested, there are certain things that you can purchase at some time at a decent price. And others, you can just put on your list and just wait.’While its very important to balance focus and competence with expanding your knowledge base over time, every investors has a sweet spot on the risk avoidance curve that they should strive to stay near, while using the lessons from Anthony Deden and wisdom of Lebron James to become more patient, and more focused. I think we’d all benefit from that.Adam Wilk is the Founder and Portfolio Manager of Greystone Capital Partners, LP, a small cap focused investment fund.Adam can be reached at adam@greystonevalue.comDisclaimer: The purpose of this post is for informational and educational purposes only and should not be construed as a recommendation to purchase or sell any security. Do your own due diligence and seek counsel from a registered investment advisor before trading in any security mentioned.This Substack is reader-supported. To receive new posts and support my work, consider becoming a free or paid subscriber.