Peter Thiel: Investing is not a lotto ticket

Peter Thiel knows the highs and lows of investing

Thiel has a wide-ranging and interesting background, but is possibly best known as PayPal's founder and CEO, president of Clarium Capital, and as one of Facebook's earliest investors.

Thiel has made his fortunes for his investors, and also has lost money for them. According to Bloomberg, Clarium has returned an annualized 12 percent since it was started in October 2002. Yet after a spectacular early run, Clarium lost money for a third-straight year in 2011. It's down 65% from its mid-2008 peak.

His advice for the individual investor?  Know what you're getting into. Investing is not gambling.

Here's what he had to say in February when he spoke at Harvard University:

When I've looked at investing in technology ventures... and I can't figure out what's going on, and this is just a flier, it might work, it might not, (so) I'll just put some money in, that's almost always a formula for it not working.

Once you think of the world as consisting of lottery tickets, you have set yourself up to lose. What you have to do is go beyond thinking of the world as just a lottery ticket.

... It's kind of a laziness, where people don't want to think as hard about things as they should. And so in my investing, where we've done our homework and thought the hardest about things, that's where we've done the best. Where we thought of things as just a lottery ticket, that's where it's gone the most wrong.

If you need some help thinking through your investments, contact your adviser. Or you can talk to us at Covestor.

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