Lessons from the Great Minds of Investing
He spent two decades studying and interviewing great investors and his book covers the four big lessons for being a good investor and human being. The talk he gave at Google below is worth listening to, but here are the big ideas for those of you too busy to read the book or watch the video.
Be willing to be lonely
Be comfortable being different. To outperform you have to be different (and right). Try to do what others aren’t doing – disregard public opinion. To be better you have to detach from the crowd and think for yourself. This might mean not doing anything for years while you wait for the fat pitch – think about what Warren Buffett does: he will study a company or industry for years (sometimes decades) before he makes a move.
To do this you need to have the temperament for it. If you don’t think you have the temperament then don’t engage in a game you can’t win. If you find yourself easily swayed by other’s opinion and need other’s to agree with you then you might be better off investing into an index fund. To be a good value investor you have to be willing to be far from the crowd – that’s where the bargains are.
Realize the role of chance in life and the uncertainty of it all. Always ask yourself, what if I am wrong. On a personal note, I have lost most money when I was most convinced of something and have learnt to remind myself of the quote from Mark Twain:
It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.
Understand how uncertain and complex the world is, especially when investing, and how little we know even if we spend weeks and months understanding a company. Even when it comes to our mentors and leaders, understand how little they might know and that they could be wrong. Just because some brilliant hedge fund manager is buying a stock doesn’t make it a good investment.
You will get knocked down, you will screw up, you will make very big mistakes. Learn how to get up. Learn how to keep going when things aren’t working out. This comes from being a little numb to pain, from not taking each hit personally. You need to take each lesson seriously enough to learn from it, but not to let it stop you from being out there and trying again – remember what Edward Misrahi said.
There are many things you can do to be resilient, to be able to get up when things go wrong. Some of it is about structuring your life and your investments to not be fragile (go read Nassim Taleb’s anti fragile), some of it is about always asking whether you wrong. Mostly though you can’t control what happens to you, but you can control how you perceive it and how you are impacted by it.
Understand what leads to true happiness
Think through what leads to true happiness and a good life. Make sure that your actions are good and lead to true happiness. Real fulfilment doesn’t come from a job, a title, money. It comes from something more lasting, more permanent. From building something, from helping others, from impacting others, from learning and teaching.
I find the best way to see what leads to true happiness is to study others. Find people who are successful and happy. Study what makes them happy, and what they have learnt in their life.
Spend time thinking about what your gift is, and what can you do to make a difference in another person’s life.