“The education of a value investor: my journey of transformation in search of wealth, wisdom and enlightenment”, by Guy Spier, is read in a tug.
It is a vital journey, of ethical and philosophical relevance. Spier tells us this journey, since he graduated from Harvard Business School, starting in private capital in New York, where he discovers that technical knowledge opposes lack of scruples. Fortunately, his father entrusts him with a capital, from which he founded what is currently Aquamarine Capital, an investment firm whose philosophy is inspired by Warren Buffett. Having him as a model, Guy was deeply impacted after a dinner with the master, for which paid 650,100 dollars with another value investor, Mohnish Pabrai (the money went to the Glide Foundation).
He lived through the financial crisis in New York and several of his private investors went out of his fund, but even it lost half of value, he persuaded his father to stay and most of his investors. After that he realized that the best structure was an investment company, like Berkshire Hathaway, avoiding having to attend requests of liquidation, with a structure of commissions aligned with the investors.
He reviewed the companies in the portfolio and, recognizing Buffet in the phrase “when it comes to investing, the temperament is more important than the IQ”, he bought other incredibly cheap ones. Several essential messages are left to us. The first is that you have to live according to personal beliefs and principles, not according to standards or opinions of others. It’s about being the best version of oneself.
“When it comes to investing, the temperament is more important than the IQ”, Warren Buffet.
To do so, it is advisable to create a physical, intellectual and emotional environment outside of distractions, where to operate calmly and rationally. Guy avoids having the Bloomberg screen in sight and other elements that can arouse the irrational and instinctive mind that calls for action. It also quarantines smart theories of how economics and finance should be in the face of complex reality. “The weakest link is the brain itself” says Guy and we have to accept it. Manhattan, with its inexhaustible energy, competitive spirit and extreme wealth, did not favor it and currently operates from the outskirts of Zurich.
His decalogue includes avoiding to look at the price of shares, do not buy to whom tries to sell, do not to speak with the management of the companies, follow an order in the analysis, treat investment ideas only with people of confidence of the buy side, not to buy with markets open, wait two years before getting rid of an equity that has fallen (as
Buffet said, “think that you have a card with 20 options to hole, which make all you will do all your life. Once the holes are made you can no longer invest. That way you will think about what you are doing “) and do not talk about your current investments, as well as avoid leverage and surround yourself with appropriate people, circles and associations.
Guy provides a plethora of references of valuable readings, including Marcus Aurelius “Meditations”.
José Mª Serrano-Pubul, CFA.
