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5 Lessons on Life & Investing from Guy Spier’s Education of a Value Investor

Once upon a time, there was a young man who got his dream job in the financial services industry, thought he could make it big one day and worked hard at it, then got disillusioned and disgusted by what he saw around, and finally quit to live a life of greater peace and fulfillment, while pursuing his passion in value investing.

If I had not read Guy Spier’s The Education of a Value Investor, and someone told me this story, I would have believed it was mine.

This is truly my story, but Guy has captured this beautifully in his wonderful book, which I completed reading recently.

Of course, Guy gas written about his personal story, but it resonated so much with me that I have kept this book in my must-read book advisory list for any budding value investor.

Of course, there are great differences between me and Guy –

  • He studied at Oxford and Harvard while I studied at obscure colleges;
  • He won a lunch date with Warren Buffett (jointly with Mohnish Pabrai, at a cost of US$ 650,000), while I continue to dream of a visit to Omaha to meet the Oracle some day;
  • He started and ended his career at an investment bank, and I did it with an independent research house.
  • He now manages multi-million dollars, while I barely manage to manage my own little savings. 🙂

Anyways, coming back to Guy’s story and his book, as I mentioned, I could relate to a lot of his experiences, thoughts, and lessons. I have pulled out just five of them that have guided me well.

These thoughts not only hold importance in investing but in life as well. In fact, I find Guy’s book amazing because it talks less about value investing rules and more on a value investor’s character development.

In Guy’s own words…

…this book is also about the inner game of investing, and by extension, the inner game of life. As I’ve come to discover, investing is about much more than money. So as your wealth grows, I hope you will also come to realize that the money is largely irrelevant. And what you will want to do with the bulk of your wealth is give it back to society.

So, here are those five meaningful thoughts that Guy writes about in his book, which I believe serve a great learning for most people aspiring to find a greater meaning in life and become better as value investors.

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7 Secrets of Warren Buffett’s Success (as per Charlie Munger)

In the 2008 shareholder meeting of Wesco Financial, a shareholder asked Charlie Munger to describe what caused Warren Buffett’s success.

“His success…is a lollapalooza,” Munger replied – a confluence of factors moving in the same direction.

Munger outlined the following seven key factors which combined together to cause Buffett’s success –

  1. Mental aptitude (Being seriously smart)
  2. Having great interest in the subject (“It’s very hard to succeed in something unless you take the first step – which is to become very interested in it.” ~ Sir William Osler)
  3. Early start (If something takes a long time to achieve, you better start early)
  4. Being a learning machine (Keep learning and learning)
  5. Reinforcement (Human beings work well if they get reinforcement – constant rewards for doing well, which drives you to do more of the same)
  6. Being correctly trusted by people
  7. Avoiding envy, jealousy, self-pity, vengeance, and extreme ideology

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My Interview with Farnam Street’s Shane Parrish

Shane Parrish - Value Investing Almanack - Safal NiveshakShane Parrish is the curator behind Farnam Street, a website aimed at mastering the best of what other people have already figured out. Shane is the founding partner of Syrus Partners, a holding company that acquires and operates businesses in North America. Before Syrus, Shane worked as an executive in the Canadian government, where he led the creation and execution of key cyber-defense initiatives.

This isn’t your typical value investing interview, but one around topics of reading, learning, and multidisciplinary thinking.

Over to Shane!

Note: This is an excerpt of my interview with Shane Parrish that was originally published in the December 2017 issue of our premium newsletter – Value Investing Almanack (VIA). To read the entire interview and more such interviews and other deep thoughts on value investing, business analysis and behavioral finance, click here to subscribe to VIA.

Safal Niveshak (SN): Please share about your background. What led you to the wonderful work you are doing at Farnam Street today?

Shane Parrish (SP): I started working for an intelligence agency on Aug 27, 2001. Two weeks later the world changed forever, and I was thrust into a leadership role — not because of any competence on my part but rather because of necessity. As the promotions kept coming, I realized that I was increasingly making decisions that impacted not only my team and their families but also the organization and people around the world. The problem was, I had no idea “how to make decisions.”

My first response to this was to look around the organization and study how most successful people made decisions. This was a great inside view. To complement that I wanted to get an outside view, so I decided to get an MBA.

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A Guide to Getting Good at Dealing with Stock Market Chaos

Imagine it’s 2020. Some genius political scientist in collaboration with a computer wizard has developed a flawless algorithm that can be marketed as a revolutionary predictor.

These geniuses offer their services to the United States President Donald Trump. In return for a generous down payment, they tell Mr. Trump that according to their forecasts, a revolution would certainly break out in the US during the following year.

How would Mr. Trump react?

Most likely, he would immediately lower taxes, distribute billions of dollars in handouts to the citizens – and beef up his secret police force, just in case the revolution breaks out.

These pre-emptive measures work! The year comes and goes and, surprise, there is no revolution.

Mr. Trump demands his money back. “Your algorithm is worthless!” he shouts at the scientist. “In the end, I could have built a few more mansions for myself instead of giving all that money to you for your dumb predictor.”

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Of Bad Businesses, Unethical Managers, and Stock Market Volatility

“I’m fast losing hope in this world!” my friend Ravi exclaimed as we started talking over desserts after our last weekend lunch.

“So soon?” I asked him. “What happened?”

“Are you reading newspapers these days Vishal? Or are you still abstaining from them?”

“I still don’t read newspapers, Ravi. But tell me what’s the news that has gotten you worried?”

“You read the news about ICICI Bank’s alleged sanctioning of a huge loan to Videocon because its chairman supposedly had dealings with the bank’s CEO’s husband? There are no honest people left in the corporate world it seems!”

“Yeah Ravi, I came across this news on Twitter recently. It’s bad if it’s true.”

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