The Education of a Value Investor by Guy Spier

Education of a Value Investor

Summary
  1. Guy Spier takes us through his journey from miserable analyst to someone who is hyper aware and thoughtful of his values and his shortcomings. By honestly addressing these two things, Spier has created a situation for himself that allows his fund to thrive and him to be a genuinely happy individual. This book offers more of a guide on how to live life than pure investing lessons and it all stems from a lunch he bought with Warren Buffett.
Key Takeaways
  1. Choose a great environment and surround yourself with the smartest people you can – your environment is much stronger than your intellect so make sure you choose it wisely
  2. Follow your bliss – do whatever it is that makes you tick, that brings a smile to yourself and feels like play
  3. Judge yourself based on an “inner scorecard” – don’t put so much weight into what others think of you
  4. Knowing what to avoid is often as important as knowing what to focus on
  5. We all have shortcomings – be honest about limitations and figure out ways around them (pair this with Dalio’s Principles)
  6. Have a group you admire and meet with regularly to share ideas – your mastermind group (Spier recommends Toastmasters or his group, Value X, among others)
  7. Write letters often, showing people you genuinely care about them
  8. Many small, good decisions over time can make a huge difference
  9. Become the most authentic version of yourself
  10. Never buy anything that is being sold by Wall Street
  11. Many investments are acutely uncertain but not as risky as initially seem
  12. Develop a series of rules/routines to apply consistently – helps improve any decisions since you have a better structural framework to work with
  13. Create a checklist to avoid obvious and predictable errors
  14. Whenever you meet someone, figure out how you can help them out
What I got out of it
  1. A thought-provoking and deep read which is obviously written by someone who has very consciously asked and answered very many important questions of himself. Spier helps lay out a framework to help people think structurally about what and how will make them happy and successful. A must read for anybody even if they have no interest in investing.

Read The Education of a Value Investor

  • Spier joined Blair as an analyst out of graduate school and hated it as it was so corrupt
  • Never do anything to taint your reputation
  • Buffett changed the way Spier thought about his life and career
  • What sets Buffett apart is his unending desire to learn
  • Do something whenever it has a potentially high upside
  • Our consciousness changes our reality
  • Strive to have as many people in your life whose values you admire
  • “Model” your hero – imagine to yourself what your hero/role model would do in a certain situation and try to mirror that behavior
  • Process of self-correction begins with self-knowledge
  • Ask self “why are you doing this?” and answer truthfully and for your own reasons – not others
  • Focus deeply on mistakes and learn all you can from them
  • Moves away from New York to Zurich due to the effects the environment has on him – jealousy, greed, anxiety, envy and unnecessary risks
  • When you have an agenda, people can smell it
  • Real power lies in the person who is in touch with himself
  • Learn and copy from the best – zero shame in standing on the shoulders of giants
  • If you’re going to do something, best to do it with wholehearted gusto
  • When you try to improve yourself internally, the universe responds
  • Buffett researched what Spiers’ wife does before they met for their lunch. Shows how much he genuinely cares
  • People will try to stop you doing the right thing if its unconventional
  • Buffett has set his life up so that it suits him and he enjoys it – make this a life goal whoever you are and wherever your interests lie
  • Understand that you stand to lose up to 50% of your money whenever you are invested
  • Never live beyond your means or go into debt
  • In investing, temperament is more important than IQ but structural advantage is even more important
  • Much of what is taught is right in theory but not helpful when investing in the real world
  • One is still vulnerable to mental shortcomings even if you are aware of them
  • Accept how flawed your thinking is and work around it
  • Structure environment to work around shortcomings. For example, Spier makes his computer desk extremely uncomfortable so that it is annoying for him to sit at this desk and answer emails
  • Managing nonrational brain should be integral part of your investing strategy
  • Be honest with yourself about your shortcomings and irrationality – being defensive and trying to block them out will only lead to disaster
  • Simply not possible to have a complete understanding of everything
  • Just because “x” idea popped into your head first does not make it the best idea
  • Take a more playful and creative approach to life and investing
  • Some of Spier’s investing tools/processes
    • Develop a series of rules/routines to apply consistently
    • Never buy/sell anything when the market is open – if decide to buy/sell, place orders so that they happen once the market closes
    • Set your account or your routine so that you only see your total returns once per quarter or once per year
    • Don’t buy anything being sold to you
    • Avoid talking to management as they’re often the best salespeople
    • Filter ideas/research – look at least biased research first
    • Discuss investment ideas with people who have nothing to gain from it and can keep their ego out of it
    • If a stock loses, don’t sell it for 2 years
    • Don’t discuss current investments with anyone
    • Create a checklist to avoid obvious and predictable errors
      • Helps with memory recall, especially of mundane checklist (pair with Checklist Manifesto)
      • Must be personalized to your own vulnerabilities
  • Company should provide win-win for whole ecosystem
  • Want companies that control as much of their destiny as possible
  • Find a way, any way, to get the right people in your life
  • Truly, the more you give the more you get
  • Avoid opaque people, seek out “open books” – people who are blatantly honest about themselves and can be blatantly honest with you and your ideas
  • Value people as an end in themselves – again, people can smell when you have an agenda
  • True value lies in getting and then giving it all away
  • Understand your relationship with money and what risks are tolerable
  • Best way to learn is through experience and adversity
  • Find/join/create a mastermind group

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