The Education of a Value Investor : My Transformative Quest for Wealth, Wisdom, and Enlightenment by Guy Spier | Healthy Mind — Think Big
What would you do if you had $650000 lying around? Buy a new car? A new house? Perhaps a vacation home in the Bahamas? Or would you have paid for a lunch with Warren Buffett?
The latter is what a man named Guy Spier choose to do. I hope he received some splendid stock tips to go with that tuna! Ok, to be fair the money went to charity and he shared the cost with Indian investor Mohnish Pabrai but nevertheless, why? Well, Warren Buffett, without knowing it, had changed the course of Guy Spier´s life — functioning as a silent mentor for him.
Mimicking Buffett helped Spier in his investing career and he copied the setup of Buffett´s early investment partnership when creating his Aquamarine Fund — which he still manages today and which has made himself, and his coinventor’s, very rich.
Let us dive in and discover what factors Spier thinks were the main ones that helped him on his path on becoming a successful investor so that we too can one day pay some hundred thousand dollars for a lunch.
This is a Top 05 Takeaways summary of The Education of a Value Investor, written by Guy Spier. And this is the Healthy Mind — Think Big, giving you the best tips and tools for reaching financial freedom, through stock market investing.
#01 : GET A MENTOR, DEAD OR ALIVE
Even though Spier had a great education, he still felt lost early in his career. He lacked a guide in his life, a compass. To get a hold of a compass, that tells you in which direction to go, is the major thing that accelerates the process of achieving whatever goals you might have according to Spier.
Spier found out about Value Investing and Warren Buffett some time into his career as an investment banker on Wall Street. This discovery changed the trajectory of Spier´s life– for the better. He read, and re-read Buffett´s annual reports, and studied the companies in his portfolio. He started to think more like Buffett, and often thought to himself: “What would Warren do in my shoes”? The ability to mimic somebody else´s actions is how we humans advance — from childhood and onward. This is a natural and effective instinct, and yet, people tend to stop copying from superiors once one´s parents aren’t idolised anymore. Individuals who keep on reading, learning, and copying skills from persons who are ahead of them will advance much faster than those who have stopped thinking that they’ve learned everything already and the good thing is that these guides or compasses don’t even need to be alive. “Make friends with the eminent dead” — as Charlie Munger calls it. There is a tremendous amount of wisdom buried in the past, and one must only read a few books to get a hold of it.
No matter where you want to go; find a compass that can lead you along your path, someone who´s actions you can mimic, someone who has already discovered the truths that you need to learn! By the way — a great way to learn “What would Warren have done?” is to study his most important investments, and there’s an in-depth blog about that on this website.
#02 : THE ANCHORNAME DEBT
To make a fortune in the stock-market requires you to be rational over a long period of time. To succeed with this, you need a system that helps you in this process. Just as there are routines that pulls you forward — reading, subscribing to this blog website, watching through all of Berkshire´s annual meetings, studying finance, etc. There are also things that can drag you down, and make you less rational.
One of the most damaging ones is debt. Mistakes become much more expensive using debt and what is the number one rule of investing? That’s right — it’s to never lose money. Debt deteriorates your thinking process during times when you need it to be at its best. To succeed with Rothschild´s “Buy when there is blood in the streets”, you and your portfolio cannot already be wiped out when it’s time to start buying. Imagine being Guy Spier, who sat at his desk in Manhattan on the afternoon of September 15, 2008 watching financial history unfold as Lehman Brothers, one of the major investment banks, had just filed for bankruptcy. Potentially almost all of his family’s net worth was at risk, along with the savings of dozens of his friends, relatives, and business associates. Even so, in this moment of crisis he said that he felt strangely calm. He managed to get out of the crisis — accelerating. But what would have happened if he, during this time, had been leveraged to his teeth? Would he have been wiped out? Not continuing to do what he loves? Been ashamed of losing the better part of his family´s and his friends´ money? Don´t use leverage because frankly, to make huge money in the stock markets, you don´t need it.
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