As a novice investor, heck as a professional, it is always helpful to take wisdom from some of the legendary investors of all-time to learn how they think about markets.
Listening, reading, and learning, however, are very different from copying.
Damian Kestel at CLSA sent out his weekly “Bits and Pieces” newsletter Friday which included a massive collection of quotes, stories and insights from some of the preeminent investors of all-time.
One particular quote from Michael Burry, the head of Scion Capital and the hero of Michael Lewis’ book (which has since been made into a movie) “The Big Short,” caught our eye.
In it, Burry emphasised that young investors should study up on their predecessors, but reminds them it is a fool’s errand to sink into past thinking too much. He also included the example of Warren Buffett, arguably the most successful investor of all-time, to prove his point.
Here’s Burry (emphasis ours):
“If you are going to be a great investor, you have to fit the style to who you are. At one point I recognised that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham, but rather set out on his own path, and ran money his way, by his own rules …. I also immediately internalized the idea that no school could teach someone how to be a great investor. If it were true, it’d be the most popular school in the world, with an impossibly high tuition. So it must not be true.”
Burry’s idea here being, you can learn as much as possible from the luminaries in the field of investing (and pretty much any other field too), but at some point in order to truly succeed, you have to come up with your own ideas.
For instance, Burry is a value investor, much like Buffett, but has a different approach. Whereas Buffett finds undervalued companies with strong attributes and remains in the position for long periods of times, even decades, Burry takes a slightly different tack.
“I try to buy shares of unpopular companies when they look like road kill, and sell them when they have been polished up a bit,” said another Burry quote in the CLSA note.
Theoretically, Burry, Buffett, and even Graham are of much the same mindset when they invest, but they take different angles. And that’s the best way to do it, you can glean as much information as possible from the generation before and take it your own way.
Even if you’re not a professional investor, it pays to have your own set of rules — willingness to take on risk, evaluation of companies, and so on — to help build a portfolio.
You’ll never be the next Warren Buffett or Michael Burry, and that’s probably for the best.