Author Topic: My last post for a while, hopefully my most valuable.  (Read 2553 times)

valueinvestor

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My last post for a while, hopefully my most valuable.
« on: June 28, 2020, 06:57:26 PM »
Alas, it seems my time has come to be a lurker for a while.

I have responsibilities that are growing every day, and it's getting harder and harder to contribute meaningfully. Especially for an auto-pilot portfolio that essentially has 3 stocks that take up more than 75% of my portfolio. The reason why my portfolio exists is to park any residual cash generated from my business, where most of my time, energy, and effort is being spent. However, it's no excuse to not attempt to give back as much as you can, especially with the value I've received from the golden nuggets embedded in this forum.

Hence I will leave you all (not that you need it - mostly geared towards those who are just starting out) with what helped me for the last 15 years.

1. Luck. Focus on getting luckier, not smarter. Almost similar to focus on your character, rather than your reputation, as good characters always have good reputations. Many people underestimate the utility of luck, and never attempt to get as much of it. Luck always revolves around certain places around the world with certain people, and it can be attributed to your stock selection. When I started out, I had a folder full of spreadsheets, and my portfolio was always dictated by what provided the most alpha via DCF, SOTP, you name it. While it was good, the process was labour intensive and not recommended if you're not a full-time investor or institutional player. Also, in most cases, even if my thesis was right, my alpha would've been capped because before the thesis played out... there would've been unfriendly shareholder actions, for instance, unfriendly squeeze-outs, acquisitions, management, mergers, capital restructure, etc. The proverbial summation is if you want to be unlucky... let's say get struck by lightning, then go to a mountain and hold onto a metal pole, where lightning always strikes.  :P

2. Write. I'm a big proponent that learning how to write makes you smarter. DCF and SOTP are great tools, but only part of a great repertoire IMHO. This skill is present with many great investors, and probably the reason why we have annual letters... idk. However, I do know that writing allows one to distill abstract concepts into useful and actionable ideas/philosophy (e.g. fair price for wonderful businesses are better than wonderful prices for fair businesses, being lucky rather than analytical, etc.)

3. Know thyself. In my opinion, many try to invest as if they are Bruce Flatt, Bill Ackman, Stephen Schwarzman, or worst, rocket scientists. IQ doesn't automatically translate into wisdom, and knowing yourself is critical to investment success. In my case, my portfolio is not going to pay the bills, but will eventually pay for my retirement (if I want to retire). Most of my efforts again go towards growing my business and being a better person, hence I'm not going to compete with people who have a large capital, smart analysts and have greater means to obtain alpha. Therefore, I'm not going to have the same ideas like them.

4. Reflect. In order to "know thyself," one must reflect. It's impossible to know what you look like without a mirror. I reflect twice a day, and possibly more in my head during the day. Constantly questioning my business strategy, investments, and general directions in life. I am a very irrational being, and hence it helps to constantly monitor yourself and make sure it does not bleed into your business, career, investments, etc. Shout out to LongHaul and his Psychology of Misjudgement Thread, which I think is a must-read. Oh before I forget, what also helps with reflection is finding people who constructively disagree with you, as opposed to those who are just disputatious, because they provide another insight that you can add to your mental framework.

5. Grow. I'm constantly growing as a person, whether it's physical or mental. I find that it helps me personally, as a result, it translates professionally. I love annual reports because it provides a makeshift mental map of the world and keeps track of large changes. With the reduction of available primary sources or reliable secondary sources, annual reports are one of many great resources to stay up-to-date. It's not hard either, because you don't need to read the entire report to understand how it fits in the world, but probably wise to read the footnotes, if you're planning to make an investment.

There's so much more, but I think these are the largest contributors, and probably what I would leave try to leave with my possible descendants. Should you construe this as advice, no... there are always exceptions to rules, and what worked for me, may not work for you. Most of these are no-brainers, but I feel that many people know them, but it has not registered with them or better yet, resonated.

Anyways, with the world divided, on the brink of economic depression, where the future is dim, I wish you all the best. Also, remind you that every great crisis provides great opportunities, and your greatest liabilities can be your greatest assets. More importantly, I would also hope that you are living lives how you see fit, and hopefully, it's full of music, dance, adventure, and/or meaning. It's been real. ;D

-valueinvestor
« Last Edit: June 28, 2020, 06:59:39 PM by valueinvestor »


cherzeca

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Re: My last post for a while, hopefully my most valuable.
« Reply #1 on: June 29, 2020, 06:39:21 AM »
thanks for this, valueinvestor. well done.

I have a variant of 1., which is to focus my alpha seeking to one opportunity.  mostly I have come to believe that low cost long term index investing is the sanest and smartest way to go (the market is right), but to borrow WEB's punchcard idea, I am willing to punch one special situation/value investment where I am betting the market is wrong now but will come to agree with me later.  does luck require diversification or just extra work and focus?  we shall see. I like hiking mountains, but only when the sun is shining.

given your portfolio it seems you have three holes on your punchcard.  if I had three good ideas and thought I could follow them intensely, I might too.  but it sounds like your portfolio is a sidecar to your business in terms of wealth creation, so paying sufficient attention to that which requires it most and which provides the most valuable payoff is my most important takeaway from your post.

bskptkl

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Re: My last post for a while, hopefully my most valuable.
« Reply #2 on: June 29, 2020, 08:48:59 AM »
Thanks for posting. That was a good read.
I've always thought of myself as lucky and tried to be receptive to good breaks. I think it has helped.
« Last Edit: June 29, 2020, 08:54:31 AM by bskptkl »

Kuhndan

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Re: My last post for a while, hopefully my most valuable.
« Reply #3 on: June 29, 2020, 08:55:59 AM »
Great stuff, thanks for posting!

Liberty

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Re: My last post for a while, hopefully my most valuable.
« Reply #4 on: June 29, 2020, 01:46:17 PM »
Have a good break, enjoy the summer (but stay safe).
"Most haystacks don't even have a needle." |  I'm on Twitter  | This podcast episode is a must-listen

sundin

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Re: My last post for a while, hopefully my most valuable.
« Reply #5 on: June 29, 2020, 02:15:52 PM »
Thanks for posting!

Parsad

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Re: My last post for a while, hopefully my most valuable.
« Reply #6 on: June 29, 2020, 02:24:14 PM »
Wonderful post!  Please at least stay a lurker.

All the best,

Sanjeev
No man is a failure who has friends!

valueinvestor

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Re: My last post for a while, hopefully my most valuable.
« Reply #7 on: June 29, 2020, 02:31:18 PM »
thanks for this, valueinvestor. well done.

I have a variant of 1., which is to focus my alpha seeking to one opportunity.  mostly I have come to believe that low cost long term index investing is the sanest and smartest way to go (the market is right), but to borrow WEB's punchcard idea, I am willing to punch one special situation/value investment where I am betting the market is wrong now but will come to agree with me later.  does luck require diversification or just extra work and focus?  we shall see. I like hiking mountains, but only when the sun is shining.

given your portfolio it seems you have three holes on your punchcard.  if I had three good ideas and thought I could follow them intensely, I might too.  but it sounds like your portfolio is a sidecar to your business in terms of wealth creation, so paying sufficient attention to that which requires it most and which provides the most valuable payoff is my most important takeaway from your post.

Thanks! I purposely stayed away from specifics because I find people learn more from insights than instruction, as it forces them to think and interpret. I found my outperformance by essentially betting on stocks such as Amazon where valuation always seems to be stretched, but opportunities and luck always seems to be on their side. Is it because their lucky, or are they in the right place and right time?  I always try to bet  on the “lucky” ones.

However to your point, yes - compounding at a rate higher than 15% over a long period of time with just the public markets, if you’re not full time is quite a feat. Luck may come from diversification, extra work, anywhere really.

There was a time where anyone in Silicon Valley could’ve been rich, if they simply went there at the right time  and associated with the right people. To borrow my uncle’s line, who was a beneficiary from the dot com boom - “You actually had to try to be poor that time.”

valueinvestor

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Re: My last post for a while, hopefully my most valuable.
« Reply #8 on: June 29, 2020, 02:32:07 PM »
Have a good break, enjoy the summer (but stay safe).

Thanks Liberty - you stay safe too!

valueinvestor

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Re: My last post for a while, hopefully my most valuable.
« Reply #9 on: June 29, 2020, 02:33:09 PM »
Wonderful post!  Please at least stay a lurker.

All the best,

Sanjeev

With your blessing, how can I not stay a lurker! Thanks Sanjeev!  ;D