#0 (old) - Guy Spier: The Education of a Value Investor

This is my personal summary of Guy Spier’s wonderful book. I take the liberty of mixing snippets from the book with my own thoughts.

If you’re interested in getting the book, here’s the amazon link. I couldn’t recommend it enough.

Ch 1: Know what game you (and others) are playing

Everyone is playing a different game.

The one they appear to be playing is not always the one they are really playing.

If somone wants to sell you something, they will first make it sound like they’re playing the same game as you. If someone is trying to make it sound like they’re playing the same game as you, they are likely trying to sell you something.

If you don’t figure out someone’s game but they figure out yours, you are easily exploitable.

An environment is a collection of games. You only get to play the games that your environment allows. Don’t fool yourself.

Some (very rare) people play a simple game and that’s the one they communicate. Those are the people you want to learn from / hang around with.

Ch 2: Keep an inner score card

Schools typically impose an outer scorecard on you: please the teachers; pass the exams; be accepted by your peers.

This will potentially cause a mislignment with your inner scorecard: what YOU want to do; what YOU’re interested in.

You can use your instinct and unconscious mind to detect these misalignments. They will send you signals.

So be careful what you optimize for. Are you optimizing for the long-term or the short-term avoidance of pain?

Be careful with knowlesge as well: it can blind you. You can refuse to see the facts because they contradict the theories you know. They say that science advances one funeral at a time. Because the theory ends up consuming your identity, especially when it feeds your ego.

Knowledge is not wisdom. Knowledge is useful but only when used wisely. Knolwedge does not give moral courage.

Ch3: Align your thoughts and your environment

When you find your path and align yourself with you core values and with like-minded people, good things can start happening, seemingly out of nowhere.

The ability to mimic is a natural human instinct.

So start studying and mimicking your heroes. Get to work. But above all: believe in the possibility of living your dream life and immerse yourself in positive thinking.

Ask yourself: “What would HE do if he were in my shoes?”. Sit down at your desk and actively imagine you are HIM. Its called modeling your heroes. Be as precise as possible. Picture them with as much detail as you can. Match the way they move, breathe and talk. You will start to feel like them and think like them.

Choose to have certain people in your life (however tangentially) who embody the values you admire.

Our minds have a way of moving towards what we focus on. So think positive

Creating the right environment or network helps to tilt the playing field subtly in the right direction so that you become far more likely to succeed.

Ch4: Master your passions

Its always easier to go with the crowd than to go against it. Following the “standard” gives a sense of false comfort.

Tiny mistakes in judgement can add up to to big differences in return over time. There’s a huge benefit to getting the seemingly minor details right from the start.

Don’t fool urself into thinking that you rise above your environment (through force of intellect or force of will). The environment is much stronger.

As investors, we all have shortcomings; the key is to accept who we are, understand our differences and limitations, and figure out ways to work around them.

Be careful of notoriety. It can be a mixed blessing. All kinds of people will want a piece of you. You will be dangerously flattered. Your competitive juices and testosterone fueled macho desires will be stimulated. Envy and greed will creep in. The need for size and status. Don’t stay in a environment where there are always people doing better than you.

Envy: a typical investor sees their friend make a killing off tech stocks that are crazy overvalued, and they plunge in right before the bubble bursts.

“Who is strong? He who masters his passions.”

One of the best decisions Guy Spier made: he surrounded himself with a “mastermind” group of investors who would become life-long friends and trusted sounding boards. It’s difficult, if not impossible, to become successful on your own.

Others can help us uncover our own blind spots. So often, we focus our analytical efforts in the wrong direction and miss something vital.

When management is either unable or unwilling to answer probing questions, that’s not a good sign. If they seem offended: run for the hills.