[Value Investing for Right Brain Dominant People]

FYI-The whole left brain right brain thing is a popular myth, although seemingly embedded in popular culture.

 

As a general rule, you really should love what you are doing, so if

[*]you do not like the reading, once you know and understand what you are reading, i.e. the 10K's, etc. 

[*]your temperament is not suited to investing

then may be value investing is not the "career" for you.  (Don't you find reading the annual reports of businesses you know about interesting?  For whatever reason, I suspect many on this board do actually like this sort of thing.)

 

That said you may have a career in the business, but not as value investor.

 

Not necessarily.  One merely has to be able to identify the very best value investors who don't charge high fees and let them do the investing.  :)

 

I think you proved his point, good at business.  Set up a fund of funds, find those managers, skim an extra 2% off of AUM and hit the links.

 

The very best available value investors will charge no fees, accept modest compensation, and run their own stock companies that are not subject to redemptions.  They will have excellent, long term records, treat others as they would like to be treated and have a large percentage of their wealth invested in the enterprise. 

 

 

So are you suggesting that Bruce Berkowitz, Bill Ackman, etc. are morally wrong for raking in such high fees for doing their job? Is this what some of you mean when you say you can't have a career as a "value investor"?

[Value Investing for Right Brain Dominant People]

Interesting topic and replies, thank you.

 

Mephistopheles, I think you might like this speech: http://www.manualofideas.com/files/sellers.pdf I recently read it and your topic reminded me of it. I believe there is a lot of truth to it. Most things you can learn, but you either have the correct mental framework or you don't. Most people don't and will always fall in the same traps. He also says something about 'working with both sides of your brain'. You'll need characteristics of both sides to come out on top. Little logic and reasoning and a lot of intuitivity won't cut it and vice versa. Not an easy thing to do I'm sure!

 

Thanks for sharing. Yea I read this article recently and it makes a lot of sense. Just, I have to work on enjoying my left brain.

 

I know I have all of the temperament traits that he talks about in the article. So I think it's a matter of sitting down and being able to work through the calculations for me.

[Value Investing for Right Brain Dominant People]

Every PM will disagree, but value-investing as a career makes zero sense. Basic risk diversification - have multiple careers, but don’t mix the two together. Or don’t P*ss in the pond you drink from.

 

 

Why do you say so?

[Value Investing for Right Brain Dominant People]

Are you wondering if investing will be a good career fit or if value investing in and of itself is a good fit?

 

As for right/left brain I am by far a more right brained person.  In all those psychological fit tests I'm always a big picture thinker, hates details which is actually mostly true.  I seem to do alright investing, I'm mindful of the details but I don't get stuck in them.  When I was in college I debated on majors between music, psychology, sociology and systems analysis.  I talked to some professors in the sociology and psychology departments and they said take the degree that makes money, so I majored in systems analysis with a minor in sociology.  I'd say I use a lot more of what I learned in sociology day to day, the degree made me think differently about things which is very useful. 

 

I think in the end you need to find an investment style that fits you.  Sounds like you enjoy event driven investments, dig deep into those and see how things turn out.  I'm with you, I'd go crazy reading some of the bigger 10-Ks.  There's a thread about some BAC warrants that requires digging through some crazy prospectus.  Good luck to those investors I hope they are rewarded but I'll take a pass on that one.  I'd start out, read 10-15 pages, start to daydream and miss some important detail.  I know I have this flaw so I can work with it.  I've also created an investment process for myself that compensates for this and reduces the amount of time I spend reading through annual reports for companies I never end up purchasing.

 

I like small caps, they're easy to understand, easy to read the reports, and easy to think about the business aspects of them.  I'll really buy anything that's attractive and relatively simple.  Maybe someday I'll be forced to invest in complex things, but so far the simple investments have worked out well.  I try to buy companies with a margin of safety and positive cash flow.

 

Of course this is all my opinion and what do I know, I'm just some dude who writes about investing on the internet.  If you're looking for career advice on Wall Street I have none.  I'd say find a job that is somewhat enjoyable (afterall it's a job, not fun) and will provide for your family and doesn't require 100% of your waking hours.  If you're thinking about a career a lot of people can tell you what to expect on this board.

 

Thanks for your reply. I'm glad to hear that I'm not the only one who has trouble following detail. I actually used to work on Wall Street, in equity research, but I hated it the work so much that I quit. But it wasn't until after that I discovered the extent of value investing, and so I am trying to figure out whether it is right for me.

 

Btw, I read your blog once in while, but I'll be sure to check it more often now that I know that we think similarly.

[Value Investing for Right Brain Dominant People]

I decided to make this thread in order to get opinions on this topic from fellow value investors. I'm a relatively new investor, and I consider myself right brain dominant. My questions are as follows: is it possible for me to have a successful and enjoyable career in value investing? Are there others here who consider themselves right brain dominant? What about famous value investors, such as Buffett, Munger, Berkowitz, Klarman, etc? How would you describe their left vs. right brain dominance?

 

I've researched a little on this topic, but I think that some of the common perceptions on this issue are misleading. One idea is that right brained people tend to be more emotional, and therefore cannot be successful investors, as they will succumb to fear and greed too easily. I disagree with this notion. I sincerely believe that my temperament is a major advantage for me as an investor. I have taken advantage of severe equity mispricings over the last few years, by buying when the rest of the world is fearful. For example, I've made significant money by buying Wells Fargo in March 2009, BP in June 2010, and more recently - BAC late last year. I've trained myself well to be fearful when others are greedy, and greedy when others are fearful.

 

But that's where my advantage ends, at least for now. Although I read 10-k's and 10-q's as much as I can, I have a hard time staying focused and forming an opinion. I generally get lost in the dry information that is presented in these filings. I also hate net-nets because of the pure quantitative analysis required. I've realized that I like situations in which there are a lot of headlines and emotions involved, even if the emotions aren't my own. Again, I site BP and BAC as those situations. They just seem more colorful to me, and reading about them in newspapers and magazines helps me form a clear picture in my head, whereas I get lost combing through annual reports.

 

I also enjoy the creativity involved in special situations. How many times has there been an investment opportunity as the result of a major oil spill? I liked the BP situation because it wasn't a part of my routine to study the long term consequence of oil spills, the Gulf ecosystem, and the Clean Water Act. Most of this I was able to understand by reading dozens of newspaper and magazine articles, as well as analysis by Whitney Tilson. It was something unique and unexpected, and so it appealed to me.

 

I've also considered the possibility that I don't enjoy the routine reading of annual reports simply because I'm new, and don't understand them well enough. I understand that there is a major learning curve required there. Contrarily, I love reading the writings of value investors including Buffett, Munger, Watsa, Klarman, and more. So you see why I can't decide whether this career is right for me?

 

I hope I haven't lost anyone here. Thanks for reading. I hope this thread generates discussion.

[Best Newspapers/Magazines for a value investor]

From what I read, the general sentiment on this thread is that WSJ is not extremely important and reading a lot of newspapers/magazines is not necessary to be a successful investor. But then what do you guys think of Buffett and Munger's opinion that newspapers are essential, and that they each read six daily in addition to the magazines and various industry publications that Buffett reads (Oil & Gas Journal, Insurance publications, etc.)?

 

And how does reading all of that compare to reading your 10-k/10-q/8-k/conference calls? What would be the ideal way to allocate our time as investors, and why do Buffett/Munger emphasize on newspapers? (Of course, they read a ton of annual reports too.)

 

I would love to get opinions on this, as I am a fairly new investor, and often get lost with the plethora of reading material that is available.  :)