Great investing cant be taught. Its in the DNA!

[premfan]

Great I have your attention with the subject line.  It seems to me that great investors or very good ones are wired that way. Its in the DNA and cant be taught. Many variables like parenting and interests before the age of 13-14 matter. For some context i'm a pretty shitty investor ( average returns with low capital base) that's why  I don't give advice and i'm not  active on the forum while being a member since feb 2009.  I'm a good operator though I run two hotels and can talk about executing all day. That said, this is a investing forum.  In 7 years I might come back and brand myself as a great investor. That said, i'm convinced that investing is intuition, context, and DNA based. Lets be intellectually  honest if you have been at this for 5-7 years and you are not winning. You can still learn,model, and read that's fine. But, 97 percent chance you are not destined to be a great investor. Adjusting and shifting to find your strengths is absolutely key to everything and especially in business.

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

 

 

 

[scorpioncapital]

No I disagree. You can accelerate your learning of this game, usually it costs alot. ..The more you pay, the sooner you'll get there. But you have to combine it with the right teaching material. Despite what people say about Ben Graham, the best teacher and reading material that has accelerated my learning 1000% is Philip Fischer's 2 books, Common Stocks & Uncommon Profits & Paths to Wealth through Common Stocks. But here's the rub - I read the books once 15 years ago and made almost zero practical impression, I read them again just recently and now everything makes sense in a way it never did. So the knowledge has to get into your DNA, and right habits too.

 

 

 

 

[premfan]

I don't like responding to my own thread before engagement. I'm stuck in a blizzard and about to go shoveling snow so I can eat. That said,  we know margin of safety is the three most important words in investing. The three most important words in  business execution is "TVA" which is The Value Add.

[Jurgis]

It's a mix.

 

Even great investors were not great investors when they started. They all needed training.

 

But, yeah, like no amount of training would make me into Richard Feynman, Lee Sedol or Mozart, no amount of training will make into Buffett.

 

Investing is deceptive though. Everybody knows from experiments that intermittent positive feedback is what hooks you onto some behavior. Investing is like that. It's very easy to keep coming back and thinking you're great while you're not.

 

Anyway, not sure what's the goal of this thread is. :) Can you clarify?

[bbarberayr]

I think one major issue is people don't accurately track their results and think they are doing better than they are.  You need to measure!

 

Having said that, I started investing back in 2000.  I didn't really make my own picks back then and was working a full-time job, so would just copy picks from other successful investors.  But reading and applying logic to them was fairly easy to me and deciding which ones made sense, and I started outperforming the markets right away and have done so 13 of the 15 years.

 

I have read the standard books, but that only helped my approach.  So, I would tend to agree that there is some DNA/personality traits involved.

 

But the other comment I would make is you have to match your investment style to your personality.  Maybe you are a safety oreiented, deal hunter, so use the Ben Graham approach.  Or maybe you are great at identifying early trends, so use the Peter Lynch approach, or maybe you can identify great companies, so use the Fisher approach.

 

There is no one right way.  And if you have no real advantage, keep focused on your hotels and buy market ETF's and you'll do great.

[premfan]

It's a mix.

 

Even great investors were not great investors when they started. They all needed training.

 

But, yeah, like no amount of training would make me into Richard Feynman, Lee Sedol or Mozart, no amount of training will make into Buffett.

 

Investing is deceptive though. Everybody knows from experiments that intermittent positive feedback is what hooks you onto some behavior. Investing is like that. It's very easy to keep coming back and thinking you're great while you're not.

 

Anyway, not sure what's the goal of this thread is. :) Can you clarify?

 

Good point about feedback loops. Business there are daily positive or negative feedback. Investing is a different beast much longer term.  Goal of thread is the collective opinions of the investors here.

[premfan]

I think one major issue is people don't accurately track their results and think they are doing better than they are.  You need to measure!

 

Having said that, I started investing back in 2000.  I didn't really make my own picks back then and was working a full-time job, so would just copy picks from other successful investors.  But reading and applying logic to them was fairly easy to me and deciding which ones made sense, and I started outperforming the markets right away and have done so 13 of the 15 years.

 

I have read the standard books, but that only helped my approach.  So, I would tend to agree that there is some DNA/personality traits involved.

 

But the other comment I would make is you have to match your investment style to your personality.  Maybe you are a safety oreiented, deal hunter, so use the Ben Graham approach.  Or maybe you are great at identifying early trends, so use the Peter Lynch approach, or maybe you can identify great companies, so use the Fisher approach.

 

There is no one right way.  And if you have no real advantage, keep focused on your hotels and buy market ETF's and you'll do great.

 

Good points. The narrative i'm getting so far is its a mix of DNA/edge.  Small data set but majority stays mix. Majority usually is wrong. I still stick with DNA with context/intuition. To clarify i'm talking about very good to great investors. Which statistically I think is less than five percent of investors.

[bbarberayr]

I'm sure its the type of thing where you need the DNA, but also have to be willing to work hard to be a very good to great investor.

 

I'd compare it to things like top-level sports or games like chess, where you have to have the DNA and do the work to be at a top level.  If you are not athletically gifted, you will not become a top tier athlete no matter how hard you work.  Likely the same applied to investing, if you do not have the proper mental attitude, intelligence, self control, etc., you will not be a top tier performer.

 

You can work hard at either and become a good athlete or a good investor, but to get to the top levels, you need both.

 

 

[LC]

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

I've been at this for 4 years. On an overall basis I've outperformed over those four years. Do I think I'm a "winner"? Heck no. I'm convinced I will probably under-perform over my lifetime.

 

I am OK with that.

 

Let me repeat that: I am OK with underperforming. It is still possible to get rich despite underperforming.

 

I don't have a huge capital base where a 2% difference translates to millions of dollars. I concentrate on being good at my job and increasing my salary and title. If my stock picks (in my signature) underperform a bit, I am OK with that. I think they have more sustainable earnings than the S&P as a whole, but I am going into the "deal" assuming I could very well be wrong. I am OK with that. In fact, I think most of my "errors" have been due to reaching too hard trying desperately to outperform. Now I just try to find stable cash flows at a reasonable price (i.e. market multiple) and "get rich slowly".

[Parsad]

Great I have your attention with the subject line.  It seems to me that great investors or very good ones are wired that way. Its in the DNA and cant be taught. Many variables like parenting and interests before the age of 13-14 matter. For some context i'm a pretty shitty investor ( average returns with low capital base) that's why  I don't give advice and i'm not  active on the forum while being a member since feb 2009.  I'm a good operator though I run two hotels and can talk about executing all day. That said, this is a investing forum.  In 7 years I might come back and brand myself as a great investor. That said, i'm convinced that investing is intuition, context, and DNA based. Lets be intellectually  honest if you have been at this for 5-7 years and you are not winning. You can still learn,model, and read that's fine. But, 97 percent chance you are not destined to be a great investor. Adjusting and shifting to find your strengths is absolutely key to everything and especially in business.

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

 

You're partly right!  That's a very hard thing for people to accept...so you will get push back on this. 

 

You can have the right training and that's what Benjamin Graham, Buffett, et al are to investors, but:

 

- You cannot teach or train the right temperament

- Or how someone will react to a crisis

- You cannot teach patience

- You cannot teach someone to think independently if they aren't prone to that type of thinking...thus you get cloning practiced rampantly these days

- You cannot teach someone to manage risk, especially if they are prone to a gambling mentality or an overly conservative mentality

 

So alongside a firm, if not enlightened grasp, of how to apply an intelligent framework to evaluating securities, you need a number of other characteristics, including both emotional and intellectual traits.  That's hard to find!

 

The solace that all investors have though is that they can hone these skills and become better versions of themselves.  So while everyone may not be great, most can be good! 

 

Cheers!

[skanjete]

Great I have your attention with the subject line.  It seems to me that great investors or very good ones are wired that way. Its in the DNA and cant be taught. Many variables like parenting and interests before the age of 13-14 matter. For some context i'm a pretty shitty investor ( average returns with low capital base) that's why  I don't give advice and i'm not  active on the forum while being a member since feb 2009.  I'm a good operator though I run two hotels and can talk about executing all day. That said, this is a investing forum.  In 7 years I might come back and brand myself as a great investor. That said, i'm convinced that investing is intuition, context, and DNA based. Lets be intellectually  honest if you have been at this for 5-7 years and you are not winning. You can still learn,model, and read that's fine. But, 97 percent chance you are not destined to be a great investor. Adjusting and shifting to find your strengths is absolutely key to everything and especially in business.

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

 

You're partly right!  That's a very hard thing for people to accept...so you will get push back on this. 

 

You can have the right training and that's what Benjamin Graham, Buffett, et al are to investors, but:

 

- You cannot teach or train the right temperament

- Or how someone will react to a crisis

- You cannot teach patience

- You cannot teach someone to think independently if they aren't prone to that type of thinking...thus you get cloning practiced rampantly these days

- You cannot teach someone to manage risk, especially if they are prone to a gambling mentality or an overly conservative mentality

 

So alongside a firm, if not enlightened grasp, of how to apply an intelligent framework to evaluating securities, you need a number of other characteristics, including both emotional and intellectual traits.  That's hard to find!

 

The solace that all investors have though is that they can hone these skills and become better versions of themselves.  So while everyone may not be great, most can be good! 

 

Cheers!

 

And the main positive : you don't have to be a great investor to achieve a more than worthwhile result. A good investor too can get to a very, very rewarding result.

[giofranchi]

As far as I am concerned, it is straightforward enough:

1) I must produce more than I consume (how much more depends on the circumstances);

2) I have businesses that give me cash at the end of each month;

3) I use part of that cash to consume and the rest to increase my ability to produce;

4) If I cannot reinvest the cash I don't use for consumption in my own businesses, because they don’t need it, these are the choices I have:

a) Invest it in other businesses through the stock market;

b) Invest it in some indexes;

5) I usually (but not always) choose a) because I like to follow businesses, because it helps me to keep learning about business, and because I find the process very useful for managing my own businesses better and better;

6) I finally take results as they come (overall they have been satisfactory till now).

 

Cheers,

 

Gio

[bbarberayr]

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

I've been at this for 4 years. On an overall basis I've outperformed over those four years. Do I think I'm a "winner"? Heck no. I'm convinced I will probably under-perform over my lifetime.

 

I am OK with that.

 

Let me repeat that: I am OK with underperforming. It is still possible to get rich despite underperforming.

 

I don't have a huge capital base where a 2% difference translates to millions of dollars. I concentrate on being good at my job and increasing my salary and title. If my stock picks (in my signature) underperform a bit, I am OK with that. I think they have more sustainable earnings than the S&P as a whole, but I am going into the "deal" assuming I could very well be wrong. I am OK with that. In fact, I think most of my "errors" have been due to reaching too hard trying desperately to outperform. Now I just try to find stable cash flows at a reasonable price (i.e. market multiple) and "get rich slowly".

 

A couple of points.

 

1. 2% a year does make a signifcant difference over time - 6% compounded over 30 years = 474% profit; 8% compounded over 30 year = 900% profit

2. The fact that you are willing to underperform and are looking longer term increases the odds you will outperform over time - it's the short term thinking and not handling market volatility properly that really hurts returns

[Jurgis]

 

And the main positive : you don't have to be a great investor to achieve a more than worthwhile result. A good investor too can get to a very, very rewarding result.

 

Not really. You are assuming that good investors outperform the baseline which is index. My guess is that they don't. A lot of the "best" did not outperform index for the last 5-10 years. (I guess we could do a poll here, though results would be skewed)

[frommi]

Not really. You are assuming that good investors outperform the baseline which is index. My guess is that they don't. A lot of the "best" did not outperform index for the last 5-10 years. (I guess we could do a poll here, though results would be skewed)

 

And you assume that someone that indexes is able to hold even if the index sucks and everybody else is outperforming like 2000-2002. Indexing sounds easy on paper, but in real life with emotions and all the macro news involved its not that easy anymore.

For me successful investing is all about finding YOUR way to invest, a way that you fully embrace and can stick to through thick and thin.

[premfan]

Great I have your attention with the subject line.  It seems to me that great investors or very good ones are wired that way. Its in the DNA and cant be taught. Many variables like parenting and interests before the age of 13-14 matter. For some context i'm a pretty shitty investor ( average returns with low capital base) that's why  I don't give advice and i'm not  active on the forum while being a member since feb 2009.  I'm a good operator though I run two hotels and can talk about executing all day. That said, this is a investing forum.  In 7 years I might come back and brand myself as a great investor. That said, i'm convinced that investing is intuition, context, and DNA based. Lets be intellectually  honest if you have been at this for 5-7 years and you are not winning. You can still learn,model, and read that's fine. But, 97 percent chance you are not destined to be a great investor. Adjusting and shifting to find your strengths is absolutely key to everything and especially in business.

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

 

You're partly right!  That's a very hard thing for people to accept...so you will get push back on this. 

 

You can have the right training and that's what Benjamin Graham, Buffett, et al are to investors, but:

 

- You cannot teach or train the right temperament

- Or how someone will react to a crisis

- You cannot teach patience

- You cannot teach someone to think independently if they aren't prone to that type of thinking...thus you get cloning practiced rampantly these days

- You cannot teach someone to manage risk, especially if they are prone to a gambling mentality or an overly conservative mentality

 

So alongside a firm, if not enlightened grasp, of how to apply an intelligent framework to evaluating securities, you need a number of other characteristics, including both emotional and intellectual traits.  That's hard to find!

 

The solace that all investors have though is that they can hone these skills and become better versions of themselves.  So while everyone may not be great, most can be good! 

 

Cheers!

 

Its great getting feedback from the caliber of businessman and investor you are. ( yes i'm putting you up on a pedestal)

[premfan]

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

I've been at this for 4 years. On an overall basis I've outperformed over those four years. Do I think I'm a "winner"? Heck no. I'm convinced I will probably under-perform over my lifetime.

 

I am OK with that.

 

Let me repeat that: I am OK with underperforming. It is still possible to get rich despite underperforming.

 

I don't have a huge capital base where a 2% difference translates to millions of dollars. I concentrate on being good at my job and increasing my salary and title. If my stock picks (in my signature) underperform a bit, I am OK with that. I think they have more sustainable earnings than the S&P as a whole, but I am going into the "deal" assuming I could very well be wrong. I am OK with that. In fact, I think most of my "errors" have been due to reaching too hard trying desperately to outperform. Now I just try to find stable cash flows at a reasonable price (i.e. market multiple) and "get rich slowly".

 

That's cool you have accepted this. You will get rich with acceptance of strengths( good at job bring value to firm etc). Investing has a long feedback loop. That said, 4 years is to early and you still  have time to shift into a good to great investor. Once you are in the game for like 8 years you can know if investing is a strength and that you can execute. John Maynard Keynes was a shitty investor that turned into a great one.  Anomalies exist.

[premfan]

I'm sure its the type of thing where you need the DNA, but also have to be willing to work hard to be a very good to great investor.

 

I'd compare it to things like top-level sports or games like chess, where you have to have the DNA and do the work to be at a top level.  If you are not athletically gifted, you will not become a top tier athlete no matter how hard you work.  Likely the same applied to investing, if you do not have the proper mental attitude, intelligence, self control, etc., you will not be a top tier performer.

 

You can work hard at either and become a good athlete or a good investor, but to get to the top levels, you need both.

 

100 percent agree. Hard work + DNA.

[premfan]

As far as I am concerned, it is straightforward enough:

1) I must produce more than I consume (how much more depends on the circumstances);

2) I have businesses that give me cash at the end of each month;

3) I use part of that cash to consume and the rest to increase my ability to produce;

4) If I cannot reinvest the cash I don't use for consumption in my own businesses, because they don’t need it, these are the choices I have:

a) Invest it in other businesses through the stock market;

b) Invest it in some indexes;

5) I usually (but not always) choose a) because I like to follow businesses, because it helps me to keep learning about business, and because I find the process very useful for managing my own businesses better and better;

6) I finally take results as they come (overall they have been satisfactory till now).

 

Cheers,

 

Gio

 

Yes you are a good operator maybe even great one. Most are not willing to execute and deal with the daily feedback loop. Notice I said willing.  Good operating and executing is mainly willingness and adjusting. The feedback loops are so short its easier to succeed if there is a willingness to do the daily work.  You have a great formula if you can execute passive investing. That said, you would be in the top 1 percent if you pull off being a good operator and a very good passive investor. Going all in on your strengths is absolute key to success. So after 8 years or so you will have enough data to go all in on your strengths.

[Jurgis]

Not really. You are assuming that good investors outperform the baseline which is index. My guess is that they don't. A lot of the "best" did not outperform index for the last 5-10 years. (I guess we could do a poll here, though results would be skewed)

 

And you assume that someone that indexes is able to hold even if the index sucks and everybody else is outperforming like 2000-2002. Indexing sounds easy on paper, but in real life with emotions and all the macro news involved its not that easy anymore.

 

Maybe. I can say from experience that holding index funds in accounts where I cannot buy stocks is trivial for me. YMMV and all that.

[giofranchi]

That said, you would be in the top 1 percent if you pull off being a good operator and a very good passive investor.

 

At the risk of sounding too predictable, I really don’t care being in the top 1 percent… I work with my own capital only, I don’t depend on anyone else, I love what I do, and I know I’ll be able to take care of my loved ones and at the same time to increase our wealth over time (though of course I have no clue about the rate I’ll increase it). That’s enough for me. And I am saying this in all earnestness!

 

Cheers,

 

Gio

 

[alwaysinvert]

Great I have your attention with the subject line.  It seems to me that great investors or very good ones are wired that way. Its in the DNA and cant be taught. Many variables like parenting and interests before the age of 13-14 matter. For some context i'm a pretty shitty investor ( average returns with low capital base) that's why  I don't give advice and i'm not  active on the forum while being a member since feb 2009.  I'm a good operator though I run two hotels and can talk about executing all day. That said, this is a investing forum.  In 7 years I might come back and brand myself as a great investor. That said, i'm convinced that investing is intuition, context, and DNA based. Lets be intellectually  honest if you have been at this for 5-7 years and you are not winning. You can still learn,model, and read that's fine. But, 97 percent chance you are not destined to be a great investor. Adjusting and shifting to find your strengths is absolutely key to everything and especially in business.

 

Listening to investors that are winning is why I still check this forum.  People like eric, oddball, and some others.  My question is that investors that have been playing this game say for two business cycles 8 years or so and are not winning. Are you still optimist that a shift will occur to make you very good to great or do you need a dose of intellectual honesty?

 

You're partly right!  That's a very hard thing for people to accept...so you will get push back on this. 

 

You can have the right training and that's what Benjamin Graham, Buffett, et al are to investors, but:

 

- You cannot teach or train the right temperament

- Or how someone will react to a crisis

- You cannot teach patience

- You cannot teach someone to think independently if they aren't prone to that type of thinking...thus you get cloning practiced rampantly these days

- You cannot teach someone to manage risk, especially if they are prone to a gambling mentality or an overly conservative mentality

 

So alongside a firm, if not enlightened grasp, of how to apply an intelligent framework to evaluating securities, you need a number of other characteristics, including both emotional and intellectual traits.  That's hard to find!

 

The solace that all investors have though is that they can hone these skills and become better versions of themselves.  So while everyone may not be great, most can be good! 

 

Cheers!

 

All those points are key in my experience too. Very well put.

 

I'd add that work ethic isn't really teachable either, it has to come from within. And most people seem to overestimate how much they work, or at least feel productive from doing really low-return tasks. 

[Jurgis]

- You cannot teach or train the right temperament

- Or how someone will react to a crisis

- You cannot teach patience

- You cannot teach someone to think independently if they aren't prone to that type of thinking...thus you get cloning practiced rampantly these days

- You cannot teach someone to manage risk, especially if they are prone to a gambling mentality or an overly conservative mentality

 

Let me disagree with some of these:

- There's a number of professions where people are taught how to react to a crisis. Police, firefighters, military, astronauts, etc. Yeah, results vary.

- Yes, you can teach patience.

 

The remaining ones are IMO also teachable somewhat, but I don't have good examples.

 

I agree that it's way harder to teach these things to someone not predisposed for them. Also they are not easy to teach and would usually take great teachers (or great teaching institution) and a bunch of time.

 

[TheAiGuy]

- You cannot teach or train the right temperament

- Or how someone will react to a crisis

- You cannot teach patience

- You cannot teach someone to think independently if they aren't prone to that type of thinking...thus you get cloning practiced rampantly these days

- You cannot teach someone to manage risk, especially if they are prone to a gambling mentality or an overly conservative mentality

 

Well, I think that question of whether these are inherent qualities necessary for a successful investor is to some degree moot. Largely, I get the sense that there is a lot of the blind leading the blind going on, which makes it difficult to tell.

 

When I look at the board, I see a lot of investors who do things like quote Buffet or make commodity price assumptions based on the recent past -- basically, it sounds like there are a lot of self taught investors here who are probably well meaning but most likely not very good posting in an effort to learn. Which suggests to me that a lot of posts are very low information and sort of terrible to learn from. Contrast this to, say, being an analyst for Julian Roberts in the 90's -- you would probably learn something with that type of mentor.

 

I would extrapolate from this more broadly and guess that most sources of information for investors are of low value and that most people they can learn from are of low skill. Buffet's letters (etc.) are good, but that's learning to do something difficult from impersonal, 3rd person writing that's often not germane to the task at hand. So, kind of like reading a guy describing how he build a car this one time and then trying to go build a different car with different parts on your own.

[TheAiGuy]

- You cannot teach or train the right temperament

- Or how someone will react to a crisis

- You cannot teach patience

- You cannot teach someone to think independently if they aren't prone to that type of thinking...thus you get cloning practiced rampantly these days

- You cannot teach someone to manage risk, especially if they are prone to a gambling mentality or an overly conservative mentality

 

Let me disagree with some of these:

- There's a number of professions where people are taught how to react to a crisis. Police, firefighters, military, astronauts, etc. Yeah, results vary.

- Yes, you can teach patience.

 

The remaining ones are IMO also teachable somewhat, but I don't have good examples.

 

I agree that it's way harder to teach these things to someone not predisposed for them. Also they are not easy to teach and would usually take great teachers (or great teaching institution) and a bunch of time.

+1