Generally, I do not post much about my wider readings because
A lot of the content probably does not make for an interesting article; or
There are enough Blinkist-style in the world to cover content better than me
However, I would say the 8-month old 2.5hr interview with Guy Spiers of the Aquamarine fund is worth mentioning
Concept of cloning
In this interview, he addresses cloning in markets and how it can/cannot work. My interpretation is that you can clone, however, overlaying your own research is vital. For example
A lot of the returns you achieve are due to weighting, so whilst you could have bought APPL at the same time as Buffett but if it was only 1% of your portfolio then your results would have been inferior
There are plenty of great companies which Buffett/Munger/others do not own material stakes (e.g. Walmart, Microsoft, Google, Amazon, Nike, Ferrari)
Even the greats get it wrong (e.g. Munger’s investment in Alibaba may prove correct however he has experienced large drawdowns)
So really, the concept of cloning is innate in human nature and in many regards, it is a starting point for investing but it does not preclude you from doing your own research
In short – you should not be ignorant of what the super investors own. If you do your own research honestly and properly and choose to own something different from others; there is no harm in that.
Remember the bias of your source of information
Guy also addresses how motivations/biases drive how people communicate. Not all biases are bad (e.g. you may be sharing an analysis of what you are investing in to get aligned co-investors) but you should know a bias exists. He cites the following biases
Industry experts: Whilst industry experts are useful, he highlights that to be a good investor rarely requires truly deep sector knowledge (e.g. a cloud technician may have overcomplicated the simple choice of investing in AWS)
Investment strategists: these sell-side analysts, generally are encouraged to explain macro factors which no one understands (e.g. implication of COVID mutations)
Doom or Bloom: Scaring/exiting readers & offering a “solution” is a great way to maintain emotions with your readers and keep subscribers/ad income
Even this blog has an inbuilt bias such as a) I will try to focus on companies that appeal to me or are not widely covered and b) I have the ambition of raising a longer-term investment fund so I want to create a track record to enhance this. This means I have a bias to create a volume of content and focus on investment concepts. These are not necessarily BAD biases but they are worth understanding
Create some friction in your bad habits
This was a minor point but one I found interesting – because we all have habits and life will always have ways of airing them. He highlighted the need to create friction whereby it is slightly harder for you to undertake your bad habits. For example
In his office, he put two chairs so he could remove himself from Bloomberg
Deleting FB/IG app from your phone to allow use solely on desktop/browser
Writing a short memo to fully justify a strategic trade before exercising it
Examples of how people curate their image
Guy gives the example of the biographies of Gandhi and Mandela/Jack Ma whereby
Gandhi admitted to all his shortcomings in life (dalliances with harlots, eating meat etc); whereas
the latter biographies omitted or changed true facts about their life (e.g. truth about Ant Financial in Jack Ma’s book or various parts of the Mandela bio)
He says currently, people can do a lot to control their image as leaders or investors so if someone appears to be completely devoid of shortcomings…. chances are they are omitting some facts
Know how to harness your own shortcoming
Interestingly he came to this section from the perspective of Berlin having the Holocaust memorial in a prime location which is a powerful way of reminding people of their shortcomings as a nation
One key message here was that whilst you have certain shortfalls (e.g. greed, envy) these are not to be ashamed of. Buffett famously said – “I am long term greedy”, but it is better to acknowledge these shortcomings than be blind to them
Overall - this is worth a listen
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