As a novice investor – heck, even as a professional – it is always helpful to take wisdom from some of the legendary investors.
Listening, reading, and learning, however, are very different from copying.
CLSA’s Damian Kestel’s weekly “Bits and Pieces” newsletter Friday included a massive collection of quotes, stories, and insights from some of the best investors of all time.
One particular quote from Michael Burry, the head of Scion Capital and the hero of Michael Lewis’ book (which has since been made into a movie) “The Big Short,” caught our eye.
Burry emphasized that young investors should study up on their predecessors, but he reminds them it’s a fool’s errand to sink into past thinking too much. He also included the example of Warren Buffett, arguably the most successful investor, to prove his point.
Here’s Burry (emphasis ours):
“If you are going to be a great investor, you have to fit the style to who you are. At one point I recognized that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham, but rather set out on his own path, and ran money his way, by his own rules … I also immediately internalized the idea that no school could teach someone how to be a great investor. If it were true, it’d be the most popular school in the world, with an impossibly high tuition. So it must not be true.”
Burry’s idea here is that you can learn as much as possible from the luminaries in the field of investing (and pretty much any other field, too), but at some point, in order to truly succeed, you have to come up with your own ideas.
For instance, Burry is a value investor, much like Buffett, but with a different approach. Whereas Buffett finds undervalued companies with strong attributes and remains in the position for long periods of times, even decades, Burry takes a slightly different tack.
“I try to buy shares of unpopular companies when they look like road kill, and sell them when they’ve been polished up a bit,” Burry was quoted as saying in the CLSA note.
Theoretically, Burry, Buffett, and even Graham are of much the same mindset when they invest, but they take different angles – and that’s the best way to do it. You can glean as much information as possible from the generation before and take it your own way.
Even if you’re not a professional investor, it pays to have your own set of rules – willingness to take on risk, evaluation of companies, and so on – to help build a portfolio.
You’ll never be the next Buffett or Burry, and that’s probably for the best.