Read on Twitter
What does it take to become a great investor?
Former hedge fund manager Mark Sellers gave this speech to a class of Harvard MBAs on why most people, including them, have almost no chance of compounding money at 20% or 25% over their careers.
https://moiglobal.com/wp-content/uploads/mark-sellers_you-want-to-be-the-next-warren-buffett.pdf
[THREAD]:
Former hedge fund manager Mark Sellers gave this speech to a class of Harvard MBAs on why most people, including them, have almost no chance of compounding money at 20% or 25% over their careers.
https://moiglobal.com/wp-content/uploads/mark-sellers_you-want-to-be-the-next-warren-buffett.pdf
[THREAD]:
He believes that it doesn’t matter what school you went to, how many books you’ve read, or even how many years of experience you have
These are things a lot of people have and can increase your chances of success, but you can’t buy or study your way to becoming a great investor
These are things a lot of people have and can increase your chances of success, but you can’t buy or study your way to becoming a great investor
So, what does it take to really stand out from the millions of other market participants?
Just like a company, the ‘moats’ for investors are structural. They are psychological and hard-wired into your brain and things that can’t easily be learned.
He lists 7 of these traits:
Just like a company, the ‘moats’ for investors are structural. They are psychological and hard-wired into your brain and things that can’t easily be learned.
He lists 7 of these traits:
1. Buying while others are panicking and selling while others are euphoric
Sounds simple to do but in practice, it’s hard to buy when it seems guaranteed you’ll lose money just as it’s hard to sell when your stocks continue to climb, especially when you risk falling behind peers
Sounds simple to do but in practice, it’s hard to buy when it seems guaranteed you’ll lose money just as it’s hard to sell when your stocks continue to climb, especially when you risk falling behind peers
2. Obsessive about playing the game and wanting to win
It’s one thing to enjoy investing, it’s another to live and breathe stocks. Sometimes it gets to the point where it interferes with personal relationships as their head is always in the clouds, thinking about their portfolio
It’s one thing to enjoy investing, it’s another to live and breathe stocks. Sometimes it gets to the point where it interferes with personal relationships as their head is always in the clouds, thinking about their portfolio
3. Willingness to learn from past mistakes.
Everyone makes mistakes but what sets some investors apart is their intense desire to recognize, analyze, and learn from their own mistakes rather than simply repressing them. Experience helps by giving you more learning opportunities
Everyone makes mistakes but what sets some investors apart is their intense desire to recognize, analyze, and learn from their own mistakes rather than simply repressing them. Experience helps by giving you more learning opportunities
4. An inherent sense of risk based on common sense
Sellers gives the example here of Long-Term Capital Management which had a team of 60 to 70 PhDs with sophisticated risk models that failed to realize they were overleveraged and collapsed when the market turned against them.
Sellers gives the example here of Long-Term Capital Management which had a team of 60 to 70 PhDs with sophisticated risk models that failed to realize they were overleveraged and collapsed when the market turned against them.
5. Confidence in their convictions and sticking by them even when facing criticism
It’s easy to be bullish on a stock that’s in an uptrend. It’s much harder to be contrarian AND be right. Remember last fall when SaaS valuations collapsed while the market continued to test ATHs?
It’s easy to be bullish on a stock that’s in an uptrend. It’s much harder to be contrarian AND be right. Remember last fall when SaaS valuations collapsed while the market continued to test ATHs?
6. Keep both sides of their brain working
Quantitative and qualitative are both equally important. It pays to both be good at crunching numbers as well as keeping the big picture in perspective and recognize how intangible factors like mgmt can influence different outcomes
Quantitative and qualitative are both equally important. It pays to both be good at crunching numbers as well as keeping the big picture in perspective and recognize how intangible factors like mgmt can influence different outcomes
7. Keeping your investment philosophy consistent through volatility
Sellers argues that few investors can handle the volatility required for high returns. Especially as the amount you have invested grows, it’s difficult to do nothing, let alone average down, in a market crash
Sellers argues that few investors can handle the volatility required for high returns. Especially as the amount you have invested grows, it’s difficult to do nothing, let alone average down, in a market crash
Financial education, reading, and investing experience are all important but they’re table stakes and can be copied by anyone
There’s a reason why the vast majority of investors fail to outperform the market over the long run
The key starts with changing your mindset
There’s a reason why the vast majority of investors fail to outperform the market over the long run
The key starts with changing your mindset
