Been on buyside for ~15 years and have a few observations. I’ve made some of these mistakes—laying them out helps me improve and evolve. First observation is that few investors read actual filings. Always stunned by this given how rich data in filings can be, esp. over time. /1

Few investors lay out financials on their own beyond few years and instead rely on sellside models. Laying out financials yourself going back 10-20 years if possible and reading MD&A takes time but process forces you to understand businesses at granular level through cycles. /2

Best financial models are often relatively simple but underpinned by extremely deep understanding of a business, its industry, and the competitive landscape. Overly detailed models can give a false sense of comfort (guilty as charged here in the past, have greatly simplified). /3

People often buy a company based on story they recently heard—reading, talking to another investor, or listening to CNBC. Story inevitably changes, and person who bought barely knows the company and therefore has little conviction. Often leads to selling at the worst times. /4

Being a PM and being an analyst are both difficult. Best PMs understand each business at granular level but can also summarize each thesis in 1-2 sentences and act confidently. Best analysts dig deep and trust their analysis but are open to new information and communicate it. /5

Investors are often terrible managers of their own invesment firms. Many of the most successful investment managers run small teams with strong and unified culture. Incentives are thoughtfully distributed (rare). Dysfunctional investment firms often lead to bad results. /6

Professional investors rarely rely on first principles: business quality, industry structure, assessing historical and prospective ROIC, understanding margins, etc. Instead rely on shorthand like px momentum/charts (!!!), P/E, and near-term narratives pumped by sellside/media. /7

Many investment firms don’t have a process. Process they tout to consultants/allocators is often a story manager thinks clients want to hear. Best way to figure out actual process is to meet each PM/analyst separately and ask about 2-3 of the same investments (good and bad). /8.

Best firms have an actual process adhered to through thick and thin. Each investor knows the process and believes it in his/her bones. And incentives are structured such that, regardless of short-term outcome, investment professional is rewarded for adhering to the process. /9

Investors run their personal accounts very differently from how they run money for clients. In their personal accounts, investors concentrate bets, focus on business quality, and are patient. For clients, investors overly diversify, focus on the short-term, and index-hug. /10