- My path to becoming a value investor is not linear. I tried many different fields before finally catching the value investment bugs.
- Beauty is something that is hard to describe, but when you see it, you know it. Passion is basically the same.
- I would like to find an area that I am most passionate about and really good at. I want to make sure that it is what I am still eager to do even at the age of 90. (long slope, heavy snow)
- Having caught the investing bugs, I found most other things no more than a laundry list of A, B, C and Ds.
- Nobody will pay me for this, but I still decided to travel around the globe to do investment research in stocks by myself. (allocating time into works that lead to a high ROIT and long-term personal development runway)
- Peter Lynch said, “if you look at ten companies you’ll find one that’s interesting. If you look at 20, you’ll find two; if you look at 100, you’ll find ten. The person that turns over the most rocks wins the game.” I’d like to be flexible and turn over many rocks. This, I believe, will be conducive to my business insights and investment decision making.
My path to becoming a value investor is not linear. I never demonstrated a strong interest in something like stock charts during my childhood, nor did I have a father or uncle who taught me the ropes of investing. In contrast, my family members knew next to nothing about investing, but once engaged in short-term speculation in the stock market. It was a total disaster. Therefore, the advice I received from them was that investing in stocks is just like gambling in a casino, the only difference is that when you lose in the stock market, you don’t even feel the pleasure of splurge as in casino.
However, thanks to my contrarian nature, I started to get curious about who the stock market winners were. In the search of the answer, I bought Ben Gratham’s Security Analysis and The Intelligent Investor, as well as several books about Warren Buffett at the age of 15. Unfortunately, because of the pressure from academic pursuits and discouragement from my family, I didn’t seriously consider investing as a career choice, and just put aside learning investing.
When I was 18 years old, I found that my primary areas of interest were mathematics, business & investment, languages and history. I am a generalist in nature, but I learned this lesson the hard way. I chose to major in Electrical Engineering, simply because I believed that it could combine my love for math and business (if I become a manager in a tech firm). I did pretty well in the first 18 months, good grades, awards, an opportunity to work at a great lab. There is, nevertheless, one thing I missed among the whole picture: engineering is not a suitable fit for my temperament, because it requires me to dedicate much of my energy to a narrow focus (and many technical details of course). However, I am more of a generalist: I prefer bigger picture to details; I am always curious about different subjects but not become an expert; I am more attentive to those unchanging principles than techniques subject to obsolescence. I came to realise that if I continued down the path and become an engineer, I would undoubtedly regret it when looking back at my life at the age of 60. I also realised that I had almost no chance to change my major, since I already missed the time. I got panicked.
I struggled to make some changes to my life. More precisely, many changes. Some are good; some are bad. I spared no effort to explore various disciplines and career paths beyond electrical engineering. I discover many areas of interest, but there was no single discipline or career path that I was wholeheartedly willing to commit to for the rest of my life. I tried several different internships, and each time it felt like eliminating an incorrect choice. I broke into LSE’s economics program, only to find that the academic world of economics often pursues precise but wrong answers rather than vague but correct ones. I am still interested in investing, but it is more of a pastime for me. I instructed myself about my business, sought for opportunities and accidentally quadrupled my money. At that time, my plan was to earn money in my spare time to support myself in pursuing my real passion.
All along, I’ve known that if something isn’t worth doing, it isn’t worth doing very well either. But where does that leave me with the most worthwhile endeavour? My yardstick is that it should be something that I am most passionate about and excel in, and I will continue doing it for many years. I decided to stop using trial-and-error, and instead learn from those who have achieved greatness throughout history. Among those great souls, I truly admire Charlie Munger, also a generalist, who has mastered the multidisciplinary thinking and making judgement. When I read Peter Lynch’s One Up On Wall Street, I was astonished. How could anybody else be so flexible, make so many investment decisions, and yet consistently outperform the market by an almost incredible margin? I delved further into the lives and works of other great value investors, and I found that their approach to work, life and ethics aligns perfectly with what I aspire to. I also desire to be richer, wiser, happier. Everything clicked.
François Rochon once said in an interview, “beauty is something that is hard to describe, but when you see it, you know it.” For me, value investing embodies this kind of beauty.When I caught the value investing bugs, most other things in life became no more than A, B, C, and D to me. I am very passionate about it, and I am willing to do it until the age of 90. I also believed that value investing is something I will excel at. (I hope this doesn’t come across as too arrogant) This is because:
1) I enjoy making decisions and have a penchant for rational thinking.
2) I always have a long-term mindset.
3) I possess the temperament required to be a value investor: I dare to be a contrarian, yet I am also willing to admit when I am wrong.
4) I have a strong curiosity and am a fast learner.
5) I can draw inspirations from various fields and disciplines.
My shortcomings might lie in the fact that I am not an especially patient person. However, if I have enough conviction in a thesis, I will persevere.
After LSE, I went to Harvard to have a MA in Ancient Near Eastern History, but I know I would choose value investing as my career. Surprisingly, contrary to others’ perceptions, studying history and philosophy helped me the most in my investment research, while economics helped the least.
Before 2022, I almost never considered going into the buy-side because I heard many people say that buy-side firms hire very few, and they are very selective about target schools. They often said that to get into the buy-side, you needed to go to a bulge bracket bank and work in investment banking or equity research. This is what I tried that was proven to be an error. In a way, they were right; this is indeed the common path to the buy-side.
“Don’t be trapped by dogma”, I remind myself. After deciding to pursue value investing, I asked myself, what is most important for a successful value investor? Business acumen, understanding what truly matters, foresight, and a long-term perspective may be more important than titles and big names. So, I ultimately decided to spend a year conducting my own value investment research in various countries worldwide. At the same time, I could reach out to value investors around the world. After all, value investing is something I’m willing to do even if no one pays me for it. Since I was well-prepared, I believed this was a high return on invested time (ROIT) opportunity for me.”
Most of my friends and family believe this is too risky, but my perception of risk differs from theirs. The risk I care most about is not whether I have income in the short term or whether it’s stable or not; instead, it’s whether my time and energy are focused on what’s most important for me in the long run. The kind of risk that they overlook is called opportunity cost. One of the biggest opportunity costs, is underinvestment in one self’s future.
Conducting investment research and making judgement accordingly, is exactly what I want to do for many years. Why don’t I just start it right now?