Value Investing: Luck vs Skill Part 2

Posted on 14 CommentsPosted in Investment Philosophy, Superinvestors, Think Differently, Walter Schloss, Warren Buffett

Earlier this week I responded to a comment that centered around the role of luck in long term outperformance. Feel free to read my response to the comment in Part 1 of this post where I list the #1 main reason why most people don’t replicate the results of Walter Schloss. It’s a very simple reason demonstrated by the results of Schloss himself. Today, I’ll discuss luck in Part 2 of this post. Does Luck Play a Role in Great […]

Value Investing: Luck vs Skill Part 1

Posted on 11 CommentsPosted in General Thoughts, Think Differently, Warren Buffett

I received this interesting comment from a reader and thought I might write a post or two on this topic: “…There is one very important writer/thinker you do not mention in your site but whom you might want to pay attention to–the Nobel prize winner Daniel Kahneman. After reading him, you will recognize and appreciate the role of luck, the unpredictability of stocks/markets, and that very few people, if any, can beat the market over the long term. Sure you […]

How Warren Buffett Thinks About Risk

Posted on 27 CommentsPosted in Books, How to Improve Results, Investment Philosophy, Superinvestors, Warren Buffett

“Rule #1: Don’t Lose Money….” The best book I’ve ever read on Buffett is Alice Schroeder’s Snowball. I remember picking up my copy about four years ago and literally not being able to put it down. I read it for hours at a time, all the while marking pages and circling things… and I often reference certain parts of the book when thinking about investments. The book goes much deeper into Buffett’s thought process than most of the other Buffett […]

How I Filter Investment Ideas

Posted on 4 CommentsPosted in How to Improve Results

My investment process can be divided into two main categories: Idea generation Investment research and due diligence These are the two areas that I spend the vast majority of my investment time (portfolio management and execution is a distant third). There is a lot of information in the value investing public domain on how to determine the quality or degree of undervaluation of various securities. There isn’t as much information on how to think about the actual search process. In […]

An Ordinary Guy Who Became a Billionaire

Posted on 1 CommentPosted in Case Studies, Investment Philosophy, Superinvestors, Warren Buffett

Last week, I came across this video of Stewart Horejsi, one of a small, but growing list of billionaires who have made their fortune solely because of their investment in Berkshire Hathaway. This was a really interesting story about a guy who began buying Berkshire stock in the 1980’s at around $300 per share. There are many other stories of people who became rich by investing with Buffett. Compounding at well over 20% per year for decades will do that […]

Thinking Differently: The Most Important Contrarian Behavior

Posted on 9 CommentsPosted in Case Studies, General Thoughts, How to Improve Results, Investment Philosophy, Superinvestors, Think Differently, Warren Buffett

“I skate to where the puck is going to be, not where it has been.”  – Wayne Gretzky One of the most important skills that you can develop as an investor is the ability to think differently. This is a broad topic with many interpretations. I often talk about thinking differently here at BHI. When it comes to general philosophy or “investment theory” (as opposed to thinking about individual stock investments), I spend more time thinking about this topic than […]