One of the things I’ve discussed a lot on this blog is the investment process. Another thing I’ve discussed is some ideas I have on how to achieve significant results. As I’ve mentioned before, one of my favorite quotes is from John Templeton “If you want to have a better performance than the crowd, you must do things differently from the crowd.”
I think that although the concept of being a contrarian is very familiar with most investors, it is often brushed over and not really studied. Most investors understand the logic and value of being a contrarian, but when it comes to their actions, they very often mimic the majority of investors. This is human behavior and it is very difficult to go against.
One thing I’ve mentioned before is that it has been very beneficial to me to make a short list of the very best investors who have achieved huge returns over time (20-30% or more over a long period of time). The list includes my top 4 investors: Buffett, Graham, Schloss, and Greenblatt, all who achieved 20%-40% returns over 20 years or more. But it also includes many smaller investors who are not household names.
One such investor is James East of Mercertus Capital. James has a fund that has achieved around 25% annual returns for the past 10 years. The video below is a short 10 minute clip of him discussing his ideas on investment philosophy and process. Notice how simple his ideas are. The key is how he implements those ideas.
It is very important to study the investment processes and philosophies of these investors. If you do that, you’ll notice some unique aspects of their processes. Most of the time, I can trace these results to two main categories. Concentration of investments on just a few situations that are determined to be very attractive on the basis of valuation and/or quality, or Diversification on a number of very cheap stocks that are often hated among the majority of investors, including most value investors.
I’ll post a list of things that many of these top notch investors have in common in the near future. For now, here is the video of James East talking about his investing ideas.