I’ve been reading through Money Masters of Our Time by John Train. I’m about halfway through the book, which covers 17 great investors with long term performance records including the likes of Buffett, Graham, Soros, Steinhardt, Neff, Robertson, Templeton, Lynch along with a number of others. One of the things I do on a regular basis is read and review books and articles written by or about successful investors such as the ones mentioned above. It’s the best way I know of to establish and improve a successful investment operation… carefully study the concepts and strategies that work for other investors, and try to reverse engineer their processes in order to create a similar result.
This book is well written with very detailed summaries and examples of each investor’s style and investment philosophy. It always amazes me to read books like this because invariably, each investor has a slightly different approach to markets, and sometimes the approach is exactly the opposite of someone else with a similar performance record.
For example, I just got done with the chapter on Michael Steinhardt who is a very active trader who turns his portfolio over about 5-6 times a year. He holds positions for weeks, days, sometimes hours, and during the time he was most active with his fund, he was a frenetic trader. At the other end of the spectrum, the chapter just prior to Steinhardt is the story of Philip Carret, who ran a fund for 55 years, and often held most of his positions for years. Some of the investors/traders in the book are short term, and more focused on trading, some are long term fundamentalists.
Many Ways to Investment Success, But Some Paths Are Shorter, Easier
There are many ways to achieve superior investment results, but in my opinion, some are much easier than others. I’ve studied all kinds of various investment methods and have found that long term value investing is the simplest way to create good long term results. For example, after reading the chapter on Soros, my thought was only Soros could execute his “reflexivity” theory and achieve the results he did. He has a trading style that is very difficult to understand, let along replicate. Maybe that’s his edge… Same with Lynch: he worked incredibly hard, and he used common investment logic, but he did an amazing amount of qualitative legwork…. Difficult for most of us to replicate.
On the contrary, the chapter on Graham provides various systematic procedures that most amateurs (and most professionals) would likely improve their results if they just had the mental ability to execute the strategy and stick with it. Value investing is not hard. It’s an easy concept to grasp, and it’s easy to put in practice, but it’s hard to stick with. There in lies the edge. As Greenblatt says, value investing works because sometimes it doesn’t work. It really is possible to study these pros, pick out the styles that are replicable, and put it into practice. But most people won’t do it. It’s hard to stick with it unless you have a solid understanding of the fundamental logic of value investing seared into your psyche. That’s part of what this blog is about: sharing my own research, ideas, and thoughts on investing that I think will help me along with anyone who reads the blog.
Investing is one corner of the business world where innovation is not necessary. Everything under the sun has been tested, tried, studied, and retested. But the best way to achieve above average, if not exceptional investment results is by simply copying the folks that have already done that. There is no need to reinvent the wheel.
After finishing the book, I’ll have a few more detailed reviews of the individual chapters on the investors. It’s a good read…