I’ve read too many investment books. They all emphasize the importance of thinking independently. They all say: “Here, I’ll teach you how to think independently. Then you'll be able to think independently like me. (Or like Warren Buffett!)” Only one book I know reveals what thinking independently might actually mean. It's "Surely You're Joking, Mr Feynman", by the famous Nobel-Prize-winning, bongo-playing physicist, and it has nothing and everything to do with investing.
Brian posted that comment on My Christmas Reading Wish List last week. I don’t know who Brian is but he gets it.
A few years back I invested a very large chunk of my portfolio in a company with an expected life of four years, beyond which it would cease to exist. It had a management team I didn’t particularly trust and a balance sheet that made the company seem highly leveraged.
Looking back at the sixfold return on that investment, it’s no coincidence that the decision to buy broke almost every rule in the how-to-invest-like-Warren-Buffett rulebook. That’s exactly why no-one wanted to own it. (To put the situation into context, this company, RHG, had a market capitalisation of less than $20m at the all time low. It generated more than $70m of free cashflow during the next 12 months).
There is much to learn from the investing greats. None of it will beat learning to think for yourself.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.