What investing advice would you give to your 15 year-old self? That was the question posed to me at the end of this interview with Livewire back in August (it’s the last question, 19 mins in if you want to skip to it).
I remembered the interview while listening to a Tim Ferriss podcast over the weekend. Ferriss usually interviews “world class performers from eclectic areas”. In this version he interviewed himself. Asked at the 40-minute marker (by himself) about the most worthwhile investment he ever made, Ferriss said “creating my own real world MBA”.
While researching undertaking a US$120,000 MBA at Stanford, Ferriss decided instead to take the $120,000 and invest it. The assumption was that he would lose the money. But that “the skills [he] would develop would be worth more than the $100k over time”. He says the money he lost ($50k of it on the first foray) was his best ever investment.
Investing advice for beginners
It reminded me of the similar question posed to me by Livewire and the similarity in our responses. My advice to everyone who wants to be a successful investor is to take a sum of money you can afford to lose and get cracking.
That doesn’t mean go out and spray money around randomly. It means practice what you are trying to learn. Read Peter Lynch’s One Up on Wall Street, then go and find a stock you think is in the early stages of success and invest in it. Read Ben Graham’s The Intelligent Investor, then go and find a company trading at a discount to its tangible asset backing. Read Joel Greenblatt’s The Little Book that Beats the Market and try and find yourself some “good companies at bargain prices”.
You should expect to lose money. But the practical experience will be worth more than formal training can ever provide.
Love your posts Steve. I think you meant Peter Lynch not Phil Fisher.
Regards
yes, thanks Es
Your advice sounds quite similar to this quote I recently came across by Francois Rochon of Giverny Capital:
“A painter aiming at being a master must paint. In the same way, an investor must invest.”
Source:
https://www.gurufocus.com/news/466626/23-questions-with-franois-rochon-of-giverny-capital
I would probably remove Buffett/Greenblatt/Marks as their contribution to value investing is minimal or negative. Add Adam Smith, Walter Bagehot and Bakunin.
The most important thing of course is to do it your own way – not trying to be someone else but taking their ideas as inspiration.
Keep up the good work, please come to NZ and save us kiwisavers from the 0.7% fee ETF – we are starved of choice 🙂
Completely agree. Investing is a craft, and like any craft, from cooking, to painting, to playing chess or a musical instrument, you learn through doing: through iterative trial and error, and the slow but steady acquisition of finer and finer nuances until mastery slowly emerges.
Most investors fail for the same reason most people remain mediocre chess players; pianists; martial art, or any other complex craft: success requires the purposeful direction of effort in a single direction for a long, long period of time. Most people do not have the patience, discipline, or motivation to stick it out.
Instead, people pursue get rich quick schemes. Bitcoin or the latest growth craze, the promises fast money with minimal effort. And they get the results they deserve.