Tuesday, May 23, 2017

Becoming a great investor and a multidisciplinary thinker...

“It’s kind of fun to sit there and outthink people who are way smarter than you are because you’ve trained yourself to be more objective and more multidisciplinary. Furthermore, there is a lot of money in it, as I can testify from my own personal experience.” -Charlie Munger

The above quote is one I think about often. And as I do, I am reminded of a goal of becoming both a great investor as well as a multidisciplinary thinker. If one is in the investment business, there are a few things that I think are key in order to achieve this: 
  • A long-term time horizon when looking at and investing in businesses (~5-10 years, with the potential to hold for longer if business advantages and reinvestment opportunities remain intact), so that one doesn't need to find new ideas on a constant basis. This allows one to take advantage of internal business (and tax-advantaged) compounding, and also allows one the time to read more widely.
  • Good filters (to avoid wasting time on things that one should not have pursued in the first place).
  • No sunk costs (via the example of Daniel Kahneman). 
  • A long-term, patient capital base (or permanent capital if possible).
  • A fairly open and clear calendar (to allow one time to think).