The Value Investors: Lessons from the World's Top Fund Managers
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Investing legend Warren Buffett once said that “success in investing doesn’t correlate with I.Q. once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
In an attempt to understand exactly what kind of temperament Buffett was talking about, Ronald W. Chan interviewed 12 value-investing legends from around the world, learning how their personal background, culture, and life experiences have shaped their investment mindset and strategy. The Value Investors: Lessons from the World’s Top Fund Managers is the result.
From 106-year-old Irving Kahn, who worked closely with “father of value investing” Benjamin Graham and remains active today, and 95-year-old Walter Schloss (described by Warren Buffett as the “super-investor from Graham-and-Dodsville”), to the co-founders of Hong Kong-based Value Partners, Cheah Cheng Hye and V-Nee Yeh, and Francisco García Paramés of Spain’s Bestinver Asset Management, Chan chose investment luminaries to help him understand the international appeal – and success – of value investing. All of these men became strong advocates of the approach despite considerable age and cultural differences. Chan finds out why.
In The Value Investors, readers will also discover how these investors, each of whom has a unique value perspective, have consistently beaten the stock market over the years. Do they share a trait that allows this to happen? Is there a winning temperament that turns the ordinary investor into an extraordinary one? This book answers these questions and more.
important aspect of investment success: that it depends more on character than on mathematical or technical ability. This is the consistent message of investment memoirs as a group. The problem is that each memoir presents a unique perspective on the character traits necessary for investment success. Different authors emphasize different characteristics: patience, coolness in a crisis, wide-ranging curiosity, diligence in pursuit of information, independent thought, broad qualitative as opposed
outperform its peers. Finding the Right Investment Culture Looking back at Black Monday and its aftermath, Nutt pointed out that the general investment landscape in the United Kingdom remained positive. Retail savings continued to power ahead as the Thatcher administration promoted investments through various programs, such as the Personal Equity Plans (PEPs). The PEPs program, introduced in 1986, relieved investors of income and capital gains tax up to certain annual limits. On top of PEPs,
explained: “Snoopy dogs were overrunning our office, so I asked my staff to store some of them at my place while I was away in South Korea. On my return, I was awakened in the middle of the night by a strange smell, which turned out to be burning Snoopy dogs, as they had been placed near a heating coil. I managed to put out the fire, but not before my bright red hair was singed. As I’d already lost half of it, I decided to shave off the rest, and ever since I’ve quite enjoyed my new hairstyle.”
and then I would befriend him or her and learn how he or she handled the business. Occasionally I would also share my ideas with these individuals based on my evaluation of the business.” From a company’s perspective, the accounting division is a cost center. As an accountant, Teng felt that he was more like a housekeeper, and hence his career prospects would be limited. After becoming financial controller, he realized that he could in fact make money for the firm. By managing the group’s
cooking so they could eat it. If they did not like sashimi [raw fish], I might have to cook it. That was survival! When I started up SPARX, it also became my mission to use American valuation models to analyze Japanese stocks so that investors worldwide could better understand and appreciate the Japanese market.” Applying his new mind-set, Abe found bargains in Japanese non-life insurance companies. By looking into the balance sheet and digging into their assets, he discovered that many of these