I look at my evolution as both as a writer, as an investor. As a writer, over time, I feel like I have a lot more courage, you know, to do more, to conquer topics that were in the past were kind of off limits for me. However, as an investor, as I matured, I give myself permission to do less.
I think today I’m a very different investor than I was 5, 10, 15, 20 years ago. I have evolved tremendously, and as I should, right? I think any and every investor should evolve over time. What’s great about investing is it’s kind of a contact sport, because you’re in constant contact with the market, and that gives you feedback. A lot of times your successes and your failures give you feedback, and then you process that and say, okay, this is what I used to think, but now I realize that I need to tweak my thinking a little bit.
When I started out—and I think this is probably true for most value investors, including Warren Buffett—we start out as kind of dumpster divers. We go for the statistically cheap, crappy companies. I think the reason we do this is because at this point, when we start out, we don’t have experience. The only experience we have is that most of us passed second grade algebra or whatever math. You know that 10 is greater than 5, and that 30 is greater than 20. So, you become a statistical investor—a statistical value investor.
Over time, you learn the qualitative parts of investing. You understand the value of the moat, the value of good management versus bad management, the value of growth. Over time, I became a more holistic, well-rounded investor. I also found that some things today are uncompromising for me. For example, I found that my emotional quotient—my rationality—is very low when I own deeply cyclical, crappy companies. So, guess what? I don’t own them.
And by the way, this is the beauty of investing. If you are a surgeon, an orthopedic surgeon, you can’t really say, “I’m so much better working on the right knee than the left knee, so I’m just going to specialize in right knees.” You can’t do that. As an investor, I need 25 stocks in my portfolio. So I can say, “I’m only going to specialize in right knees,” or “I’m only going to specialize in high-quality companies,” because my emotional quotient is the highest there. That’s where I’m the most rational.
I look at my evolution both as an investor and as a writer. Over time, as a writer, I feel like I have a lot more courage to do more, to conquer topics that in the past were kind of off limits for me. I’ve given myself permission to conquer topics that were outside of what I was “supposed” to write about. Supposedly, as an investor, I should only be writing about investing. But I’ve been writing about classical music, life, parenting—all different topics.
As an investor, as I matured, I’ve given myself permission to do less, to know my circle of competence, to know where I’m the strongest, and to say no a lot more. That has been a significant evolution for me. Now, when somebody pitches me a stock and says, “This is such an incredible retailer,” I can say, “I don’t do retail.”
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