Originally published at: https://blog.12min.com/the-education-of-a-value-investor-summary/
My Transformative Quest for Wealth, Wisdom, and Enlightenment
Living a financially successful life is not the same as living an ethically sound one.
However, a balance can be achieved between the two.
Read on to find out.
Who Should Read “The Education of a Value Investor” and Why?“The Education of a Value Investor” does precisely what it promises – it shares the secrets of becoming a successful value investor.
As you will see below, schools will not teach you these lessons, so read on and find out how you can make good, ethically sound choices that will bring you success on the long haul.
We recommend it to all people who are interested in investing.
About Guy SpierGuy Spier is a regular contributor to the financial media. He is an investor who is deeply inspired by Mohnish Prabrai and Warren Buffet.
"The Education of a Value Investor Summary"If you ask people around you to tell you the safest way to success, they will tell you that you should attend an elite school, that will give you all the knowledge you need.
However, that is not the reality.
In fact, elite education does not always give students the proper skills that can be of use in the real world.
Take the 2008 financial crisis for example.
With so many smart and educated people around, you would expect that it would have been predicted.
Yet, no one saw it coming.
Well, elite universities and business schools are flawed. They are great at teaching their students some skills, but sadly, these skills are not the proper ones.
The skills elite schools teach are based on theories which not always apply to the real business environment.
What is the use of models and theories which assume that when you encounter a problem, you will have the perfect amount of data when in reality, you never do?
Markets are very complicated and shaped by many factors.
As a result, it is impossible to take all of this information into account when you are examining a real problem. There will always be a piece of data which is missing.
That is why the skills elite schools teach never match the needs of the real world.
Another mistake is that elite schools focus on rationality, and oversee the human ability of critical thinking.
In other words, they value students who can think rationally, making them feel extremely intelligent, while they condemn all types of unconventional thoughts.
So, if you are an investor, or you wish to be, you need to know much more than just the books you read during your schooling.
For example, what schools never teach you are staying true to your moral values.
There may be instances when you will join a firm which does not work “clean.” Many companies, especially on Wall Street use different methods to cheat the money out of their clients and profit out of it.
If you are new in such a company, you will surely be in a huge moral and ethical dilemma.
On the one hand, you will want to make a good impression, and on the other hand, you will like to keep your conscience clean.
What we advise you is never to compromise yourself and your own standards.
If you are past that point and have already made a mistake or two, it is okay as long as you wish to overcome this behavior and learn from the past events.
We are not saying that moral fraud is easy to stay away from, especially when it is happening all around you, but if you want to have a proper career, and a sound sleep each night, you better learn how it is done.
The answer lies in value investing.
Value investing has the long-term potential of the firm in mind, instead of the short-term whims of a market.
This makes it easier to not fall into the trap of wanting to deceive the customers to make a quick sale since it focuses on the long-term potential, to which such a sale means little.
Another thing you should do is find a good role model, which will teach you how you can approach the change and achieve your goal.
Furthermore, make sure you persist in your projects. Many times you will be tempted to give up before the project ends, but it is all because you are approaching it the wrong way.
The right way to start a new project is by developing a positive attitude, and act, instead of waiting for the perfect conditions to come.
Of course, during the process, you have to know your shortcomings and weak points, as well as negative emotions which may arise.
Once you notice something like that, like for example being driven by envy or anger, change your mindset.
All of the above-given advice, as well as a large number of recommendations that we did not cover and you can find in “Education of a Value Investor” will help you become both a better person and a better investor.
They may not have taught you in school how to become one, but you can learn yourself.
Key Lessons from "The Education of a Value Investor"1. Work Should Not Challenge Your Morals 2. Invest Your Time, As You Make Your Money 3. Do Not Be Afraid of Financial Crisis
Work Should Not Challenge Your MoralsRemember that being ruthless and successful and challenging your morals are two entirely different things.
Whenever you are in a dilemma that challenges them, choose honesty. That is the only way to do it right. Do not let the pressure that comes with the job blind you.
Invest Your Time, As You Make Your MoneyInvesting money is something you will surely do, but you need to go further and invest your time in people too.
When you do this, when you give people attention, respect, and care, they will truly value you for what you are and not just your money.
Do Not Be Afraid of Financial CrisisGood value investors stay calm during a financial crisis since they know that no matter the circumstances, there is always more money to be made.
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"The Education of a Value Investor Quotes"[bctt tweet="People will always stop you doing the right thing if it’s unconventional." username="get12min"]
[bctt tweet=“Books are a priceless source of wisdom. But people are the ultimate teachers, and there may be lessons that we can only learn from observing them or being in their presence.” username=“get12min”]
[bctt tweet=“So often, we focus our analytical efforts in the wrong direction and miss something vital. So it’s crucial to be open to the possibility that we might be mistaken.” username=“get12min”]
[bctt tweet=“Our environment is much stronger than our intellect. Remarkably few investors—either amateur or professional—truly understand this critical point.” username=“get12min”]
[bctt tweet=“It takes 20 years to build a reputation and 2 minutes to ruin it. If you think about that, you’ll do things differently.” username=“get12min”]
Our Critical ReviewThis book is a treasure.
In fact, any example of sound morals and values is an example that should be celebrating it.
We believe that every investor should read this book and learn its lessons.
It guarantees you success and peaceful sleep at night. Is there anything better than that?