Why I love investing

An extra post this week.

Let’s start with a quote from the Godfather of investor Buffet:

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Investing is something I keep writing about. So let me tell you all why I love investing (the process) and why I believe that most successful investors have worldly wisdom to offer.

Investing is not all about finance and numbers. It is highly multidisciplinary and to be successful in investing you need to be good in not only the business part but also the other part which is behaviour and thinking from different perspectives. If you want to be a good investor you have to know about history, physics, psychology, sociology, etc. You have to pick up the big ideas from all disciplines and keep them in your head. This is why I write about mental models. We need 80-90 of these big ideas and use them in our decision framework. I have not seen any other field have this kind of framework when they should as well. Most psychologists tend to see it from only one lens. This is why investors have so much wisdom they read about everything. But as Munger said above you have to know a little bit of all of them, not a few.

This takes me to my next point in investing they read about EVERYTHING. Investors tend to read about things not related to business at all as well. They use this wisdom that they collect and implement it in investing and in their life. This may not be true for all investors but the ones that I love almost always read about and talk about stuff not related to the thing they do for a living at all. Moving on to the next point.

Investing is an art, not a science. Investing is different for everyone what seems like an amazing opportunity to me might be a horrible one for someone else. Every time you are buying a stock there is someone on the other side selling it to you. Both of you think it is the right decision. And both can very well be right. Investing is different for everyone and everyone’s style is different. Everyone wants something different out of that investment and their risk appetite is also different. This is why you cannot simply have one textbook to teach you about investing. There are many methods out there you have to choose what is best for you. This gives me comfort because I could not care less if the biggest fund manager in the world said his investment process is the best because the same process might not suit me. So to sum up this point investing styles and decisions are different for everyone as everyone’s circle of competence, risk appetite, expected returns, etc. are different.

Coming back to reading. Investing involves a lot of reading. Investing is not appealing to everyone because of the amount you have to read. If you love reading and have the focus or temperament to read a lot you will love investing. Investing is very boring that way. The public has a misconception about the market thinking it is fun, exciting and thrilling. It is quite the opposite, investing is very boring. As Mohnish Pabrai says if you like seeing paint dry you can be an investor. This is why many people fail. Investing is simply about reading and thinking most of the time. You don’t have a lot of action involved. I have no problem telling people that I am boring because I am. All I do is read, think and play sports.

Investing teaches us to be contrarian. In investing it is best when you are against the majority. In investing you have to realise when people are being irrational and take advantage of it. When people buy things at unreasonable valuations and there is over-optimism you should be cautious to get in. If people are pessimistic for reasons which don’t matter in the long run you should capitalise. When a person who has no clue about investing gives you advice to buy a stock it is an indicator of over-optimism. Being against the crowd is not easy and I respect the successful investors for being able to do this. Study bubbles (or crashes) and you will find out how irrational the crowd is. See 2020,2008, etc.

This is not about investing but more about the people who are successful in investing. When you read about all the different successful investors. You realise that they have won not only in investing but also in life. This is not to say that every successful investor has a great life. From what I have read the life that they have lived seems like one to follow. This may be because of the fact that they read so much. They have worldly wisdom. The more I have read about Buffet and Munger the more I want my life to be similar. They do not care about others they are happy with where they are. They have conquered mimesis and envy. Even though their relationships with their spouse have not been the greatest.

Thank you for reading this and kudos if you made it to the end! Means a lot!