Characteristics of Successful Value Investors

Having always read on traits that makes one successful, I thought that I post an article sharing on my views that makes a one successful at value investing.

Independent Thinking

We understand that thinking independently is somewhat hard especially for investors just starting out fresh. Believe me, we have been there once scouring through blogs, looking up what other value investors are holding and reading up their analysis. As much as we can search through the list of stocks from a to z, it is an extremely tedious process. However, I guess it is through this process of reading of analyst reports and other investor’s analysis that we actually fast track our entire learning process. Why do I say so? With these analyst reports and all, they have their pros and cons and it is through reading and understanding them will it make us better investors. However, while there is nothing wrong basing an investment decision on analyst reports in the early stages, I would say that after a few years, one should lose such “training wheels”.

Being a Stoic

One good book we would recommend on this would be Seneca: Letters from a Stoic. Essentially, it is about keeping emotions out of our judgements and decisions we make. This is not only applicable in investing but in life as well. Mixing emotions and investing would probably lead to extremely poor results. We have talked a great deal about it in previous articles regarding behavioural biases that resulting in poor stock picks. Some other good research papers that we have read on this would be such as Disposition Effects in Financial Markets or Ambiguity Aversion and Asset Pricing. We have always believed that with value investing, it is all about making logical decisions and not allowing our emotions to get in our way.

Themes for the next decade: Cannabis, 5G, and EVs

CannabisA lot changes in 10 years, and many changes are expected by the time 2030 rolls around. Some key themes have already emerged, and we expect them to continue to impact investing decisions. At the recent Morningstar conference, several panelists joined a discussion about several major themes for the next decade, including cannabis, 5G and Read More


Never Fear Mistakes

One of the biggest fears when starting out would be what if I buy the wrong stock? However, allow me to phrase it differently, if we never make that first step, we would never know if we were right or wrong. Making the mistakes when we are younger is much better than making it when we are much older when the capital involved is much larger and that the stakes are much larger. I would admit that I have made some mistakes over the course of my investment journey such as investments in Quindell, Sino Grandness and Lion Asiapac. Given a choice, I would gladly make these mistakes again. Through learning from such mistakes, it is equivalent to paying a ‘tuition fee’ – though costly, it will help prevent us from making much bigger losses in the future. I believe that life is full of experiences and we have to dare to try them all, without fearing of making errors. At times, while some of these experiences may turn out to be bad ones, there will too be ones that are enriching and maybe life changing.

Arrogance

Yes, this is not a mistake. At the end of the day with value investing, it is always about going against the majority’s view. In some way to have such conviction in ourselves and not sway, it requires a certain amount of arrogance. It is such arrogance that allows us to continue having conviction in our own investment thesis despite everyone disagreeing with us. However, while such arrogance is necessary, we have to be mindful of it as well. We have to exercise control over such arrogance, knowing when to listen, when is someone actually giving us valuable advice. After all in the stock market, between the buyer and seller, there can only be one patsy.

Final Words

While there are many other traits that would make one a better investor, these are the 4 points off that top of my head, which I deem to the most important. If anyone has other better traits to share, do drop a comment to share it with the rest!

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I developed my passion for investment management especially equity research at a relatively young age. My investment journey began when I was 20, at a point in time where markets were still recovering from the Global Financial Crisis. My portfolio started from money I saved over the past years and through working during the holidays. I was fortunate to have a good friend with common investing mentality to began my journey towards value investing. To date, we still research and invest in companies together, discussing valuations and potential risks of a company. To date, I manage a fund with a value investing style. Positions are decided upon via a bottom-up approach or smart speculation (a term I came up with when buying a stock for quick profit due to a mismatch in prices in the market due to takeovers/selling of a subsidiary or associate). Apart from managing my own portfolio, I enjoy sharing my research with family and friends, seeking their opinions and views towards the stock. Reading Economics in London, I constantly keep up with the financial news in Singapore & Hong Kong. Despite my busy schedule, it has not stopped me from enjoying other aspects of life. I enjoy a variety of activities in whatever free time I may have – endurance running, marathons, traveling, fine dining, whiskey appreciation, fashion. Lastly, I enjoy meeting new people, discussing ideas and gaining new perspectives towards issues in the world.