Sins of Investing – Envy (Part 3)

Sins of Investing – Envy (Part 3)

Having covered Sin 2: Sloth in the previous article, I will be covering on Envy in today’s article.

Sin 3: Envy – Constant need to compare

In today’s competitive world, we have build up this constant need to compare ourselves with others. Just looking at Singapore, we can see this being cultivated since young. Parents comparing their children’s results/achievements at school with other kids and pushing their kids to do even better.

Bring it back to investing, how does envy affect one’s investments?

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Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More

As value investors, our route to success is always not a fast one. While we may get lucky, but more often than not, we have to wait years before the value in our companies get recognised. Hence, in this process of waiting, there would be tons of people achieving success through other methods, e.g. trading or speculation. This lack of success may result in envy, causing resentment and perhaps even rage to build up. Such resentment or anger would cloud one’s judgement and prevent us from looking inward to examine if the mistake lies within ourselves. Instead, one may start blaming everything around him (the failure of value investing) instead of himself (the lack of patience).

This would result in the distrust in the value investing way, and perhaps deviation in the methodology. I find that in value investing there are a set of rules one has to follow. When one starts deviating from these rules, that is when mistakes starts occurring. The rules did not fail the person, but rather, the person failed the rules. 

For myself, I am only human and I do feel envious too when I first started out. I would wonder why others were able to choose the winning stocks, while the value of my investments had not been recognised. There would be this bit of envy, where I wondered what did I lack compared to others and how I could make up for this inadequacy. However, over the years, I realised that success is only a matter of time. The main ingredient for such success is patience and conviction in the amount of hardwork and due diligence one has put into the analysis. It is through such experience that it has allowed me to build up a sense of nonchalance when I hear of someone doing better than me of having higher % gains. Never allow your envy to cloud your judgement as this would just derail one from the longer term plan.

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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.
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