4 Invaluable Investing Insights From Guy Spier

Value investor Guy Spier has made a name for himself for a variety of reasons. Born in South Africa, he was educated in Oxford and Harvard to prepare himself for what would become an almost legendary investment career.

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Today, Guy Spier lives in Zurich, has become a published author, and invests in a variety of areas through his Aquamarine Fund. But it’s his insights for potential value investors that are particularly valuable. Here are 4 of Guy Spier’s most significant quotes, relating to all areas of his job, life, and passion.

Guy Spier Adds A New Checklist Item

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1. "There are always going to be pockets where people are just fearful and don’t want to tread. If you’re willing to tread there, then you’ll do fine."

This quote is part of a larger interview in which Guy Spier dives deeply into his personal passion for chess, and how that passion relates to his investment patterns. In chess, as in investing, most players are driven by data-based analytical moments. But while a basic analytical mindset is undoubtedly important, human patterns matter just as much.

In the interview, Spier dives into Warren Buffett’s investment strategy as the perfect example. Bucking a larger, fear-based pattern, Buffett invested in Goldman Sachs at the height of the financial crisis of 2008. When the bank recovered, the investment paid off.

2. "In general, my experience has been that the best managers and capital allocators do one thing at a time, rather than multiple things."

Who would you hire to be your investment manager? In a recent blog post on the topic, Guy Spier attempts to answer that exact question. In doing so, Spier essentially turns the popular mantra of not putting all of your eggs into one basket on its head.

Multitasking is as popular in investing as it is elsewhere in life. But, as Guy Spier outlines, it’s not always the right thing to do. If focusing on multiple areas causes you to lose focus in your core responsibilities and competencies, it could become detrimental. Singular focus, on the other hand, tends to be more likely to succeed. See: Warren Buffett’s “Not To Do” List

3. "We think we control our environment, but in fact, it’s our environment that controls us. We can’t change the world. The only thing we can change is ourselves, by trying to get a better understanding of our own messed-up wiring."

An admittedly fatalistic quote is at the same time invaluable investing advice. Guy Spier is not afraid to focus on his shortcomings, and instead uses them as motivation to improve his investing style and options. Self-improvement may seem esoteric, but in his example, it’s very much pragmatic as well.

The cold truth is that no investor can control the market. The most successful professionals are guided by market forces, and adjust themselves and their strategies to fit these shifting forces. Be flexible, and you will become a better value investor as a result.

4. "One has to divide Warren Buffett into different periods. There is a continuously evolving style of Warren Buffett."

Before he became a famous investor, Guy Spier was most famous for paying more than $600,000 just to have lunch with his professional role model: Warren Buffett. That led to some fun articles, but also valuable insights into the legend that Spier looks to model himself after.

The above quote encapsulates his investment style. It is at once analytical, breaking down Warren Buffett’s investment style into separate parts, and mindful of adjustments. In a way, it fits perfectly with the previous quote on adaptability.

Over the past decade, Guy Spier has moved from a relatively anonymous hedge fund manager to a published author and world-famous value investor. His journey from point A to point B has been fascinating to watch, and will only continue to rise in importance. As a result, Guy Spier’s insights on the nature and unique aspects of investments are invaluable for anyone looking to apply the lessons to their own environment.

Article by Vintage Value Investing



About the Author

VintageValueinvesting
Ben Graham, the father of value investing, wasn’t born in this century. Nor was he born in the last century. Benjamin Graham – born Benjamin Grossbaum – was born in London, England in 1894. He published the value investing bible Security Analysis in 1934, which was followed by the value investing New Testament The Intelligent Investor in 1949. Warren Buffett, the value investing messiah and Graham’s most famous and successful disciple, was born in 1930 and attended Graham’s classes at Columbia in 1950-51. And the not-so-prodigal son Charlie Munger even has Warren beat by six years – he was born in 1924. I’m not trying to give a history lesson here, but I find these dates very interesting. Value investing is an old strategy. It’s been around for a long time, long before the Capital Asset Pricing Model, long before the Black-Scholes Model, long before CLO’s, long before the founders of today’s hottest high-tech IPOs were even born. And yet people have very short term memories. Once a bull market gets some legs in it, the quest to get “the most money as quickly as possible” causes prices to get bid up. Human nature kicks in and dollar signs start appearing in people’s eyes. New methodologies are touted and fundamental principles are left in the rear view mirror. “Today is always the dawning of a new age. Things are different than they were yesterday. The world is changing and we must adapt.” Yes, all very true statements but the new and “fool-proof” methods and strategies and overleveraging and excess risk-taking only work when the economic environmental conditions allow them to work. Using the latest “fool-proof” investment strategy is like running around a thunderstorm with a lightning rod in your hand: if you’re unharmed after a while then it might seem like you’ve developed a method to avoid getting struck by lightning – but sooner or later you will get hit. And yet value investors are for the most part immune to the thunder and lightning. This isn’t at all to say that value investors never lose money, go bust, or suffer during recessions. However, by sticking to fundamentals and avoiding excessive risk-taking (i.e. dumb decisions), the collective value investor class seems to have much fewer examples of the spectacular crash-and-burn cases that often are found with investors’ who employ different strategies. As a result, value investors have historically outperformed other types of investors over the long term. And there is plenty of empirical evidence to back this up. Check this and this and this and this out. In fact, since 1926 value stocks have outperformed growth stocks by an average of four percentage points annually, according to the authoritative index compiled by finance professors Eugene Fama of the University of Chicago and Kenneth French of Dartmouth College. So, the value investing philosophy has endured for over 80 years and is the most consistently successful strategy that can be applied. And while hot stocks, over-leveraged portfolios, and the newest complicated financial strategies will come and go, making many wishful investors rich very quick and poor even quicker, value investing will quietly continue to help its adherents fatten their wallets. It will always endure and will always remain classically in fashion. In other words, value investing is vintage. Which explains half of this website’s name. As for the value part? The intention of this site is to explain, discuss, ask, learn, teach, and debate those topics and questions that I’ve always been most interested in, and hopefully that you’re most curious about, too. This includes: What is value investing? Value investing strategies Stock picks Company reviews Basic financial concepts Investor profiles Investment ideas Current events Economics Behavioral finance And, ultimately, ways to become a better investor I want to note the importance of the way I use value here. It’s not the simplistic definition of “low P/E” stocks that some financial services lazily use to classify investors, which the word “value” has recently morphed into meaning. To me, value investing equates to the term “Intelligent Investing,” as described by Ben Graham. Intelligent investing involves analyzing a company’s fundamentals and can be characterized by an intense focus on a stock’s price, it’s intrinsic value, and the very important ratio between the two. This is value investing as the term was originally meant to be used decades ago, and is the only way it should be used today. So without much further ado, it’s my very good honor to meet you and you may call me…