My grandfather never went to school.
But he once ran a very successful restaurant in Stuttgart.
Qualivian Investment Partners Up 30% YTD; Long ORLY Thesis
Qualivian Investment Partners commentary for the second quarter ended July 30, 2020. Q2 2020 hedge fund letters, conferences and more “Short-term investors will accept a 20% gain because they didn’t spend the time to develop the conviction and foresight to see the next 500%.” - Ian Cassell Executive Summary Readers of investment letters fall into Read More
The only person I have ever known who employed a chauffeur.
But when he emigrated to America he lacked the tools to learn the language. Soon he was as poor as the rest of us and he worked as a cook for the rest of his life.
But he was bright and he could think.
His favorite thinking tool was a common German word with no English equivalent: Hauptsache.
Which translates to “the most important thing”.
Noted investor Howard Marks wrote an excellent book by that title, embracing that concept, which Warren Buffett called “that rarity, a useful book.”
But “the most important thing” is four words.
Hauptsache is just one.
And when a single word expresses an idea it does your thinking for you.
It’s a cognitive labor-saving device.
And a problem-solving device.
All in one, as the marketers say.
In a single word Hauptsache gives you something akin to the centuries-old thinking tool of Occam’s Razor, which says the simplest explanation is most likely to be true.
But you can be cut down by Occam’s Razor.
Accidents, suicides and “lone assassin” killings may not be as simple and obvious as they first appear.
Likewise you can be mistaken or misled by the Hauptsache.
In The Godfather (1972) when Michael twice tells McCluskey and Sollozzo that the most important thing is that there be “no more attempts on my father’s life” he assures them that he is frightened and weak, setting them up for his revenge.
The Hauptsache and Investment
Every great investor has his own Hauptsache.
I. "Rule number one: never lose money." - Warren Buffett
Warren’s second rule is: “Never forget rule number one.”
And his Hauptsache is thereby carved into stone.
II. "Don't overspend your income." - Charlie Munger
Charlie tells the story of Mozart, who always overspent his income and lived in the misery of overwhelming debt.
Underspend your income and you can compound wealth.
Overspend your income and you will compound debt.
It is easier than ever to fall into debt.
Mozart could get credit because he had genius.
Now anyone can get credit if they have a pulse.
III. “Don’t look for the needle in the haystack. Just buy the haystack.“—Jack Bogle
Jack Bogle created the best-ever tool for diversification: the low-cost index fund.
It’s a can’t-fail proposition.
In a low-cost index fund you will never lose your shirt .
And you will never miss out on the skyrocketing stocks you’re unlikely to find on your own.
The Hauptsache-wisdom of these three great men--two are thankfully still with us--provide a formula for successful investment over a lifetime.
Just underspend your income and invest the savings in diversified, low-cost index funds all your life long.
When you retire you will be rich.
Yet most people just don’t know it.
Of those who know it, most won’t do it.
But anyone can.
Though he never went to school my grandfather had Hauptsache I and II down pat.
He worked to 84, then he died.
And he did not die poor.
He did not live to learn Hauptsache III.
But he would have understood it.
It’s a Hauptsache.