The Education of a Value Investor

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This article appeared first on The Stock Market Blueprint Blog.

In , Guy Spier doesn’t share his methods for identifying undervalued stocks.

He doesn’t outline formulas which guarantee a margin of safety, and he doesn’t define a maximum P/E ratio to look for when adding to a position.

Rather, the Oxford-educated hedge fund manager chronicles how he came to discover the key to being a successful investor: becoming a better person.  He didn’t always understand this though.

From Shady to Sensible

Through a series of events – reading The Intelligent Investor and having lunch with Warren Buffett among the most notable – he gradually transformed from the shady investment banker he started out as to the sensible steward he is today.

As the subtitle indicates, the book outlines Spier’s transformation from a Gordon Gekko-type character to an avid admirer of Warren Buffett.

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The first few chapters sometimes read as the confessions of a newly converted believer coming clean with the sins of his former way. At one point he admits:

“Even as I write about this now, my skin crawls. Part of me wonders if it’s a mistake to write about it at all. But I think it’s important to discuss just how easy it is for any of us to get caught up in things that might seem unthinkable – to get sucked into the wrong environment and make moral compromises that can tarnish us terribly”

As the book unfolds, Spier discusses the steps he took to start his fund and what he’s learned from the mistakes he made along the way.

Investment Checklist

In addition, he lays out eight rules which make his investment process “smarter and less vulnerable”, and he speaks of the importance for every investor to create his own investment checklist in order “to avoid obvious and predictable errors.”

Although the principles in these guidelines are applicable to investors of all stages, the specifics are written more for the hedge fund audience than the average investor.

For example, rule #3: Don’t Talk to Management, is not applicable to a small individual investor.

It’s also hard to relate to Spier when he talks about only being able to afford to pay $250,000 for the privilege to have lunch with Warren Buffett.

That being said, aspiring individual investors will still undoubtedly be positively influenced from Mr. Spier’s valuable advice.

The Education of a Value Investor

In writing The Education of a Value Investor, Spier gives the reader a chance to learn from his experiences, just as Buffett has said, “It’s good to learn from your mistakes, it’s better to learn from other people’s mistakes.”

In a way, this is a self-help book for those recovering from self-centered greed looking for a guide to help them along.

Make no mistake; Guy Spier is still a Capitalist who works hard to accumulate wealth. However, for him making money is not the end-goal. It’s part of his “inner-journey.”

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Mitchell Mauer is the Founder of The Stock Market Blueprint is a site that finds value stocks for investors building long-term wealth. The site’s investment philosophy is anchored in principles established by Benjamin Graham and his most reputable followers over the last 100 years.

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