A Brief Book Review of The Education of a Value Investor by Guy Spier
There is an unexpectedly touching and humble message at the core of this memoir, which is essentially an extended Prodigal Son parable and thank you letter from Guy Spier, the founder and manager of the Aquamarine Fund, to a few key folks in his life; those folks are Spier’s father and the investors Warren Buffett, Charlie Munger, and Mohnish Pabrai. It is unexpectedly touching and humble because, for one, Guy will admit that he drives a convertible Porsche and has never had to take out mortgages to purchase homes in some of the wealthiest neighborhoods in the world. More importantly, the book starts with Spier fresh out of Harvard Business School and Oxford (where he was top of his class and friends with David Cameron), admittedly arrogant about his intellectual powers.
Spier thought his brainpower was like a parachute that could bail him out of any free-falling situation or like an oxygen tank to help him climb to the top of any environment; sadly, Spier thought wrong. After a stint at a (probably corrupt) Wall Street investment bank, he learned that’s not true; environment is stronger than he appreciates, and often the best move is to switch our environments rather than try to influence them. This is perspective he unfortunately did not find within the ivy-clothed buildings of his adolescence.
From this stark awakening, he begins to model the behaviors of Buffett and Munger, which becomes especially pronounced after he and Pabrai—author of the solid book The Dhandho Investor—successfully win an auction to have lunch with Buffett, which Spier calls “the ultimate capitalist master class”. The memoir then begins to read as an almost uncomfortably rose-tinted hagiography of Buffett before Spier thankfully has another awakening; he realizes that his goal in life and as an investor isn’t to blindly imitate Buffett but to become more authentically himself and embrace and work around his own idiosyncrasies (e.g., his ADD, his need to show how smart he is, etc.). How? I think there are three key ideas at the center of his hard-earned wisdom:
(A) We are significantly more likely to be changed by the environments we are in and the peers we associate with than to change them, so we should be thoughtful and careful about what environments we spend time in and gravitate toward people who are “better than us”. Books help, but real flesh-and-blood people help even more;
(B) Having a lot of intellectual horsepower is less important than understanding and knowing how to manage our inner emotional landscapes. It’s important to be reflective and introspective about who we are, especially if we are fortunate enough to be investors, whether of our own capital or that of others. The financial markets expose our vulnerabilities, which is not to say that we should try to be free of any, but is to say that we should confront our vulnerabilities and structure our lives to minimize the deleterious aspects of them. Often it pays more not to work to increase our rationality but to structure our lives to limit our irrationality so whatever rationality we do have can compound over time. To highlight this, Spier dives into some admirable and honest detail to explain actions such as why he uprooted his family to Zurich from New York; why he goes to therapy; why he eschews debt; and why he, Pabrai, and Buffett all take naps in their offices; and
(C) You can’t do the remarkable by aspiring to be conventional. Moreover, the unconventional doesn’t have to be wild; it can be the simple, “boring”, hard stuff (e.g., Munger, despite being a billionaire, is always one hour early to every meeting; Buffett does not have an email address; Pabrai will not sell anything within two years of buying it; Spier does not publicly discuss his current portfolio holdings, etc.).
Saw this at the NYSIB library in midtown and then ordered my own copy online. Glad I did. Full of lessons; marked this up like a graffiti artist.