A few years ago, when I was in Warsaw for my CFA level I preparation course, an “academician” (professor) knowing my passion for Warren Buffett asked me: “So what do you do? Do you “copycat” what he buys, strictly following his ‘moves'(investments), and his portfolio?” I said “No, of course not! One of the first things he taught me was to think for myself”. “This is not a business in which you ask opinions or take polls. You focus on facts. This is a business in which you think!” I was surprised that he was surprised by my answer, but then I thought about the “Super Investor of Graham and Doddsville”, and Walter Schloss and so on so forth.. In the end, I was surprised that I was surprised by his surprise!
I felt that he was skeptical about my direct answer. I had the impression that academics tend to focus so much on “managing risk” that when they are indeed right about something, they just put it down to “a standard case of over-confidence”, and therefore continue to avoid making any decision.
Several modern “portfolio theories” were also prevalent, and occasionally fashionable, in previous decades. Ignoring most of them and focusing only on the principles that I clearly understood was a key factor for my investment education.
The “Nebraskan Cradle” I got on board with mainly focuses on what businesses are worth.
The combination of art and science is what really suits me. Moreover, I still believe that it is a crucial building block when considering and evaluating stocks to allocate capital and to buy.
That brief conversation with the CFA professor came to my mind again recently when I sold the airline stock (for a substantial profit) I bought in April 2020. It was a year ago that Buffett sold the same airline. Warren and I clearly had two very different opinions about the situation. A perfect demonstration of my hypothesis for that professor in Warsaw; thanks to Warren, after many years of experience, I was able to disagree with Buffett himself, my personal hero and master! Moreover, I did the same thing with a well-known bank stock that Berkshire sold about a year ago or so. At end of last summer, I started buying it quite aggressively at a certain price level. When the price went too high (from my “valuation standpoint”), I stopped buying.
So 60 years after it was written, Philip Fisher’s dedication in his second book, “Paths to Wealth through Common Stocks” still applies and is wonderful: “This book is dedicated to all investors, large and small, who do not adhere to the philosophy: Everyone seems to believe it so it must be so.”
In life, solitude can be a demanding companion, but in the investment world, it can be a blessing.
If you think that being a professional investor is like any other job, switch to something else. If you are gifted at evaluating businesses, you don’t need advisers or consulting specialists, you just need a quiet room.