Copyright John T. Reed 2014
I just read the first two chapters of a book titled The Education of a Value Investor by Guy Spier. He is a wealthy Harvard MBA fund manager. I am an affluent Harvard MBA married to another affluent Harvard MBA. I am a self-publisher author. She is a federal bank examiner and former banker..
I figured Spier’s book might teach me stuff I could use to improve my advice writing including my Succeeding book. http://www.johntreed.com/succeeding.html.
After the first two chapters, HE should have read MY book instead of the other way around. He says the biggest mistake of his life was taking a job out of HBS with D.H. Blair, a Wall Street investing firm with a dubious reputation. Indeed, it was sleazy and that was the big mistake. He was told at the time i was sleazy but wen ahead.
Chapter 16 of my book is only one page long. Its title is “Reputation and Values.” Its first sentence is, “Reputation is like fine china: easily broken and never really repaired.” He quotes Warren Buffett saying something similar.
I have bold-faced rules throughout the book. One in this chapter is, “Be very careful with whom you associate.”
Other chapters in the book that might have helped him include: 13. Be yourself, 30. Working for other people, 34. Making an honest living, 35. Tenure and other deals ‘too good to leave.’
An an experienced coach and teacher I know that hearing the same lesson stated in different words often breaks through where the first version did not. So if you are not excited about reputation and making an honest living after reading my Succeeding book, read Spier’s too.
Reading further, Spier is a hero worshiper, which is embarrassing. I am embarrassed for him and because he is one of my fellow Harvard MBAs.
Robbins, whose original name was Anthony Mahavorick, is a famous motivational speaker/author. He was adopted by one of his mother’s husbands, a pro basketball player named Robbins. By coincidence, Tony is 6'7" but I no of no evidence that he ever played basketball or any other sport.
He has his students do fire walking to prove that they can do anything. Spier did the fire walking. I assume it’s a trick that does not injure you because of the speed it which you do it and the callouses on the balls of your feet. Wikipedia sys,
Modern physics has explained the phenomenon, concluding that the amount of time the foot is in contact with the ground is not enough to induce a burn, combined with the fact that embers are not good conductors of heat.
Modern physics has absolutely nothing to do with achieving high goals.
Whatever, you cannot do everything. But there are a number of little-known capabilities of the human body and mind that can be used to amaze like magician tricks. At Fort Benning, when I was a senior at West Point, they had my class shooting flying little disks out of the air with BB guns held at the hip like Annie Oakley. Apparently, anyone can do it. They called it “Quick Kill” and urged us to use it in Vietnam by simply carrying our rifles at the hip and turning to face an enemy and shooting from that position. It is a “trust your subconscious” deal like hitting a baseball. Fire walking is a keep moving and trust the insulating effects of charcoal to protect you from the nearby glowing red heat source within the charcoal. It’s a cheap trick sold for a lot of money to the gullible.
Robbins, did not attend college at all. I am not even sure he graduated from high school but he was student body president senior year. His teachings on health and finance/investment have been strongly criticized by experts.
When my oldest son entered middle school, I started to give him books that I had read like Robbins stuff from my youth:
• The Power of Positive thinking
• How to Win Friends and Influence People
• Think and Grow Rich
But when I perused them, I found them out-of-date, overly simplistic, and too quaint to be taken seriously. For example, they would say things like “you need a lot of pep to succeed so make sure you [insert faddish, early-20th century ‘pep’ tip here].”
I think looked at contemporary how to succeed books like Tony Robbins’ Unlimited Power. I found it to be a bunch of fuzzy rah rah nonsense.
My ultimate solution for a book to give my sons was to write and publish my book Succeeding which bears little resemblance to other success book.
He also likes Buffett, a far more sensible “hero,” but I think this hero worship is childish and an exaggeration of what one should draw from experts like Buffet.
The difference between being a fan and being a hero worshiper is trying to imitate the entire life of the hero versus just liking some aspect of a person. As Buffet seemed to tell Spier, my life is designed for me not everyone. The principle is to design your life for you not some other person no matter how successful. That is essentially what I say in Succeeding, too. Although I say it in ways like “recognize that personal taste is part of what you get when you ask for advice from a successful person. They don’t realize it’s personal taste; they just assume it must be part of what made them successful.”
For example, Spier has imitated Buffet’s choice of where to live and, when he bought a lunch with him, the food he ordered.
Spier says one of the big things he got from Buffet and some other heroes of his is “be yourself.”
That would be another thing he would have gotten from my book. Chapter 13 it titled “Be yourself.”
Of course, no one needs me to tell them that. Their mom already did. I do not put conventional wisdom in my books. What I do in that chapter is explain it the way a Harvard MBA might describe a sophisticated marketing technique. I say stuff like:
• You have to stand out from the crowd when competing.
• You are already unique.
• You are better at being yourself than you are at being someone you’re not.
• No one on earth is as good as being you as you are.
• Failure to be yourself would mean being phony which pretty much guarantees that you will come across as a phony.
• You will come across as more confident and honest if you be yourself.
• The girl or guy or job interviewer will eventually find you out and dump you even if you initially succeed in convincing them you are someone you are not.
I did not write about this stuff until the early 2000s when I was 60. But I figured it out around college and in my early 20s. Spier seems to have just figured it out—in his late 40s.
I like a lot of what Buffett has done and said, but I do not care for his image which I think is unwarranted. He was the main shareholder of Moody’s when it was rating garbage mortgages AAA. He claimed afterward that he did not even know where their headquarters was located. That is disingenuous BS. A. the actual building is irrelevant. B. He had spent years saying he only buys a stock when he understands it. C. He also claimed to like “pricing power” which is his euphemism for monopoly power. Moody’s customers were almost forced by law to use Moody’s or one of the tiny number of other “Nationally Recognized Statistical Rating Organizations.” The government eliminated that status in the wake of the subprime crisis.
Buffet is also the jerk who criticized California’s Prop 13 which limits annual property taxes on real estate to about 1% of the price you paid for the property. And he said there was something wrong with the fat that his secretary paid a higher tax rate on her income than he did. Actually, she does not. Both she and Warren pay the same rates. His income, however, was mostly capital gain, taxed at a max of 15% at the time; hers was ordinary income, taxed at 35% or so at the time. Why didn’t Mr. Nice Guy Buffet structure his secretary’s pay so she would be taxed at long-term capital gains rates like he was?
I think he’s a demagogue who is desperate for popularity with the masses. You may say with so much money he doesn’t need that. I agree that he shouldn’t, but what’s this raise-tax-rates-on-the-rich crap if not to become popular with the non-rich? Like many rich guys who play that political game, Buffet refuses to donate money to the federal government which would have the same effect as his paying higher tax rates.
Anyway, back to Spier. He should follow much of Buffett’s advice on analyzing securities investments. But mimicking Buffett’s living in Omaha by moving to Switzerland (both away from Wall Street) strikes me as childish. Living in New York City does not require you to hang around with Wall Street types. Spier even says he stopped doing that at the annual Berkshire-Hathaway conventions where you can hang with the Wall Streeters or with ordinary shareholders.
He also mimicked Buffet’s aversion to the “2 and 20” standard money fund fee structure. (2% of the asset value annually plus 20% of any fund gains) I guess Buffett just lets people buy stock in his company and his profit is any gain in the stock if he is the seller. He only takes a $100,000 a year salary. More pandering to become popular it seems to me.
I do not care for 2 and 20 as an investor. And I never managed money for others. But if it is fully disclosed, I see no problem with doing it that with with investors who do not share my aversion to it.
The structure I like better would be something like .5% to 1% of the asset value per year because someone has to manage the damned fund and that takes time and the manager’s time is valuable. If the fund has a bad year, the manager is still managing his ass off and has to buy groceries. I would say the manager’s share of beta gains (going up the same as the whole market) should be zero but his share of alpha gains (those uniquely caused by the manager and above and beyond what happened in the rest of the market) could arguably be greater than 20%.
Ultimately, if you can create alpha gains, screw having partners or shareholders. Take 100% of the alpha gains. Early on you might need to share if that was your lowest cost source of needed capital, but long-term, any investor who is still paying 20% to 50% for his investment capital is an idiot.
I have fans and occasional some of them overdo it. When I catch one, I sort of chew him out.
“My book should not be anyone’s ‘bible.’ Search for the truth, not the one true guru. Hell, you sound like you think every word I’ve ever written is wonderful. If you would go back and read it all in chronological order, you would find that even I do not like some of what I wrote and the older it is, the greater the probability of that.”
John T. Reed