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Learning Curve

WORDS OF INVESTING WISDOM

Learning Curve Becoming a better investor has always struck me as a process of self-education – you read everything you can and learn through trial and error. My finance degree, except for having to take some accounting courses, was worthless. Aaron Edelheit, 1.31.08

I’ve had the good fortune of being around smart investors my whole life, including my father. But I’d have to say learning from what works and what doesn’t is how you really become a better investor. In the end, the market is the best teacher. Wayne Cooperman, 3.30.07

should be more of a business analyst than a stock analyst, meaning that I had to better understand how companies themselves created value. I moved more away from classical stock metrics of P/E and book value to business metrics of return on capital and cash flows. Andrew Pilara, 4.30.07

If one is wrong in judging a company to have a sustainable competitive advantage, the investment results can be disastrous. Jean-Marie Eveillard, 5.30.08

People suffer from an illusion of control, that even if things do go wrong, they'll be able to sort them out. A lot of the modern risk-management techniques created a totally false illusion of safety. The idea that by quantifying risk using a tool like VaR [Value at Risk] that you could therefore control it is one of the slightly more ridiculous things to have come along in years. James Montier, 10.31.08

Back in the late 1990s we invested in a few too many “concept” stocks – earlierstage companies with developing tech-

I generally find the best investors are very open and have almost a child-like curiosity about how everything works. They don’t come to the table with preconceived notions. Americans, in fact, are more likely to have this kind of attitude than Europeans or Asians. It’s much harder to learn new things when you think you already know everything. Oliver Kratz, 6.29.07

If you stop learning, the world rushes right by you. It's very hard to do this by merely hearing someone else talk. That's why most teaching is vivid. For example, when they trained soldiers for World War II, they shot real bullets above them, which really taught them to hug the ground. Charlie Munger, 7.31.07

Around 1982 it hit me that there were a lot of lousy stocks in my portfolio and I started wondering why. While it sounds like an obvious conclusion now, the common denominator of the losers was that they were in lousy businesses. I realized I Winter 2008

“I didn’t actually catch anything, but I do feel I gained some valuable experience.” www.valueinvestorinsight.com

Value Investor Insight 33

Words of Investing Wisdom  

Greatest Hits” collection of investing insight from Value Investor Insight

Words of Investing Wisdom  

Greatest Hits” collection of investing insight from Value Investor Insight

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