The Value Investors: Lessons from the World’s Top Fund Managers was one of the recent books I have read. This book essentially distilled the lessons encountered by the World’s top fund managers over their investment lifetime in simple examples for readers like us.
Why it caught my attention was that it was one of the few books that was written by an Asian author – Ronald Chan. Ronald Chan was also the author of “Behind the Berkshire Hathaway Curtain” another book that was previously covered by our partner Sudhan. Why these two books caught my eye was how Ronald Chan carried out the research for his books. Taking for example this book, the value investors, if you are writing on the world’s top fund managers, what better way is there than to interviewing the person themselves and getting the information directly from the horse’s mouth! He even managed to get up close and personal with the legendary investor Walter Schloss, who worked with the Dean of investing Benjamin Graham himself.
Who Is Ronald Chan?
Ronald is the founder of Chartwell Capital Limited in 2007 and currently serves as its Chief Investment Officer. It was noted that his approach was to seek undervalued investment opportunities based on fundamental analysis. We also can see shades of value investing from Chartwell’s long term investment horizon and the awareness of a margin of safety in every purchase. Being an active market practitioner, we think that Ronald is definitely qualified to write on this subject. With Bruce Greenwald writing the foreword, we think that it was safe to say that he got the academic side covered as well!
What Is This Book About?
Investing legend Warren Buffett once said that “success in investing doesn’t correlate with IQ once you are above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
In an attempt to understand exactly what kind of temperament Buffett was talking about, author Ronald Chan interviewed twelve value-investing legends form around the world, learning how their personal background, culture, and life experiences have shaped their investment mind-set and strategy.
In essence, this was a summary of what made them tick and what we could learn from their experiences!
Who Are These Legendary Investors?
There were a total of twelve value-investing legends covered in this book. Each chapter explores their respective value perspective that has enabled them to consistently beat the market. Some issues explored are, “Do they share a common trait?”, “What is their temperament like?” and “What advice do they have for us?”
Let us go through an interesting quote from five of them!
- Walter Schloss on surviving and career advice:
I learn that if I can simply survive in the market, just like surviving in the war, and not lose money, eventually I will make something. I also learned that life is short, so you need to be confident in yourself, and stick to what you like to do rather than something you don’t like but that will make you money.
- Irving Kahn on learning and learning by experience:
Ben always believed in the Socratic approach. He never provided students with a ready answer, believing that through discussions and rational decisions, solid conclusions would be reached. I remember asking him about the word ‘tranche’ as it applied to finance. Instead of providing me the definition right away. Ben asked me to look it up the dictionary. I discovered that it means ‘slice’ in French. Ben believed that if he told me the answer right away, I would forget it, but if I took the initiative to look it up myself, then I would always remember it.
- Thomas Kahn on keeping your cool:
There is nothing wrong about being an emotional person, but when it comes to investing, you need to set your own valuation standard. Then you also need to keep your emotions in check so that you are not affected by the general market. Sometimes, the best thing to do is nothing.
- William Browne on rational behaviour:
Investing is driven by people, and people are not rational most of the time! In investing, what you need to do is find businesses that have high probabilities of surviving the market. Then you implement a methodology to buy them at the right prices so you can be more often right than wrong.
- Jean-Marie Eveillard on simplifying your investment process:
Besides, some of the best analysts I have dealt with have enjoyed explaining complicated situations and how a company could turn itself around and so forth. I always tell them that they are smart, but the most complication they try to read into the story, the higher the probability that they will make a mistake. I tell them that there is nothing wrong with making money through simple investment ideas. After all, that’s what Warren Buffett has done for years.
Value In Action
Curious to find out more on the other seven?
More information on the book can be found right here!
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All views and opinions articulated in the article were expressed in Mun Hong’s personal capacity and do not in any way represent those of his employer and other related entities. Mun Hong does not own any shares in the companies mentioned above.
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