The education of a value investor | Guy Spier


Published: 2014

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This autobiography is about the life journey of the Zurich-based fund manager Guy Spier, from a young and greedy Gordon Gekko wannabe to when he found Warren Buffett and began his search for a more authentic life. Spier currently runs the fund Aquamarine Capital, where between 1997 and 2014 he had an annual return of 9.4%, compared to the S&P 500’s 3.1%. The fund started with $15m and today has $250m under management [2020]. 

DISCOVERS ROBBINS AND GRAHAM. Spier studied at Oxford and Harvard, after which he entered the New York financial industry through the investment bank D. H. Blair (which was later shut down by the authorities). After that he felt lost for a few years and attended Tony Robbins events and read books on personal development. During that time, he stumbled upon Benjamin Graham’s “The Intelligent Investor,” which led him to Buffett and value investing. In 1997, with capital from his father, he started Aquamarine Capital.

THE LOTTERY TICKETS OF LIFE. Spier believes that when we can do something where the potential upside is large (but uncertain) while the downside is limited, we should do it – over and over again. He calls it the lottery tickets of life. The pay-outs from these lottery tickets are infrequent, but can be large and life-changing.

SOCIAL GOODWILL. Examples of these lottery tickets are thank you notes, training courses and travel. Inspired by the book “A Simple Act of Gratitude”, Spier began sending out fifteen thank you letters a week. He became addicted to the positive feedback this gave and the thank you letters changed his life. Thank you notes are an effective way to earn interest on social goodwill. Another way is that every time you meet a new person, ask yourself how you can help him or her in some way.

THE UNDERVALUED MILLION DOLLAR LUNCH. Through a thank you note for an educational AGM, Spier got to know the investor Mohnish Pabrai and in 2008 they bid on a charity lunch with Buffett for $650k. The lunch turned out to be a big milestone in Spier’s life. A year after lunch, Spier had laid off two-thirds of his employees and moved from New York to Zurich. In addition, he changed the fund’s fee structure (to the same as Buffett had in his partnership), shut down the Bloomberg terminal and stopped looking at stock prices on a minute basis.

WHAT WOULD BUFFETT DO? Spier writes that the best tool for problem solving is to ask oneself what one’s role models would have done in the same situation. In Spier’s case, the questions go to Buffett. Through a diligent study of Buffett, he says he has gained a feeling and understanding of how he had reasoned in the same situation.

BECOME THE BEST VERSION OF YOURSELF. One of Spier’s early goals was to become as good an investor as Buffett. After the charity lunch, he realized that it was not only practically impossible but also a wrong approach to life. He should instead strive to become the most authentic version of himself. In doing so, he would maximize his potential, while living a life tailored to the person he was. For that, Spier needed to change focus from being controlled by external validation (the external scorecard) to being controlled by internal validation (the internal scorecard).  

LOCATION MATTERS. Buffett is in Omaha, Munger and Pabrai is in Los Angeles and Spier is in Zurich. All have about ten minutes commuting distance to the office. Buffett usually has his cell phone turned off and does not even have an email address. Spier, who was a New York-based, realized that the environment shapes and influences everyday life to a large extent. He chose to make the Bloomberg terminal difficult to access (a heighted desk with an inconvenient angle), to dim the colors of his screen (so as not to start on green and red flashing arrows) and to create a study room in the form of a library without computers or telephones. Buffett made Spier realize that it is not enough to rely on his intellect to sort out all noise – we must actively create systems to get rid of it. 

USE CHECKLISTS. Spier has a checklist of 70 points which he applies to each potential new portfolio holding before investing. The checklist has been developed together with Pabrai and is based on their, as well as other successful investors’, historical mistakes. By producing a checklist, you force yourself to think about your investment process in a more systematic and structured way.

LIFE IS A GAME. Spier realized that he saw his career as a struggle for life or death. A self-chosen and destructive view that needed to change. He started doing things more for fun, without a clear agenda. He started playing bridge and chess. He realized that life could also be a game. He stopped forcing himself into things he did not want to do. Spier still works hard – but he works when and where he feels like it. 

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