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Brian Flores
Brian Flores
Articles (126)  | Author's Website |

Li Lu Reflects on Getting Older

Li Lu shares some of the lessons he has learned over the years

April 20, 2016

As the chariman of Himalaya Capital Management, Li Lu has become famous for his disciplined and value-oriented approach to investing. He just turned 50 and seized the opportunity to write about some of the important lessons he has learned. He touched upon some important aspects of success and wisdom in general.

Taking the journey

"If I have anything to do with that journey, it is simply that I took it. Woody Allen is right; 90% of success is to show up. At various stages in my life, I could have stopped or taken the long rest. For some reason, my heart told me otherwise. I just kept going. Half of the time, I wasn’t sure where I was heading. The other half I was probably taking the wrong turns. No matter."

Having control of our emotions

"But I was on high alert to correct mistakes along the way. I was careful not to be influenced by emotions that I know are poisonous and counterproductive to the journey I want to take – things like envy, resentment, hatred, jealousy, greed and self-pity. I certainly wasn’t born with immunity to this side of human nature. In fact, my early life experiences may require me to work even harder than others to guard against these human vulnerabilities. And when I did fall prey, or when I took a wrong turn, I was fortunate to be able to correct them quickly. Socrates was right. An unexamined life is not worth living, certainly not living well."

The luck factor

"I will fail in a lot of professions. For example, I won’t be good at ballet or basketball for that matter. My temperament and experiences prepared me well for a career in investment. I was extremely lucky to be introduced into the field by the greatest investor who ever lived when I accidentally stepped into a lecture by Warren Buffett (Trades, Portfolio) at Columbia nearly 25 years ago. And it was even more magical 13 years ago when Charlie Munger (Trades, Portfolio) became my investment partner, mentor and lifelong friend. To this day, I don’t know to what I would attribute this extreme fortune. It is something even the wildest imagination or the best fiction could not conjure."

Investing for the love of it

"Now that I have compiled a record of my own for over 20 years, still enjoy the game even better than when I started, I think I will simply continue. I’m curious to see how long I can follow the great record set by my teachers, Warren and Charlie, that is by now well over 50 years. Not for the size of asset under management, not for the fees, just keep a scorecard the way a golfer would after each round and after a lifelong career. So value investing is likely a lifelong pursuit for me."

I think Li Lu's letter is a great reflection of some of the factors that contribute to success. Just as Buffett mentions, it seems to me that Li Lu also tap dances to work and that he is very much aware that one does not walk the road to success alone. In his book "Outliers," Malcolm Gladwell discusses the role of luck in our success, which is something that great investors acknowledge. We can certainly decide how to allocate our time and resources, but there are some things that we cannot control and/or influence.

Another critical aspect is Lu's willingness to correct his mistakes and emotional biases. These are very hard to straighten out; however, an examined life is certainly worth living, as he mentions. By applying these concepts, we are likely to improve not only our results but also our lives as we come close to wisdom.

What do you think?

About the author:

Brian Flores
"I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you." - Charlie Munger

Visit Brian Flores's Website

Rating: 4.0/5 (1 vote)



Superguru - 3 years ago    Report SPAM

Are his holding and buy/sells published anywhere?

Toddallen - 3 years ago    Report SPAM

Can you provide a link to the original text from Li Lu?

SerenityStocks - 3 years ago    Report SPAM

Benjamin Graham was a scholar and professional investor who mentored renowned value investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

Warren Buffett once gave a talk at Columbia Business School describing how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The talk is known today as "The Superinvestors of Graham-and-Doddsville".

Buffett also wrote the preface to Graham's book - The Intelligent Investor - and calls it "by far the best book about investing ever written."

Graham wrote:
"to distill the secret of sound investment into three words, we venture the motto - Margin of Safety"

Buffett expressed the same principle in a different way saying:
"Rule No.1: Never lose money. Rule No.2: Never forget rule No.1."

Graham's first recommended strategy - for novice investors - was to invest in the stocks comprising an Index.
For more serious investors, Graham recommended three categories of stocks - Defensive, Enterprising and NCAV - with 17 rules for Quality and Quantity.
For professional investors, Graham described various special situations or "workouts".

The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
Defensive, Enterprising and NCAV stocks can be reliably detected by modern data-mining software, and offer a great avenue for profitable investment.
Most of Buffett's investments are what Graham defined as Special Situations.

Article: How To Build A Complete Benjamin Graham Portfolio has more details.

Simon premium member - 2 years ago

Can anyone advise how you can invest in Himalaya Capital Management?

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