Guy Spier might not be the highest profile value investor, but that does not mean you should ignore him and his ideas.
Spier is the founder and managing partner of Aquamarine Capital, an investment partnership styled after the original 1950s Buffett partnerships. He also authored "The Education of a Value Investor," a book about his discovery of value investing and how he has sought to improve his process over the years by disconnecting from Wall Street and concentrating on looking for value at his own pace.
Be the best you can be
Quite a lot of Spier's work is focused on being the best investor you can be, acknowledging your weaknesses and strengths and then building on them rather than trying to replicate other investors.
I believe this is a vital lesson for all investors. You should only invest inside your circle of competence, which means running at your own pace and not trying to be clever, which can cost you a lot of money if it does not work in your favor. Investors who take large bets on mispriced assets understand they are statistically more likely to succeed over the long term than highly diversified investors who invest in a broad selection of assets but know very little about each one.
On this topic, Spier said the following in an interview with Graham & Doddsville, an investment newsletter from the students of Columbia Business School, in the fall of 2013:
"The investors that we appreciate and do well somehow have found a way to reflect their inner life in a very fundamental way in their investing moves. At the end of the day, every successful investor ends up differentiating themselves on the unique aspects of their personality and who they are. I’m not trying to be the best investor... I’m not Ben Graham and I’m not Warren Buffett (Trades, Portfolio). I shouldn’t try to out-Warren Warren...To compare myself to any of those other people is a very dangerous thing to do and probably not helpful actually. But they are all smarter than me and they’re all better investors and that’s okay. I’m comfortable with that. It’s about being the best version of yourself. That may be investing in low cost index funds because that’s where you’re at in terms of your ability to analyze and your relationship to money, and that’s perfectly fine."
Understanding your investment limits is vital if you want to be a successful investor. You are investing your own money, you are not investing for anyone else or with anyone else's mind, therefore, you have to build the best skillset for you and work off that -- there is just no other way.
Know your limits
Personally, Spier has really helped educate me in this way of thinking. He's also a great advocate of checklists, which should help you streamline your own personal investment process.
"A checklist is a very personal thing for me. It’s what mistakes have I made, what mistakes have people close to me made that I understand, and am I repeating these mistakes? It’s a bit like the common law. You’re not trying to talk in generalities. You’re saying, ‘I remember when I invested in EBC oil and someone in management was going through a divorce and it really messed up the investment. Is anybody here going through a divorce I need to know about?’ I remember when I invested in Lab Corp of America it was over-leveraged. We didn’t realize it was overleveraged. It was a great business but the investment went down by 80%. Is that the case here? That’s definitely one thing. "
Investing is not just about buying the right stocks or calculating returns, there is so much more to being a successful investor. Part of this process is realizing your limitations and improving your own education when it comes to the market.
I think Spier is one of the best investors to read up about in this respect. Even though the likes of Warren Buffett (Trades, Portfolio), Charlie Munger (Trades, Portfolio), Seth Klarman (Trades, Portfolio) and Mohnish Pabrai (Trades, Portfolio) have all broached this topic before, Spier is a lot more relatable as he is not a multibillionaire with a large following.
If you want to improve your investing process, I strongly recommend you read some of his work and interviews. They do not contain secrets to enormous wealth, but they will help you become a better investor through self-learning and understanding of your personal drawbacks and strengths.
