Video Link: https://youtu.be/ayM0EN7jymM
In this episode, Guy Spier talks about building a better investment process and why you shouldn't buy if someone tries to sell you something?
In this episode, you’ll learn:
Guy Spier's list of building a better investment process.
How to make better decision?
How honesty leads to a better life?
To check out all Collection: Guy Spier <click here>
GUY SPIER 00:00
But now I'm going to go to some very specifics. So this comes down to, you know, investing. Just straight, some of the things that I write about, but – and I'll just talk to some of them.
And so these are directed I sort of – investors would be sort of looking at these and saying half of these are heresies. And I don't want to discuss all of them, but – so I want to pick one that I can't even see there, 'cause there are more rules than there are up there, but you know that second one is such a powerful thing – (Laughter) – and so easy to implement, and it resulted in such an increase in my quality of life.
So I'm in New York and I'm running sort of like about $50 million and I get into some databases and now all manner of brokers and other people are calling me up. And the phone's ringing off the hook. And for some time that feels really good, 'cause I have – I need to feel significant and now these people are paying attention to me.
And you know, so they all have an axe to grind. They all have a commission to make. They all have something that skews the environment, puts me into their sales force field. And I will tell you that you cannot believe how many people still operate by choosing whatever's most available, because a salesperson pulls them up.
The minute I figured out this rule, and this is like if you think of ants solving complex problems about where to build their nests and where to find food sources and where to direct their energies by a very simple set of rules that Hölldobler and Wilson have identified, I think that is one straight, simple rule.
So you know I started doing it. People would call up. I'll say, oh, this is a sales call. I'm really sorry, but I will not be able to buy your product because you're selling it to me. (Laughter)
You know they are about, how are you going to find out about new funds over or how are you going find out about great tech stocks? And I'd say, well I'd ask one of my peers on – and this is before the internet is really taking off – I'd ask one of my peers, I'm not going to ask you.
So the phone stops ringing instantly and I just created a whole area of sort of quiet calm where there used to be sort of noise. And so just simply and it's interesting thing that doesn't direct me to success, but it just creates one condition. I think that doing that consistently tilts the playing field a little bit.
Just to go specific into sort of like the investment world, a friend of mine calls me. So, no, a deal guy is in Zurich and he wants to talk to me about a deal. So he calls me up he says, "Hey, we've got something, it's very interesting. Can I come by to the office and talk about it?"
And the answer is, no, thank you very much, send me a PDF.
"No, but I'm in Zurich today, and it's timely, and I really want to talk you about." So then the answer goes like this, it says, "look, you can come to the office and talk to me about it, but then I won't be able to invest in it, because that's my rule." And – (Laughter)
You know, so now he's stuck, because he really wants me to invest in it. But the simple rule of saying, I'm not going to take a sales call, send me the information in written form so I can evaluate in a non sort of like salesy-heightened environment where my mind is going to be messed with, is just a better way to do things.
Warren Buffett says he doesn't participate in open outcry auctions. It's exactly the same idea. And people come to him and they say, you know but this is the most amazing deal, and yes it's an auction, and he's just saying that – he's saying over a lifetime of making those kinds of decisions, if he doesn't show up at any open outcry auction or when anything is being auctioned he's going to do better.
So it's a strange thing because it's not, it's not saying, well, I'm shooting at that target. I'm saying, well, if I just get enough things away from that target eventually something will hit it. It's a sort of a backward way of creating – I guess it's just the creating of conditions for success. And if you ask me about it I'll come back to this.
But you know, TED Talks are 18 minutes, so I've already gone over my TED Talk time by, you know. And so I titled this chapter – so those rules, those kind of heuristics, accepting that I'm – my limitations, I think are powerful for investing.
I think that a lot of people who invest and who sell their investments, they want to try and convince you that they're doing it all in a certain way. And I think that most of them are using some kind of heuristics, but they just don't want to talk about it. And I think the industry that I'm in should be more honest with the people who are not in the industry about what they're actually doing.
And many people want to hear – oh, well, we optimize, you know, we review the portfolio once a month and when a stock comes to 80% of its intrinsic value then we sell it. And I just think that is so out of sync.
For everything we know about what humans are, why is the financial industry not talking more honestly about it? I decided that I would rather talk honestly about what I do, and that I'm trying to manage my irrationality than kind of – and when I started doing the book, I definitely had the agenda item. I'd like to drum up business. And I was lucky enough to have been around some great people.
And I'd read the autobiography of Mahatma Gandhi, where he talks about, within the first third of the book, about going with prostitutes. So here's a guy writing his autobiography, he's a leading man of India, he's revered as a saint, and he wants to tell the world that he slept with prostitutes. And I thought, well, if he can be that honest maybe I should be honest too.
But I started off the project hoping to drum up business, or at least having that as somewhere as an agenda item. And I was lucky enough to realize that it was more valuable for me, and I would live a more meaningful life, if I was authentic and honest than if I kind of tried to sort of cover up some things that I didn't like.
But so I think there is a lot of stuff that gets told by the financial industries to the American public which is just sales talk, because that's what they expect to hear. And I think the financial industry, especially having failed the United States and the world in 2008-2009, with a lot of rich people in it, has an obligation to be more honest about what's going on. I don't think it's not hard to do. We just got to get more people doing it.