Collection: Li Lu - #18 '3 Points That Will Make You a TRULY GREAT Value Investor'



[Transcript]

LI LU 00:00

Now, if for whatever reason that your personality is built to be a value investor, that probably means that you somehow, you know, genetically mutated throughout the process of evolution that;


a. You’re very comfortable being in a minority, which is not really a very natural to human beings, you know throughout our human evolution process, the most of us survive because we stick with the group, in face of large mammals, that’s the only way we can survive.


And so it is really over, you know, tens of thousands of years of evolution it really, you know, deeply ingrained into your genes, but occasionally you will find a small percentage of people really survive despite the fact that they really have a different kind of a gene, it's almost through a mutation process that the group of people survived.


So that’s the first thing you have to really be very very comfortable. You know being very much by yourself and therefore, you would naturally adopt the attitude you’re right, not because other people agree with you but because your reason and your evidence are right. It is common sense but of course as people said, common sense is the least common commodity. Most people don’t think that way.


And secondly that you would have probably spend most of your time truly be an academic researcher instead of so called "professional investor."


Most of the time you’re going to spend as professional investor, as a value investor – not a professional investor – is really to be an academic, to be a researcher, to be a journalist actually, to basically have insatiable curiosity, to really and try to figure out how just about everything works. Because investing really, the more you know, the better off you are as an investor.


And so you just have to be naturally interested and occurs just about everything any kind of a business, politics, science, technology, humanity, history, poetry, literature, everything really affected your business basically.


So you almost have to wait, you know, I don't want to scare off people, you don't have to but it will help you, it will help you.


And then occasionally you would have find a few insight that all of those studies that really gave you tremendous opportunities that other people just for whatever reason couldn't deal with. Either psychologically somebody said or were because of the limitation of the thinking or because of the institutional imperative of the institution they belong to, all sort of different reasons.


And then you go through your (checklist) to find out, is the business that opportunity you’re given is that cheap? Is the business a good business? Is the management somebody that I can trust? Either because they’re good or because the external checks are sufficient? And what else is missing? And then why this opportunity presented to me?


So you go through all this checklist and if you're comfortable and then you just have to really go over the last psychological barrier to basically do it.


(Source: https://youtu.be/y3c2PKupiu8)

 

[YAPSS Takeaway]

What makes a truly great value investor?

  • Be comfortable being in the minority group.

  • Have intense curiosity about everything.

  • Take action and just do it after going through all your checklist and you're comfortable with it.