Anyone can be an investor. Select a strategy, approach, strategy or model and put in your money to create your portfolio. Depending on the performance, you may get returns that beat whatever index you bench-marked your portfolio against and be considered a “good” investor.
But what does it takes to be elevated into “great” status and stand out like Warren Buffet, George Soros, Charlie Munger, Seth Klarman and Howard Marks?
Jason Zweig, editor of the revised edition of Benjamin Graham’s The Intelligent Investor (Harper Collins, 2003), once wrote;
An enormous value can exist, because the market is inefficient; but it might not persist, because its very enormity may call the value to some else’s attention. Whoever is first to appraise it correctly wins“A Portrait of the Investing Columnist as a (Very) Young Man” written by Jason Zweig
Today, being able to find mispriced investments is not enough, you must also be able to find where mispriced investments are likely to be found. The ability to sieve through all the information available and know where to seek out undervalued assets and business is what separates the “great” from the “good”.
I have heard this story about an investor during the days when Norway first discovered oil in the North Sea. Everyone were scrambling to invest in stocks that would benefit from this find such as oil majors, infrastructure stocks etc etc. Prices of these stocks went sky high from all the speculation. One investor thought differently, he deduced that when the Norwegians disposable income increase (since they are the direct beneficiaries from extracting the oil in their seas), they would be more willing to spend on paintings by local artists to decorate their homes. Hence, he went to purchase as many art pieces by Norwegian artists as he can when the price is still low. True enough, the price of the paintings that he bought began to appreciate in the later years as the nation became wealthy.
There are many events to come that would impact the financial markets such as Brexit, protests in Hong Kong and the potential impeachment of US President Donald Trump. By observing the relationship between the geopolitical and socio-economic volatility and financial markets, a “great” investor will be able to identify the knock-on effects and make the appropriate investment decisions before anyone else does.
Easier said than done. For ordinary investors like us, I would think that the way to bridge the gap between “good” and “great” would be to educate oneself. It may not be possible to know enough, but if we get a clearer picture of what is going on in the world around us, we might be able to make wiser investment decisions.