6 October 2018
Dear Fellow Investor,
An interesting book was written by William Green, The Great Minds of Investing. He interviewed 24 of the world’s richest investors and shares the common characteristics that contributed to their success.
I highly recommend you listen to an interview he gave in London:
https://www.youtube.com/watch?
I have not read the book but I intend to order it.
From the you tube interview he detailed 4 characteristics of the great investors:
1. Diverge from the crowd and be willing to be lonely. You must be different. Reading the Edge, watching CNBC/ Bloomberg and following Facebook will not make you rich. We do our own independent on the ground research and visit unpopular companies, unloved and under researched companies to get a research edge before the crowd is interested.
2. Be humble. We are imperfect as human beings so network with those who are more intelligent and knowledgably than us. No matter how much money we make if we become arrogant and think we know everything , we can lose everything. Be willing to admit our mistakes and move on.
3. We must have the ability to take pain. We call that emotional resilience. If we do not play, we can not win so when we play make sure we understand the risks and rewards. Have an exit plan for profit or loss. Diversification in uncorrelated assets will help us mitigate pain. All great investors follow these guidelines.
4. We must have a return on life, not just equity. Return on life means your family, your hobbies, your holidays and your interactions with friends, pets and colleagues. For me, this gives me peace of mind and reduces stress. Every day I take my dog Rover for a long walk. It helps me interact with nature and is a form of meditation. Sometimes I get investment ideas from walking Rover and this gave me the idea to comment on the US 10 year treasury bond.
The 10 year US bond is the benchmark for world interest rates. The US 10 year treasury bond last week has broken a 10 year high and currently is at 3.22 %. US ISM Mfg. came in at 61.6 an all time record high. This is pushing up interest rates Unemployment in the US is at 3.7 % the lowest since 1969. Bond markets are saying the US economy is very strong and inflation is picking up. Highly leveraged, FANG and internet stocks have taken a big hit. The CAPE ratio for the S&P is at the 2nd highest level in 150 years.
We must be mindful and defensive at this juncture as we are on thin ice. Banks, consumer stocks and some tech stocks are OK for now. Any leveraged company with high debt must be avoided.
Invest well and grow your wealth
Bill
Critter of the week is a magnificent leopard.
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