This is a killer talk I came across from Hedge Fund manager Mark Sellers, speaking to some Harvard MBA kids on what it takes to make it in markets. Regardless of whether you consider yourself a trader or investor, Mark’s “seven traits” apply.
Enjoy…
First of all, I want to thank Daniel Goldberg for asking me to be here today and all of you for actually showing up. I haven’t been to Boston in a while but I did live here for a short time in 1991 & 1992 when I attended Berklee School of Music.
I was studying to be a jazz piano player but dropped out after a couple semesters to move to Los Angeles and join a band. I was so broke when I lived here that I didn’t take advantage of all the things there are to do in Boston, and I didn’t have a car to explore New England. I mostly spent 10-12 hours a day holed up in a practice room playing the piano. So whenever I come back to visit Boston, it’s like a new city to me.
One thing I will tell you right off the bat: I’m not here to teach you how to be a great investor. On the contrary, I’m here to tell you why very few of you can ever hope to achieve this status.
If you spend enough time studying investors like Charlie Munger, Warren Buffett, Bruce Berkowitz, Bill Miller, Eddie Lampert, Bill Ackman, and people who have been similarly successful in the investment world, you will understand what I mean.
I know that everyone in this room is exceedingly intelligent and you’ve all worked hard to get where you are. You are the brightest of the bright. And yet, there’s one thing you should remember if you remember nothing else from my talk: You have almost no chance of being a great investor.
You have a really, really low probability, like 2% or less. And I’m adjusting for the fact that you all have high IQs and are hard workers and will have an MBA from one of the top business schools in the country soon. If this audience was just a random sample of the population at large, the likelihood of anyone here becoming a great investor later on would be even less, like 1/50th of 1% or something.
You all have a lot of advantages over Joe Investor, and yet you have almost no chance of standing out from the crowd over a long period of time.
And the reason is that it doesn’t much matter what your IQ is, or how many books or magazines or newspapers you have read, or how much experience you have, or will have later in your career. These are things that many people have and yet almost none of them end up compounding at 20% or 25% over their careers.
I know this is a controversial thing to say and I don’t want to offend anyone in the audience. I’m not pointing out anyone specifically and saying that you have almost no chance to be great. There are probably one or two people in this room who will end up compounding money at 20% for their career, but it’s hard to tell in advance who those will be without knowing each of you personally.
On the bright side, although most of you will not be able to compound money at 20% for your entire career, a lot of you will turn out to be good, above average investors because you are a skewed sample, the Harvard MBAs. A person can learn to be an above-average investor. You can learn to do well enough, if you’re smart and hardworking and educated, to keep a good, high-paying job in the investment business for your entire career.
You can make millions without being a great investor. You can learn to outperform the averages by a couple points a year through hard work and an above average IQ and a lot of study. So there is no reason to be discouraged by what I’m saying today. You can have a really successful, lucrative career even if you’re not the next Warren Buffett.
But you can’t compound money at 20% forever unless you have that hard-wired into your brain from the age of 10 or 11 or 12.
I’m not sure if it’s nature or nurture, but by the time you’re a teenager, if you don’t already have it, you can’t get it. By the time your brain is developed, you either have the ability to run circles around other investors or you don’t.
Going to Harvard won’t change that and reading every book ever written on investing won’t either. Neither will years of experience. All of these things are necessary if you want to become a great investor, but in and of themselves aren’t enough because all of them can be duplicated by competitors.
As an analogy, think about competitive strategy in the corporate world. I’m sure all of you have had, or will have, a strategy course while you’re here. Maybe you’ll study Michael Porter’s research and his books, which is what I did on my own before I entered business school. I learned a lot from reading his books and still use it all the time when analyzing companies.
Now, as a CEO of a company, what are the types of advantages that help protect you from the competition?
How do you get to the point where you have a wide economic moat, as Buffett calls it?
Well one thing that isn’t a source of a moat is technology because that can be duplicated and always will be, eventually, if that’s the only advantage you have. Your best hope in a situation like this is to be acquired or go public and sell all your shares before investors realize you donít have a sustainable advantage.
Technology is one type of advantage that’s short-lived. There are others, such as a good management team or a catchy advertising campaign or a hot fashion trend. These things produce temporary advantages but they change over time, or can be duplicated by competitors.
An economic moat is a structural thing. It’s like Southwest Airlines in the 1990s, it was so deeply ingrained in the company culture, in every employee, that no one could copy it, even though everyone kind of knew how Southwest was doing it.
If your competitors know your secret and yet still can’t copy it, that’s a structural advantage. That’s a moat.
The way I see it, there are really only four sources of economic moats that are hard to duplicate, and thus, long-lasting. One source would be economies of scale and scope. Wal-Mart is an example of this, as is Cintas in the uniform rental business or Procter & Gamble or Home Depot and Lowe’s.
Another source is the network affect, ala eBay or Mastercard or Visa or American Express.
A third would be intellectual property rights, such as patents, trademarks, regulatory approvals, or customer goodwill. Disney, Nike, or Genentech would be good examples here. A fourth and final type of moat would be high customer switching costs. Paychex and Microsoft are great examples of companies that benefit from high customer switching costs.
These are the only four types of competitive advantages that are durable, because they are very difficult for competitors to duplicate. And just like a company needs to develop a moat or suffer from mediocrity, an investor needs some sort of edge over the competition or he’ll suffer from mediocrity.
There are 8,000 hedge funds and 10,000 mutual funds and millions of individuals trying to play the stock market every day. How can you get an advantage over all these people? What are the sources of the moat?
Well, one thing that is not a source is reading a lot of books and magazines and newspapers. Anyone can read a book.
Reading is incredibly important, but it won’t give you a big advantage over others. It will just allow you to keep up. Everyone reads a lot in this business. Some read more than others, but I don’t necessarily think there’s a correlation between investment performance and number of books read.
Once you reach a certain point in your knowledge base, there are diminishing returns to reading more. And in fact, reading too much news can actually be detrimental to performance because you start to believe all the crap the journalists pump out to sell more papers.
Another thing that won’t make you a great investor is an MBA from a top school or a CFA or PhD or CPA or MS or any of the other dozens of possible degrees and designations you can obtain.
Harvard can’t teach you to be a great investor. Neither can my alma mater, Northwestern University, or Chicago, or Wharton, or Stanford. I like to say that an MBA is the best way to learn how to exactly, precisely, equal the market return. You can reduce your tracking error dramatically by getting an MBA.
This often results in a big paycheck even though it’s the antithesis of what a great investor does. You can’t buy or study your way to being a great investor. These things won’t give you a moat. They are simply things that make it easier to get invited into the poker game.
Experience is another over-rated thing.
I mean, it’s incredibly important, but it’s not a source of competitive advantage. It’s another thing that is just required for admission. At some point the value of experience reaches the point of diminishing returns. If that wasn’t true, all the great money managers would have their best years in their 60s and 70s and 80s, and we know that’s not true. So some level of experience is necessary to play the game, but at some point, it doesn’t help any more and in any event, itís not a source of an economic moat for an investor.
Charlie Munger talks about this when he says you can recognize when someone gets it right away, and sometimes it’s someone who has almost no investing experience.
So what are the sources of competitive advantage for an investor?
Just as with a company or an industry, the moats for investors are structural. They have to do with psychology, and psychology is hard wired into your brain. It’s a part of you. You can’t do much to change it even if you read a lot of books on the subject.
The way I see it, there are at least seven traits great investors share that are true sources of advantage because they canít be learned once a person reaches adulthood. In fact, some of them can’t be learned at all; you’re either born with them or you aren’t.
Trait #1
Is the ability to buy stocks while others are panicking and sell stocks while others are euphoric.
Everyone thinks they can do this, but then when October 19, 1987 comes around and the market is crashing all around you, almost no one has the stomach to buy. When the year 1999 comes around and the market is going up almost every day, you can’t bring yourself to sell because if you do, you may fall behind your peers.
The vast majority of the people who manage money have MBAs and high IQs and have read a lot of books. By late 1999, all these people knew with great certainty that stocks were overvalued, and yet they couldn’t bring themselves to take money off the table because of the ìinstitutional imperative, as Buffett calls it.
Trait #2
The second character trait of a great investor is that he is obsessive about playing the game and wanting to win.
These people don’t just enjoy investing; they live it. They wake up in the morning and the first thing they think about, while they’re still half asleep, is a stock they have been researching, or one of the stocks they are thinking about selling, or what the greatest risk to their portfolio is and how they’re going to neutralize that risk.
They often have a hard time with personal relationships because, though they may truly enjoy other people, they don’t always give them much time. Their head is always in the clouds, dreaming about stocks.
Unfortunately, you can’t learn to be obsessive about something. You either are, or you aren’t. And if you aren’t, you can’t be the next Bruce Berkowitz.
Trait #3
A third trait is the willingness to learn from past mistakes. The thing that is so hard for people and what sets some investors apart is an intense desire to learn from their own mistakes so they can avoid repeating them.
Most people would much rather just move on and ignore the dumb things they’ve done in the past. I believe the term for this is repression.
But if you ignore mistakes without fully analyzing them, you will undoubtedly make a similar mistake later in your career. And in fact, even if you do analyze them it ís tough to avoid repeating the same mistakes.
Trait #4
A fourth trait is an inherent sense of risk based on common sense.
Most people know the story of Long Term Capital Management, where a team of 60 or 70 PhDs with sophisticated risk models failed to realize what, in retrospect, seemed obvious: they were dramatically over leveraged. They never stepped back and said to themselves, “Hey, even though the computer says this is ok, does it really make sense in real life?”
The ability to do this is not as prevalent among human beings as you might think. I believe the greatest risk control is common sense, but people fall into the habit of sleeping well at night because the computer says they should. They ignore common sense, a mistake I see repeated over and over in the investment world.
Trait #5
Great investors have confidence in their own convictions and stick with them, even when facing criticism. Buffett never get into the dot-com mania though he was being criticized publicly for ignoring technology stocks.
He stuck to his guns when everyone else was abandoning the value investing ship and Barron’s was publishing a picture of him on the cover with the headline “What’s Wrong, Warren?”
Of course, it worked out brilliantly for him and made Barron’s look like a perfect contrary indicator.
Personally, I’m amazed at how little conviction most investors have in the stocks they buy. Instead of putting 20% of their portfolio into a stock, as the Kelly Formula might say to do, they’ll put 2% into it.
Mathematically, using the Kelly Formula, it can be shown that a 2% position is the equivalent of betting on a stock has only a 51% chance of going up, and a 49% chance of going down. Why would you waste your time even making that bet? These guys are getting paid $1 million a year to identify stocks with a 51% chance of going up? It’s insane.
Trait #6
Sixth, it’s important to have both sides of your brain working, not just the left side (the side that’s good at math and organization.)
In business school, I met a lot of people who were incredibly smart. But those who were majoring in finance couldn’t write worth a damn and had a hard time coming up with inventive ways to look at a problem. I was a little shocked at this.
I later learned that some really smart people have only one side of their brains working, and that is enough to do very well in the world but not enough to be an entrepreneurial investor who thinks differently from the masses.
On the other hand, if the right side of your brain is dominant, you probably loathe math and therefore you don’t often find these people in the world of finance to begin with. So finance people tend to be very left-brain oriented and I think that’s a problem. I believe a great investor needs to have both sides turned on.
As an investor, you need to perform calculations and have a logical investment thesis. This is your left brain working.
But you also need to be able to do things such as judging a management team from subtle cues they give off. You need to be able to step back and take a big picture view of certain situations rather than analyzing them to death. You need to have a sense of humor and humility and common sense. And most important, I believe you need to be a good writer.
Look at Buffett; he’s one of the best writers ever in the business world. It’s not a coincidence that he’s also one of the best investors of all time. If you can’t write clearly, it is my opinion that you don’t think very clearly. And if you don’t think clearly, you’re in trouble. There are a lot of people who have genius IQs who can’t think clearly, though they can figure out bond or option pricing in their heads.
Trait #7
And finally the most important, and rarest, trait of all: The ability to live through volatility without changing your investment thought process.
This is almost impossible for most people to do; when the chips are down they have a terrible time not selling their stocks at a loss. They have a really hard time getting themselves to average down or to put any money into stocks at all when the market is going down.
People don’t like short term pain even if it would result in better long-term results.Very few investors can handle the volatility required for high portfolio returns.
They equate short-term volatility with risk. This is irrational; risk means that if you are wrong about a bet you make, you lose money. A swing up or down over a relatively short time period is not a loss and therefore not risk, unless you are prone to panicking at the bottom and locking in the loss.
But most people just can’t see it that way; their brains won’t let them. Their panic instinct steps in and shuts down the normal brain function.
I would argue that none of these traits can be learned once a person reaches adulthood. By that time, your potential to be an outstanding investor later in life has already been determined.
It can be honed, but not developed from scratch because it mostly has to do with the way your brain is wired and experiences you have as a child. That doesn’t mean financial education and reading and investing experience aren’t important.
Those are critical just to get into the game and keep playing. But those things can be copied by anyone.
The seven traits above can’t be.
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Do you possess these 7 traits?
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前两天有一位读者向投投推荐了马克·塞勒尔先生的这篇文章，尽管这是马克·塞勒尔先生于2008年在哈佛大学所做演讲的文稿，算是一篇旧文了，但读完文章后，仍让投投感触颇深，于是便想着做一期微信与你分享。 记得前段时间有人评论，这可能是一个投资人的数量大于创业者的数量，创业者明显不够投资人用的时代，泡沫不仅在创业一端，亦在投资一端。许多并不具备相应的资历、判断能力乃至思考能力的人，在过去几年的洪流中，都进入了这个行业。 马克·塞勒尔先生是对冲基金Sellers Capital Fund创始人，曾在晨星公司担任首席股权战略师。在这篇文章里马克·塞勒尔先生不仅给哈佛的高材生们泼了一盆冷水，或许也给我们很多置身在双创大潮中的投资人都泼了一盆冷水。
对冲基金Sellers Capital Fund创始人 1 你将不会成为一个伟大的投资人 我知道这里（哈佛大学）的每一个人都有超越常人的智力，并且是经过艰苦的努力才达到今天的水平。 不过，你们至少应该记住一件事：你们几乎已经没有机会成为一个伟大的投资人。这已经考虑到你们都是高智商且工作努力的人，并且很快就能从这个国家最顶级的商学院之一拿到MBA学位的事实。 其原因是，你的智商是多少、看过多少书报杂志、拥有或者在今后的职业中将拥有多少经验，都不起作用。很多人都有这些素质，但几乎没有人在整个职业生涯中使复合回报率达到20%或25%。 一个人能学会如何成为一般级别之上的投资人？ 如果你们聪明、勤奋又受过教育，就能做得足够好，在投资界保住一份高薪的好工作。不用成为伟大投资人，你们也可以赚取百万美元。因此无须为我今天说的话而沮丧，即使不是巴菲特，你们也将会有一份真正成功且收入不菲的职业。 我不确定「能够赚取20%的复合回报率」是天生的还是后天习得的能力，但如果你到青少年时期还没有这种特质，那么你就再不会有了。你读完每一本关于投资的书不会，多年的经验也不会。那些只是你超过其他投资人的必要条件，因为它们都能被竞争对手复制。 作个类比，想想企业界的各种竞争策略吧。你们或许会研习迈克尔·波特的文章和书籍，现在，作为公司的CEO，什么样的优势才能使你们免受残酷的竞争？
*迈克尔·波特是哈佛大学商学院著名教授，被誉为「竞争战略之父」 2 建立自己的「护城河」 第一、建立巴菲特所说的「经济护城河」(economic moat)？ 如果技术是你唯一的优势，那么它并不是建立「护城河」的源头，虽然它是可以、但它最终还是会被复制的。这种情况下，你最好的希望是被收购或者上市，在投资人认识到你并没有可持续性优势之前卖掉你的所有股份。 科技所给你带来的优势是非常有限的。还有比如一个好的管理团队、一场鼓动人心的广告行动，或是一股高热度的流行趋势。这些东西制造的优势都是暂时的，因为它们与时俱变，而且能被竞争者复制。 经济护城河是一种结构性（structural）的优势，即如果你的竞争者知道你的秘密却不能复制，那就是就是一条「护城河」，一种结构性的优势。 在我看来，实际只有四种难以复制且能持久的「经济护城河」。
就像公司要么建立一条「护城河」，要么就忍受平庸，投资人也需要一些超越竞争者的优势，否则他就沦为平庸。 3 「护城河」由何而来？ 首先，大量阅读书籍、杂志、报纸并不是建立「护城河」的有效方式。 投资界的人都有大量阅读的习惯，但是我不认为投资表现与阅读数量之间呈正相关关系，你的知识积累达到某个关键点后，再多的阅读就会呈收益递减效应。事实上，读太多新闻反而会伤害你的投资表现，因为那说明你开始相信记者们为了报纸销量而倾泻的所有废话。 另外，任凭你是顶尖学校的MBA，或者拥有注册金融分析师资格、博士学位、注册会计师证书等等数十种可能得到的学位和证书，都不可能让你成为伟大的投资人。只是让你更容易获得进入这场赌局的邀请而已。 经验是另一件被高估的事情。虽然经验的确很重要，但它并不能帮你获得竞争优势，它仅仅是另一张必需的入场券，一定程度的经验是玩这个游戏所必需的，但到了一定时候，它就不再有更多帮助。它不是投资人的「护城河」。查理·芒格说过，你们可以辨别出谁能正确地「理解」，但有时这个人可能是一个几乎没有投资经验的人。 4 伟大的投资人该必备的七个特质 就像一个公司或者一个行业，投资人的「护城河」也应该是结构性的。它们与一些心理学因素有关，而心理因素是深植在你的脑子里的，是你的一部分，即使你阅读大量相关书籍也无法改变。 我认为，至少有七个特质是伟大投资人的共同特征，是真正的优势资源，而且是你一旦成年就再无法获得的。事实上，其中几个特质甚至丝毫没有学习的可能，你必须天生具备，若无就此生难寻。 第一个特质是，在他人恐慌时果断买入股票、而在他人盲目乐观时卖掉股票的能力。每个人都认为自己能做到这一点，但是当1987年10月19日这天到来的时候（历史上著名的「黑色星期一」），市场彻底崩溃，几乎没人有胆量再买入股票。 而在1999年（次年即是纳斯达克大崩盘），市场几乎每天都在上扬，你不会允许自己卖掉股票，因为你担心会落后于他人。绝大多数管理财富的人都有MBA学位和高智商，读过很多书。 到1999年底，这些人也都确信股票被估值过高，但他们不能允许自己把钱撤离赌台，其原因正是巴菲特所说的「制度性强制力」(institutional imperative)。 第二个特质是，伟大投资人是那种极度着迷于此游戏，并有极强获胜欲的人。他们不只是享受投资的乐趣——投资就是他们的生命。 他们清晨醒来时，即使还在半梦半醒之间，想到的第一件事情就是他们研究过的股票，或者是他们考虑要卖掉的股票，又或者是他们的投资组合将面临的最大风险是什么以及如何规避它。他们通常在个人生活上会陷入困境，尽管他们也许真的喜欢其他人，也没有太多的时间与对方交流。 第三个特质是，从过去所犯错误中吸取教训的强烈意愿。这点对于人们来说是难以做到的，让伟大投资人脱颖而出的正是这种从自己过去错误中学习以避免重犯的强烈渴望。大多数人都会忽略他们曾做过的愚蠢决定，继续向前冲。 我想用来形容他们的词就是「压抑」（repression）。但是如果你忽略往日的错误而不是全面分析它，毫无疑问你在将来的职业生涯中还会犯相似的错。事实上，即便你确实去分析了，重复犯错也是很难避免的。 第四个特质是，基于常识的与生俱来的风险嗅觉。大部分人都知道美国长期资本管理公司（1990年代中期的国际四大对冲基金之一，1998年因为俄罗斯金融风暴而濒临破产）的故事，一个由六七十位博士组成的团队，拥有最精妙的风险分析模型，却没能发现事后看来显见的问题：他们承担了过高的风险。 他们从不停下来问自己一句：“嗨，虽然电脑认为这样可行，但在现实生活中是否真的行得通呢？”这种能力在人类中的常见度也许并不像你认为的那样高。 我相信最优秀的风险控制系统就是常识，但是人们却仍会习惯听从电脑的意见，我看到这个错误在投资界一再上演。 第五个特质是，伟大的投资人都对于他们自己的想法怀有绝对的信心，即使是在面对批评的时候。巴菲特坚持不投身疯狂的网络热潮，尽管人们公开批评他忽略科技股。 当其他人都放弃了价值投资的时候，巴菲特依然岿然不动。《巴伦周刊》为此把他做成了封面人物，标题是「沃伦，你哪儿出错了？」当然，事后这进一步证明了巴菲特的智慧。 就个人而言，我很惊讶于大多数投资人对他们所买股票的信心之微弱。根据凯利公式，投资组合中的20%可以放在一支股票上，但很多投资人只放2%。从数学上来说，运用凯利公式，把2%的投资放在一支股票上，相当于赌它只有51%的上涨可能性，49%的可能性是下跌。 为何要浪费时间去打这个赌呢？这帮人拿着100万美元的年薪，只是去寻找哪些股票有51%的上涨可能性？简直是有病。 第六个特质是，左右脑都很好用，而不仅仅是开动左脑（左脑擅长数学和组织）。一些非常聪明的人只用一半大脑思考，这样足以让你在世上立足，可是如果要成为一个和主流人群思考方式不同的富有创新精神的企业投资人，这还远远不够。 另一方面，如果你是右脑占主导的人，你很可能讨厌数学，通常就无法进入金融界了。所以金融人士很可能左脑极其发达，我认为这是个问题。我相信一个伟大投资人的两边大脑都发挥作用。 最后最重要的，同时也是最少见的一项特质：在投资过程中，大起大落之中却丝毫不改投资思路的能力。这对于大多数人而言几乎是不可能做到的。当股票开始下跌，人们很难坚持承受损失而不抛出股票。市场整体下降时，人们很难决定买进更多股票以使成本摊薄，甚至很难决定将钱再投入股票中。 很少有投资人能应对高回报率所必须经历的短期波动。他们将短期波动等同于风险。这是极不理性的。风险意味着你若押错了宝，就得赔钱。而相对短时期内的上下波动并不等于损失，因此也不是风险，除非你在市场跌到谷底时陷入恐慌，被损失吓得大乱阵脚。 我必须申明，人们一旦步入成年期就无法再学到上述特质了。 这个时候，你在日后成为卓越投资人的潜力已经被决定了。这种潜力经过锻炼可以获得，但是无法从头建立，因为这与你脑组织的结构以及孩童时期的经历密切相关。 金融教育、阅读以及投资经验很重要，但只能让你够资格进入这个游戏并玩下去。那些都是可以被任何人复制的东西，而上述7个特质却不可能。 作者：马克·塞勒尔（Mark Sellers） 来源：投资人说 |
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