Use Your Own Words
Craft | 5 min read | The world's best investors coin their own catch phrases, you should too
Investors are artists in the sense that we all have our own unique styles.
No two styles are the same because no two people are the same. That should go without saying. Yet, many of the blogs that describe their “Investment Philosophy” leave me scratching my head.
I am referring to these beautifully written pieces that describe the investor’s philosophy and process, thoughtfully weaving in quotes from Warren Buffett, Charlie Munger, Benjamin Graham.
But I think that’s the problem.
It’s one thing to honor the ones who have come before us by appealing to the timeless principles they have discovered. It’s another thing to rely so much on their principles that we don’t make their principles our own.
How many times have we read that an investor wants a high-quality business — one with high returns on incremental capital and a long runway, a durable competitive advantage, and shareholder-friendly management?
But doesn’t everyone want that?
After I finished of those “Investment Philosophy” posts, I walked away without a clue as to what they would actually own or the types of bets they are willing to make. It made me think:
We desperately need to revive the sense of creativity, originality, and imagination. We need to think like artists.
Writers, chefs, and designers do this really well. People from these professions understand their backgrounds are different from their mentors and heroes. These backgrounds heavily shape the way they approach their craft. Some of them are even born with certain personalities or abilities. Instead of letting any of these traits hold them back from originality, they embrace it.
As the investor Roy Neuberger puts it:
My advice is to learn from the great investors-not follow them… adapt what fits your temperament and circumstances. Your resources and your needs are bound to be different from anyone you may want to emulate.
Most of our heroes do this well.
In fact, many have coined their own catch phrases.
Tom Russo spreads the gospel about the capacity to suffer.
Charlie Munger sees investing as trying to shoot fish in a barrel: “My idea of shooting a fish in a barrel is draining the barrel first. It's really easy, then you shoot, preferably with a big shotgun.”
Even Mohnish Pabrai, the self-proclaimed shameless copycat, coined the famous line “Heads I win; Tails I don't lose much” and used an ancient Indian poem called Mahabharata to explain “The Art of Selling” in his book, The Dhando Investor.
These aren’t just flashy zingers and catch phrases.
These are manifestations of the way they uniquely see the world, see their craft, and see themselves.
What are these elite investors doing that we “regular” investors aren’t?
Here’s how Paul Podolsky, who worked under Ray Dalio for 15+ years, describes the mind of an elite investor:
Paul [Podolsky] described the minds of great portfolio managers as working “like a kaleidoscope.
And what is a kaleidoscope?
A kaleidoscope typically works on the principle of multiple reflections. The basic property of a mirror is to reflect the image of any object that is placed in front of it. This property of mirrors can be utilized to obtain more than one reflection of [one] object. This phenomenon is known as multiple reflections.
Alas, we have found the secret sauce!
We now know what differentiates good investors from great investors: it’s reflection.
Reflection often creates space for a new, differentiated view. And reflection repeated as a habit creates a lifetime of new and differentiated views.
Elite investors constantly reframe, rethink, and reimagine their philosophy and their process on a day-to-day basis. They look at things from all angles and reflect, just like if they were just like rotating a kaleidoscope.
I want to invite us, the investment community, into fully embracing this kaleidoscopic way of thinking and life. Once we submit to this paradigm, our own individuality and uniqueness will powerfully come through in the way that we talk about investing and the way we actually invest.
Thankfully, there are easy ways to begin. In fact, the easiest way to begin is to do something we likely did in elementary school: go through a series of prompts and questions.
These prompts and questions can be anything — as long as each prompt or question is different. A designer once explained how he used this process, more formally known as oblique thinking, in the early stages of the design for a new mural:
What if I looked at this mural from 100 feet away?
What would it look like from 10 feet away?
What if I turned the mural upside down?
What if I stripped away 90% of the elements?
Prompts and questions are the most common practices of reflection. There are others, but these basic techniques undoubtedly spur the imagination like no other.
If you don’t know where to start, just start where you’re at. There’s no need to get existential about your investing life. Just start incorporating reflection into your daily regimen. Reflect on anything.
Soon enough, you’ll start to see things you were so intimately familiar with fresh eyes.
That’s the kind of relationship I want to see all investors to have with their craft.
And I truly believe it will help our own investment styles be better understood; if not by others, most definitely by ourselves.
So, to conclude this article, I am going to describe my investment style using the most original language possible — what I call my catch phrases.
Here’s to more creativity, imagination, and originality in our world.
Sincerely,
Ralph Molina
August 7, 2023
My type of business:
I want Toyota’s, not Jeep’s. I want to own a business that requires the least amount of maintenance due diligence.
My ideal business is an unforced actor — a business liberated from time.
I want to own businesses with singularity.
There are only two types of moats that are safe enough for me to invest in: (1) Mt. Olympus and (2) Hurdles of Insanity.
The only conviction I need in management is having 90% certainty on what they won’t do.
How I see situations, opportunities, and holdings:
I want to own a business at the point of “maximum” margin of safety.
I want my decisions to feel like I’m pulling from the top of the Jenga Tower.
My style of investing is more like playing a game of Go Fish and less like poker.
My ideal situation is when perfectly rational people pass for non-investing reasons.
You shouldn’t own more businesses than the number of kids you are willing to have.
Sleeping well is important than eating well. My only objective is to generate stress-free, tax-efficient, joyful returns.
A thought-provoking piece, still on my mind three months after I first read it. More than that, I've come to think that it has relevance far beyond investing, that the same thinking can be applied to many other aspects of life.