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TMFAleph1 (94.88)

Why I'm a Better Investor Than You Are

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October 18, 2007 – Comments (9)

9:27 AM

Let me first say that the title of the post may not be true, but it sounds more compelling than “My Competitive Advantage as an Investor” -- it did pull you in, didn’t it? By popular request (from 2 people!), I’m going to discuss my potential sources of competitive advantage as I seek superior returns in the public stock markets. They are two-fold: 

1. An unusual mix of scientific and liberal arts educations. I’ve studied Mathematics and Statistics to a decent level and I also have training in less formal disciplines such as Politics, Philosophy and Economics. This yields an advantage in that people tend to choose one mode of thinking over the other, whereas equity investing can best be approached using both types of thinking. This relates to Charlie Munger’s concept of the latticework of mental models.

2. Bi-cultural upbringing. I was born into a bi-cultural family, was educated in three countries under two educational systems and have worked in the U.K., Japan and the U.S.A. You might conclude that I have an obvious advantage in investing internationally, but I think the real benefit of my background is much more powerful. Growing up and living in several countries has taught me that the ways in which people view reality is influenced by the culture in which they live, as well as the one in which they are educated. This creates all sorts of subtle biases, which can have an effect on how accurately you model reality and the quality of your decision-making based on your models.  The magnitude of these biases can vary dramatically by culture (compare how growing up in North Korea might impact your view of the world versus growing up in England, as I did) and by individual. Having straddled several countries/ cultures gives me a leg up in identifying (and hopefully, avoiding or eliminating) these types of bias.

I hope this was not too abstract and gave you some sense of where I feel my advantage lies. I recommend every investor go through the process of trying to identify their competitive advantage. If you cannot find one, you should either (a.) seek to develop one; or (b) delegate your investments to someone who already has one. Best of luck!

I went way over today in terms of time, but I think the topic merited careful attention if it was to yield any value for readers at all.

 

Total: 386 words

Time: 29 minutes 

*** The above text was written in ten minutes. As a result, some of it may not stand up to rational scrutiny. I apologize preemptively for any errors, omissions and misrepresentations. ***

9 Comments – Post Your Own

#1) On October 18, 2007 at 12:36 PM, TMFJoeInvestor (95.19) wrote:

That header is solid gold.  We need to run an article with that.

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#2) On October 18, 2007 at 12:39 PM, TMFAleph1 (94.88) wrote:

It's definitely a draw!

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#3) On October 18, 2007 at 1:18 PM, TMFHelical (98.69) wrote:

I have to say that I was expecting more along the lines of 'the people around me', 'tools that I have access too' or 'educational preparation'.  But nope, none of the above.  You are a better investor for reasons that have nothing to do with investing.

Kudos

I completely agree with you - the ability to relate what you know to what you are doing / learning, especially if it is from a diverse field or source - separates the great from the good.  I still don't tire (well maybe a little) of hearing Ronald Muhlenkamp talk about being a good investor largely due to his background in farming.

Nice commentary.

Zz

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#4) On October 18, 2007 at 1:28 PM, TMFAleph1 (94.88) wrote:

Thanks, Zz. I appreciate your praise and your encouragement to write the post. 

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#5) On October 18, 2007 at 1:59 PM, floridabuilder2 (99.31) wrote:

looks like ZZ is making the blogs rounds with me... i keep bumping into him....  As I was saying to TMF Hollywood... if more people would type better subject titles, then they would get more views.... this was a great title and a good read.... 

Here is a bad title.....  stock market thoughts

zzzzzzzzzzzzzzzzzzzzz

anyways, my belief is (1) bet on your industry short or long... (2) never go against street momentum regardless of your personal view if the market should be trending down or up,(3) screener software ... (4) and drink lots of Monster... it seems to help

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#6) On October 18, 2007 at 2:13 PM, TMFAleph1 (94.88) wrote:

(4) and drink lots of Monster... it seems to help

Hey, floridabuilder, are you investing or playing Halo 3?

;-) 

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#7) On October 18, 2007 at 3:06 PM, floridabuilder2 (99.31) wrote:

actually i am supposed to be working... but since the residential market hasn't capitulated yet, i spend most of my time just rejecting deals and milking my caps score.... 

 

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#8) On October 18, 2007 at 8:22 PM, klaracat (27.14) wrote:

I was grow up in the Russia. My father is Russian,and mother is Ukrainen.I have relatives living all over former SU.My greitgrama is Turkish,and i was  told i have sum Gypsey blood in me.

I was live in the Greece for a year.(Beautifley contry and very interesting people.)

Now i am in America.

  You wright ,it give you A lot of advantage,because you now who you are,but you allso can put youselfe in s.b. else shoes,and you now how they think.

I was very god in math in school,but choose go to medical school.(simple reson:in tex school you have draw,and when i drow, paralel line allways cros.)

I am very new to the market.But i am learning,and after couple stuped mistakes i am on a wright track.

So,when i gona have more experiens and edication in market you do  not go have much agventaje on me.(exept in typing. It take for me long time to type,and practice do not show any impruvmet.)

P.S.i do not now what is Monster,but my firsth winer i bought after five shots of B&B.

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#9) On October 22, 2007 at 3:35 PM, zygnoda (27.14) wrote:

I have agree with you that living in different countries really benefits you.  I lived in South Korea for a couple years growing up and alhtough I never lived among the people exactly it was a great experience. 

You make a good point about offering a unique perspective and set of abilities.  I agree that everyone should seek to offer something unique because that is what makes them valuable.

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