Gary Mishuris, Managing Partner and Chief Investment Officer of Silver Ring Value Partners, shares his childhood experiences and how they influenced him as an investor. Topics discussed include attention as a finite resource, Charlie Munger's early investment record, parallels between investing and caring for a Bonsai tree, and the evolution of value investing.
Selective ignorance and managing attention are crucial in navigating the investment landscape.
Passive investing may not always be the ideal strategy, especially for individuals with lump sum investments.
Appreciating the value of a sound investment process is crucial, especially when faced with the challenge of outperforming passive investing.
Deep dives
The importance of selective ignorance and managing attention
Selective ignorance and managing attention are crucial in navigating the investment landscape. Recognizing that our attention is a finite resource allows us to curate our environment and filter out distractions that may hinder our decision-making process. By being aware of environmental factors and carefully choosing who we engage with, we can avoid being swayed by persuasive sales techniques and maintain focus on our investment process. It is essential to judge ourselves based on our inputs and the quality of our decision-making rather than solely focusing on outcomes. This approach helps us maintain discipline and block out the noise that can lead to emotional investing.
Navigating tough investment periods and the limitations of passive investing
Investment periods, such as the market stagnation between 1969 and 1981, can be challenging, and passive investing may not always be the ideal strategy. While passive investing can work well in certain circumstances, it has limitations, especially for individuals with lump sum investments who may not benefit from the constant inflows that make passive investing more effective. Additionally, the performance of active mutual funds over extended periods can be disappointing, even for experienced and knowledgeable investors. It is important to consider the difficulty in assessing the skill of an active manager and the potential for individual biases and emotions to influence investment decisions.
The importance of process in investment and the challenge of outperforming passive investing
Appreciating the value of a sound investment process is crucial, especially when faced with the challenge of outperforming passive investing. While passive investing can provide broad market exposure at a low cost, investors who can assess the quality of an active manager's process may find opportunities for potential outperformance. However, it is challenging for most investors to accurately evaluate and select active managers due to the complexity of investment strategies, making passive investing an attractive option. It is crucial to maintain a disciplined approach, focusing on following a sound process and evaluating decisions based on inputs rather than being solely outcome-oriented.
The cautionary tale of past investment legends and the importance of long-term perspective
Examining the experiences of past investment legends, such as during the 70s, provides valuable lessons. Some successful investors may have periods of underperformance, enduring tough market conditions and short-term setbacks. However, judging their long-term results rather than fixating on specific timeframes allows for a broader perspective. It is vital to separate oneself from short-term outcomes and focus on a long-term process that aims to generate consistent results over time. Maintaining a long-term perspective helps avoid rash decision-making driven by short-term fluctuations and market noise, leading to more successful investment outcomes.
Value of Emotional Support in Investing
One of the significant values added by investment managers is providing emotional support to clients during turbulent times. The manager's presence and reassurance can provide clients with a sense of calm, courage, and commitment to their investment plans. By remaining steady and composed during market downturns like in March 2020, a manager can alleviate clients' concerns and help them stick to their long-term investment strategies, which can be more valuable than trying to outperform the market.
Lessons from Bonsai for Investment Selection
The practice of bonsai reveals insights about patience and proportionality in investment selection. Bonsai involves creating a miniature representation of a tree by carefully managing its growth through specific soil and pruning techniques. Not all species of trees are suitable for bonsai, and similar to investing, some businesses may not thrive regardless of the efforts put into them. Just as selecting high-quality businesses is essential in investing, focusing on integrity and consistency is crucial in managing investments. Choosing investments with transparency, humility, and a long-term approach can help build trust and achieve success in the investment landscape.
What can we learn about investing from Gary's childhood gold ring story, a gentleman thief, Bonsai tree, and Charlie Munger.
Gary Mishuris, CFA, is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.
Gary received a S.B. in Computer Science and a S.B. in Economics from the Massachusetts Institute of Technology (MIT).
He started his investing career at Fidelity as an Equity Research Associate.
I highly recommend Gary’s Behavioral Value Investor newsletter, which you can find on Substack.
https://behavioralvalueinvestor.substack.com/
https://silverringvaluepartners.com/
Today, we have a wide-ranging discussion about everything investing, from stock picking to some big-picture ideas.
Gary shares his early childhood experiences and how they influenced him as an investor. He shares how attention is a finite resource in life and in investing. We talk about Charlie Munger and his early investment record, and we can learn from his experience. Gary finds parallels between other passions and pursuits and investing, including planting and caring for a Bonsai tree. We enjoy a lively discussion about the evolution of value investing. Stay tuned until the end when Gary explains the importance of the process over the outcome and shares his thoughts on capital allocation and his definition of success.
I really enjoyed talking to Gary and learning more about his investment style and experience; there are some one-of-a-kind anecdotes and stories hiding in this episode; it’s a real treat. I wish you a delightful listen.
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