Greatness According To Nick Saban

Greatness According To Nick Saban

If you’re a sports fan you know with the dawn of free agency and rise of player movement in the last two decades it’s become almost impossible to win championships on a consistent basis.

Before the 1980’s in the US sports dynasties were normal.  They could do this because player movement was restricted.

This kept player salaries down and meant that the best teams had huge competitive advantages over poor teams.  If you’re all getting paid about the same doesn’t it make sense to stay with a great team instead of going to a bad one?

This changed in the US in the 1980’s though…

Free agency, drafts, and salary caps became the norm.  Poor teams could now pay huge amounts to star players to lure them away from championship teams.  Drafting players became more important as they’re generally cheaper than star players.  And salary caps in professional football and basketball meant talent was spread around the league instead of concentrated on a handful of teams.

This all led to higher salaries for great – and sometimes even average – players.  More player movement.  And fewer super teams and dynasties forming as talent spread around.

Now most teams in all sports around the world go through periods of relative success followed by failure until the cycle repeats and the team goes on an up – or down – swing again.

Few teams win championships.  And even fewer win them on a consistent basis.  The ones that do should be studied.

Unlike most people in America who root for the underdogs in big games and playoffs, if my favorite team isn’t involved I always root for greatness to beat the underdog.

I want to watch the best of the best play for and win championships.  I don’t like watching inferior teams beat better ones with a “lucky bounce” or fortunate call by referees.

I love when skill, hard work, perseverance, drive, and passion trumps luck.  So when I see greatness I try to study it.  And I thought this would be a great topic to post about since all of us here are trying to reach greatness.

This post is the first in a planned three post arc focusing on great teams from the world of sports.  In these posts I’ll focus on the head coaches, star players, and team structures over the long-term.  The hope is we all can learn something about what it takes to become – and stay – great at what we do.

If these posts are popular I’ll turn it into a regular series.

Today’s Part 1 is about head coach five time football champion head coach Nick Saban now of the University of Alabama Crimson Tide.

Saban’s led the Crimson Tide to championships in four out of the last seven years.  Only the second team since 1936 to do this.  Saban’s other title was when he coached at LSU.

Below is a profile of this championship coach with linked articles detailing his processes.

Nick Saban

Excerpts below are from linked articles.  Bolded emphasis is mine.  My notes are the non quoted lines.

The following is from: The Lesson From Nick Saban’s Championship Reign is to stop trying to copy Nick Saban.

Success breeds imitation in every industry. In football, when a coach figures out something, hoards of administrators notice.  Offenses come up with something new, defenses adjust, offenses adjust to the adjustment, etc.

With Saban, however, teams have attempted to copy without figuring out what they should be copying. They hire his assistants, hoping his influence rubs off. Sometimes it does. Former Alabama DBs coach Jeremy Pruitt became Florida State’s defensive coordinator in 2013 and helped to boost the Seminoles to the national title under head coach and fellow former Saban assistant Jimbo Fisher. Often, it doesn’t. Former defensive coordinator Will Muschamp took the Florida head coaching job three years after a Gator national title and won more than seven games just once.

To imitators, Saban’s Process™ seems to consist of strong defense and occasional offense. Because he is a former defensive coordinator himself, that is the product. But that isn’t the Process. The Process is the path, not the style.

Love this saying.

To truly imitate Saban, you look first for someone who runs the most organized, effective recruiting operation on the planet

The following list is from the article talking about how Saban approaches everything.

You must develop.

Saban pushes a lot of kids out the door. If you do not fill a depth chart spot or fill a niche, odds are pretty good that you will be transferring. But many are willing to wait a couple of years for serious playing time because they know they’ll develop.

What is your niche?  What is your competitive advantage?  Are you willing to put in the time to improve?

You must deploy your talented, well-developed players appropriately.

You don’t have to take many strategic risks when you’ve got a talent advantage in every game, but you need to make sure that these players belong to a system is built to defeat the opponents you will play on a yearly basis. And if your offense or defense gets a little staid, you must be willing to make changes.

If you’re in a leadership position are you putting your “players” into the proper positions to succeed?  If so are they the right people for your system?

You must be impossibly organized.

A place for everything, everything in its place.

Love this saying as well.

If, despite all that, you find yourself in a dogfight for the national title, you must have the guts to call for a surprise onside kick by Griffith with 10 minutes left in a tied game.

If you read the article you’ll know this play wasn’t a fluke.  Saban and the coaching staff knew from watching film to look for this tendency during the game.  And since they saw Clemson doing the same thing over and over on kick returns they knew this onside kick would work if executed properly.

The teams that find a way past Alabama do it by following a path that isn’t Alabama’s.

Strive for greatness but don’t emulate something that doesn’t adhere to your philosophy and principles.  Create your own path for greatness.

This sport requires you to learn the right lessons when you fail, lest you be doomed to fail even more. Those who attempt to imitate Saban have already failed. There is only one Nick Saban.

There’s also only one Warren Buffett, Charlie Munger, Seth Klarman, etc in our business.  Strive for greatness by taking knowledge from the greats.  But don’t try to emulate them exactly.  Create your own path for greatness.

The following is from Nick Saban: Sympathy For The Devil.  This is an older article… He’s now won five total national titles.  And four of the last seven.

Saban’s pathological drive helps explain why he’s both one of the most successful coaches in American sports and, simultaneously, one of the most polarizing. He has now won four national championships—one at LSU and three over the past four years at Alabama, a coaching run unmatched in college football in more than half a century—

“The thing that amazes me about him is that he doesn’t let up,” says retired Florida State coach Bobby Bowden. “People start winning, they slack off. But he just keeps jumping on ‘complacency, complacency, complacency.’ Most coaches don’t think like that.”

Are you grounded enough to continue to work towards greatness after success?

Most big-time head coaches leave camp duty to assistants—the daylong photo session with every last camper is considered enough—but in Saban’s mind that wouldn’t be right. He has a saying: Right is never wrong. It means, in essence, there is only one way to do things: the correct way. A Nick Saban Football Camp without a great deal of Nick Saban would be something short of entirely right and is therefore, to Saban, unthinkable.

Love this saying and mindset.

Saban’s guiding vision is something he calls “the process,” a philosophy that emphasizes preparation and hard work over consideration of outcomes or results. Barrett Jones, an offensive lineman on all three of Saban’s national championship teams at Alabama and now a rookie with the St. Louis Rams, explains the process this way: “It’s not what you do, it’s how you do it.”

Taken to an extreme—which is where Saban takes it—the process has evolved into an exhausting quest to improve, to attain the ideal of “right is never wrong.” At Alabama, Saban obsesses over every aspect of preparation, from how the players dress at practice—no hats, earrings, or tank tops are allowed in the football facility—to how they hold their upper bodies when they run sprints. “When you’re running and you’re exhausted you really want to bend over,” Jones says. “They won’t let you. ‘You must resist the human need to bend over!'”

“He pretty much tells everybody what our philosophy is, but not everyone has the discipline to actually live out that philosophy,” Jones says. “The secret of Nick Saban is, there is no secret.”

What is your philosophy?  What are your processes? And do you have the discipline to live by them?  Every day?

If you poke around Alabama for a few weeks, you’ll run into a lot of people who’ve had similarly awkward interactions with Saban—on the golf course, perhaps, or at booster banquets, where Saban often looks like a man held captive. Those close to him make excuses for the behavior. His wife, Terry, says he’s shy and introverted. His golf buddy Rumsey says Saban has a kind of tunnel vision that short-circuits social niceties.

“He’ll walk by people and they’ll think he’s rude,” Rumsey says. “He’s not an asshole—he never saw ’em!”

Reminds me of stories I’ve read of Munger in places like the book Damn Right.

Even among his adversaries, Saban is regarded as a master of X’s and O’s.

“I don’t want people to think I’m not happy when we win—I am,” Saban says. “But there’s a difference between being happy for the feeling of accomplishing something and being overjoyed and feeling ‘This is it—we conquered the world.’ We didn’t. We just won a game.”

The following is from: Do You Really Want To Know What It Takes To Beat Alabama?

If you want to know how to beat Alabama, the answer is simple. You need five turnovers and need to make none yourself. You need a lottery ticket, a lightning strike, or both. You need a whole bureaucratic apparatus devoted to reducing any possible loss to a gross accumulation of statistical anomalies.

Even then, you don’t get the two things that make this all work.

The first is Saban. He is not a renewable resource, as far as I know, but his transformation of Alabama into a ratings-killing certainty so oppressive it might have blacked out the sun for an entire generation of rickets-stricken coaches and players is complete. There is no adjustment against him. He will outwork you or hire people to outwork you and the people you hire. No one is more committed to building Football Walmart and bankrupting your mom-and-pop programs. No one.

How committed are you?

Give up on this idea of doing his thing better. Hire a bandito with a spread passing attack and zero fear of death. Hope for five turnovers or the NFL to poach him away*. Life is about being brave in the face of inevitable doom. Until someone does, Saban will charge you all unfair rates for sunlight.

The following is from Nick Saban Is Ready For Everything.

“He understands every element of human performance,” Moawad wrote in the email. “And there is no contingency that he doesn’t prepare for.”

Are you prepared enough?

It’s true. There are no accidents. There are onside kicks that will almost certainly work. There is an army of assistants and former assistants versed in the Process and ready to serve at a moment’s notice. And there is a head coach who has no idea when he’ll finally be ready to stop kicking everyone else’s butt.

So… Are you really ready to strive for greatness?  Are you willing to outwork the titans of the investment and business worlds to achieve that greatness?  Let me know in the comments below.

Also let me know in the comments below how I can improve this series going forward as I already have two other articles planned.

***

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You also gain access to three gifts.  And a 50% discount on a year-long Press On Research subscription.  Where my exclusive stock picks are evaluated and have crushed the market over the last four years.

Value Investing Journey 10 Most Popular Posts Of 2015

Value Investing Journey 10 Most Popular Posts Of 2015

The following list is the Value Investing Journey 10 Most popular Posts of 2015.

If you missed any when they were first posted make sure to check them out below now.  Here’s looking forward to an even better 2016.

10. Car Wash Psychology, Mental Models, And The Power Of Habit

9. Searching For Case Studies – Turning $2 Million Into $2 Trillion

8. My Answer To How Do You Find Stock Opportunities?

7. Armanino Foods Case Study Part 1 – Preliminary Analysis

6. On Failure

5. The 15 Steps I Took To Become An Excellent Value Investor

isaac newton

4. 17 Things That Changed My Life – Some Saved It

3. Why The P/E Ratio Is Useless – And How To Calculate EV

2. Lionel Messi Is A Failure

And the number one most viewed post on this site in 2015 was…

1. Warren Buffett And Charlie Munger Are Failures

File:Charlie Munger.jpgFile:Warren Buffett KU Visit.jpg

From the views it looks like you’re interested in a variety of topics.

Valuation, case studies, Buffett and Munger, failure, psychology, habit, mental models, and personal improvement were major themes of the above list.

According to Munger reading a wide variety of things means we all improved as investors and thinkers in 2015.

Remember, no matter how fast you improve or learn as long as you continue to learn and improve this will compound over time and lead us closer to our goals.

Bonus – Most Viewed Page Of The Year

The number one viewed page on the blog – besides the home page – was the Recommended Reading And Viewing Page.  This one page got almost 8,000 unique views last year by itself.

If you’ve never visited this page you should.  It holds links to all the best resources I’ve learned from over the years.  And gets updated regularly.

Is there anything I haven’t written about yet that you want me to in 2016?  Did your favorite post make the list? If so which one was your favorite?  If not which post was your favorite that didn’t make it?  Let me know in the comments below.

And to make sure you don’t miss any more great content subscribe to Value Investing Journey for free here.

Once subscribed you’ll also get entered to win prizes.  Get a 50% discount on a One Year Press On Research subscription.  And get three gifts.

*Repost* Who Do You Want To Become?

*Repost* Who Do You Want To Become?

I’m moving my family across country and am unable to post anything new until settling down in the Tampa area.

For more information on how this will affect anything go here.

I hope you enjoy these older posts in the meantime.  And please feel free to contact me.  I’ll get back to you when I can.

To subscribe to the Value Investing Journey newsletter go here.

To subscribe to the Press On Research exclusive newsletter go here.

Thanks so much.

Jason

What do you want to be when you grow up is one of the most asked questions of kids after they hit age 10 in the United States.

Most kids say they want to be doctors, teachers, athletes, or celebrities.  But do any of us really think about what we want to do when we “grow up?”  I didn’t until my wife got pregnant and I had to think about it.

I know people who are almost 30 who still don’t know what they want to do.  So I feel fortunate to know exactly what I want to become…

I want to be great at everything I do.  Including being a dad and husband.  Investor.  Entrepreneur.  Teacher.  Philanthropist.  And world traveler among other things.  And I try to work toward my goals every day.

But there is one thing that stops us from becoming great and achieving our goals.  Adversity.

When many of us hit adversity or fail, we quit or procrastinate.

Not the winners…

The best among us persevere through the hard times.  And succeed because their will demands they succeed.  Not trying is not in their vocabulary.  Nothing else matters except working towards their goals.  Every day.  Every hour.  And every minute they can.

Until they reach their goals.

They still fall along the way… But this only makes their resolve stronger.

Another reason many of us quit when we face adversity is because working toward greatness requires sacrifice.

So… Who do you want to become?  And what are your goals?  Let me know in the comments below.

On Failure and Purpose

On Failure and Purpose

Whether you love him or hate you have to admit that Steve Jobs is one of the most influential people of the last 30 years.

He started Apple and grew it to become a great company.  Got fired from the beloved company he founded.  Started Next and worked with Pixar.  And then got brought back to Apple to save the company.

But he didn’t just save it.  He changed the world as we know it with the products the company introduced.

So I thought it’d be great to learn from a super successful guy who failed a lot on the way.

Are you ready to do what’s necessary to be great.  And achieve your goals?

Just Ask

Stay Hungry, Stay Foolish

Do you love what you do?

“The ones who loved what they did persevered.  And the ones who didn’t love it quit because they’re sane.”  Steve Jobs

“If you haven’t found it yet don’t settle.  And keep looking” Steve Jobs

“If today were the last day of my life would I want to do what I’ about to do?” Steve Jobs

“Have the courage to follow your heart and intuition.  They somehow already know what you truly want to become.  Everything else is secondary.” Steve Jobs

What is your purpose?

“I recently read a shocking statistic. Did you know that most heart attacks happen on a Monday? It doesn’t matter where in the world you live, the highest occurrence of heart attacks seems to be between 8am-9am on Monday morning.

According to a recent study, the risk of a heart attack increases by about 20 percent on Mondays for men and 15 percent for women.

Why do you think this is?

I believe it has a lot to do with the feeling of dread that overcomes us as we are getting ready to go to work. Because let’s face it; very few of us enjoy our jobs.

In fact, if you have a college education or higher the chances are that you hate what you do. You probably fell into a good corporate career in your twenties, lured by prospects and credentials rather than passion.

Years later you find yourself trapped.” Les Brown

So…  What is your purpose?  And are you working towards your goals?

Let me know in the comments below.

***

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*Repost* 17 Things That Changed My Life – Some Saved It

*Repost* 17 Things That Changed My Life

Some Saved It

This post is something I’ve wanted to write for a while but haven’t been able due to lack of writing skill and fear.  I fixed the lack of writing skill working at the investment newsletter.  And fear only went away because of something I posted on Twitter a few weeks ago.

While reading on StumbleUpon I found a great post: 10 Business Books That Changed My Thinking linked below.  And reposted it on Twitter.

This repost went viral after Tim Ferriss retweeted it.  And then Tweeted to me directly.  This inspired me to write my post detailing the things that changed my life.

At last count 44,854 people viewed this.  Favorited it 143 times.  And retweeted it 39 times.

A couple weeks ago I asked the question, Who Do You Want To Become?  And at the end of it I told you I wanted to be great at everything I do.

And if you’ve followed this blog for a while you know I dealt with serious health issues in the past.

But I’ve never explained either of the above because I’ve been afraid and embarrassed.

For the first time I’m going to tell my full story.  What led me to where I am now.  And what my mindset is going forward.

Some of the things in this post only people who’ve known me for 15+ years know.  Some of the things I’ve only ever told my family.  And some I’ve told no one other than my wife.

What makes people tick has always fascinated me.  Why people do the things they do.  And how great people become great even in the face of adversity.

My hope writing this article is to help anyone who’s struggling realize that if I can overcome, so can you.

17 Things That Changed My Life

Some Saved It

Growing up I only wanted to do two things when I got older.  Travel.  And join the Air Force.

My dad spent 22 years in the Air Force so it was the only life I knew and I loved it.  We moved around a lot growing up which was hard but also exciting.  When you move to new places you get to try new things.  Meet new people.  And visit new areas.

To me moving is like an adventure.  So I wanted to travel when I got older to keep experiencing this.

I was born on Cannon Air Force Base in New Mexico.  Moved from there to Mountain Home Air Force Base in Idaho.  Spent a few years there and then moved to Tyndall Air Force Base in Florida.  And after a few more years moved to Ellsworth Air Force Base in South Dakota where I’ve been for the last 18 years.

Because everyone moves on military bases it’s easy to make new friends.  But what made these transitions even easier was playing sports.  And growing up I played everything: Football, baseball, basketball, wrestling, and track.

Like most kids, I didn’t worry about anything growing up other than when to hang out with my friends next.  And I didn’t spend any time thinking about what I wanted to do when I grew up because I already knew what I was going to do when old enough.

Join the Air Force and travel the world like my dad.

But my plans went awry when I woke up shaking and not able to breathe one night in the summer of 2000.  This is where my story begins on 17 Things That Changed My Life.

Night Of Terror

This night was the most terrifying of my life.  It was so bad that every detail’s etched into my mind, still 15 years later.

We’d just gotten back from visiting family in Idaho in July of 2000.  And after sitting in the car with my brother for 14 hours I needed to get outside.

This was before portable DVD players, Kindle Audiobooks, IPods, and cell phones.  And all my brother and I could do at the ages of 12 and 11 was stare at nothingness or listen to our CD players for 14 straight hours.

For those not old enough to know, CD players are ancient devices use to play music.

I was going crazy by the time we got home so I got hold of my friends as soon as I could.  And we met up and walked to the base gym to play basketball.

I don’t remember how many games we played but when we walked to the gym it was the middle of the day.  When we walked back home it was pitch black.  I was drenched in sweat.  And the hot summer wind wasn’t relieving my overheated exhaustion.

Even though exhaustion overwhelmed me, when I got home I needed to eat something so I didn’t wake up feeling terrible the next day.  I ate some food then collapsed into bed looking forward to the next day hanging out with friends again.

But that would have to wait…

That night I woke up with my whole body shaking uncontrollably.  Not able to breathe.  And barely able to walk.

I shuffled my way towards my parent’s room thinking I was dying.  Got half way and then felt myself falling to the floor.  But I was paralyzed.  I couldn’t move my arms to brace myself.  So I fell head first into the wood floor and blacked out.

The next thing I remember I woke up in a panic.  Thrashing at everything.  And not knowing where I was as the EMT’s loaded me onto the gurney.  All I remember seeing before blacking out again was my mom crying.

The next time I woke up I was in the hospital thrashing again.  Not knowing where I was.  Why I was there.  And in a ton of pain due to my head dive into the wood floor.

After I found out why I was there and what happened the doctors ran more medical tests on me than anyone at the age of 12 should ever have to go through..

After hearing the worst from the doctors that it could be a brain tumor.  We were all in a state of panic waiting for the test results.

Luckily it wasn’t a brain tumor.  But it was still serious…

I had a grand mal – tonic clonic -seizure.  And had Rolandic’s Epilepsy.  A form of epilepsy that’s hereditary and found in kids between the ages of 8 – 18.

I was on medicine for a few years to prevent me from having another seizure.  I never did.  And got off the medicine when I was 17 after retesting and finding out I no longer had to worry about seizures.

While the medicine kept me from having another seizure, there was one massive side effect I had to it.  It damaged my short-term memory, but we’ll get back to this later.

In the short-term I was still able to do everything I wanted to do.  Including playing football.  But this one seizure disqualified me from doing what I’d dreamt of ever since I was a little kid.

I found out I wasn’t able to join the Air Force during my junior year of high school because of this one seizure.  And going into my senior year I had no idea what else to do because that’s all I’d ever wanted to do.  But I had to figure out something to do with my life.

Hamstrung in High School

Having only one year left to figure out what I was going to do I started scrambling.

My first thought went to running track in college.  I loved it.  Was decent at it.  Went to state in a couple sprint relays at the end of my junior year.  And just missed going to state in the individual 100M dash the same year.

I immediately went to a few of my high school coaches who knew state university track coaches to get in contact with them to see what they thought of my chances to make their teams.

I heard back from the head coach of South Dakota State University who said with my times, the first year at school I would have to walk on to the team.  But if I continued to improve I would likely get a scholarship for my sophomore through senior years of college.

Even though this wasn’t my first choice.  I was still excited and my girlfriend and I started making plans to both attend the school.

But at my first race at the state track meet my junior year, disaster struck.

A couple days before this at practice I felt a little twinge in both of my hamstrings.  But since there was no sharp pain, no popping, and only minor soreness I didn’t think much about it.

When our team got to the state track meet my legs were still sore.  But nothing I’ve not run with before so I kept practicing, stretching, and running like I always did to prepare for a race.

This was my first time at state.  And my first race was the 4 X 200 meter relay where I was the third of four legs.

As I saw my teammate rounding the corner coming toward me to hand off the baton my adrenaline spiked.  And the soreness in my legs was gone.  But this didn’t last long.

Within 50 meters of grabbing the baton I knew something was wrong because my legs tightened fast.  At 100 meters I could feel slight popping in my legs and knew I should stop.  But didn’t want to let me teammates down so I kept running.

At 150 meters I felt a couple loud pops.  And at this point all I could do was hobble-run towards my teammate.  I’ve never wished the end of a race came faster than I did then.

At 175 meters I felt some pops in my lower leg that slowed me down even more.  And when I finally got to my teammate I was in last place, exhausted, and collapsed to the ground in pain.

I’d run track since 8th grade in middle school.  Done all different running events up to the one mile.  The 800 meter “dash” is the worst.  Even did long jump and triple jump.    And I’d never been that exhausted.  Or in that much pain after finishing any event.

My coach helped me hobble over to the trainer’s tent to check out my legs.  And while I knew something major was wrong I didn’t expect to hear what he told me.  Not only had I torn both of my hamstrings.  But I also tore both of my calves as well.

After taking some time to recover I spent the rest of the next year working to become stronger for next track season.  But even this didn’t help.

This time as the anchor leg of the 4 X 200 meter relay during the first race of my senior year track season I felt the same pops and pain I did at state the year before.  Ended up hobbling to the finish line.  Threw the baton down to the ground in frustration.  And hobbled to the trainer’s tent already knowing what he was going to tell me.

My body was giving out… I tore both of my hamstrings again.  My senior year track season was over.  And my plans to run track in college were also over.

Back to square one again.

The Nightmare Begins

I spent the summer after my junior year recovering from my hamstring and calf tears working out.  Hanging out with my girlfriend.  Working at Burger King.  And hanging out with friends.

It was a normal summer until late July.

I don’t remember what happened in a vivid way like I did with my seizure because this was a slow progression.  Not paralysis, thinking I was dying, collapsing, and blacking out one night.

I remember getting a cold that lasted a while and being a bit dizzy during the cold.  But nothing else spectacular.

This cold lasted for a couple weeks and at the end of it I noticed I was dizzy all the time.  Not dizzy as in vertigo or Meniere’s Disease. But I always felt like I was moving.  Even when I wasn’t.

I’ve always had trouble describing this feeling.  And this is the best way I’ve ever found to describe how I felt.

One day a couple years after this started I was driving downtown with my girlfriend and stopped at a red light.  All the sudden I felt the entire car moving as if I was pushing the gas so I slammed on the brakes.

I turned to my girlfriend and asked her if the car was moving and she said no.

After this I didn’t drive for several years.

At first I was dizzy all day, every day for three months.  Then all the sudden one day it would go away and I would feel great for three months.  This went on for my senior year of high school.  And then one day the dizziness came and stayed.  This time for 10 years.

But before we get to that we need to finish talking about high school.  Because a few more things happened in my junior and senior years of high school that changed my life forever.

Good Things Did Come Out Of High School

High school wasn’t all bad.

For most of high school I had fun with my friends.  Played football.  Ran track.  Had girlfriends.  And had fun like any other normal high school kid.

You may have noticed that I haven’t talked at all about the things I learned in high school changing my life.  And that’s because even though I had great teachers, nothing I learned changed my life the entire time I was in school.  Formal education teaches you nothing about life.  How to make decisions.  Or how to think for yourself.

The exception was one semester during my senior year.

When I was in school, every senior had a light load of classes unless they chose to take AP classes.  The only mandatory classes were English and a Government/Consumerism class split one each semester.

The Government class was interesting because I’ve always loved learning history.  English was where one of my teachers told me ” I hope you never want to become a writer, because you’re terrible at it.”  But Consumerism class is where I learned several life altering things.

My First Foray Into Stocks

What follows is an excerpt from my book describing this class.

I’ve always liked the thought of investing since learning the basics and the power of compounding during my senior year of high school in 2004/2005.  At my high school every senior had to take one semester of government and one semester of consumerism.

This is a hybrid class that taught about different subjects one of them being the basics of investing and the power of compound interest.

Which I did not comprehend at the time, basic investing ratios, what dividends were, and other entry level investing concepts.

At the end of the class there was a project where we got put into groups of three or four people and found companies to invest in with a fake money account.

The group whose portfolio went up the most in the few week experiment won the contest and got the highest grade for the project.

I ended up being the leader of my group because I was the only one who was interested in investing at all.

The first batch of companies we picked were ones that typical hormone fueled teenage boys might pick to buy: Playboy and Nike among others.

I don’t remember picking those companies for any reason other than we liked the products as they pertained to Nike.  And thought it would be cool to be Hugh Hefner and own Playboy… For the articles of course.

This was the depth of our analysis on the first batch of companies we bought.

As the weeks went on and the school year got closer to ending, being normal seniors, the interest of the other members of the group interest dropped even further.  And I was the only one still doing work on the project as the semester was getting ready to end.

Since I was left to do whatever I wanted I started doing research on a company that would be a fantastic investment.  Not only for the class project but over the long term.

The company was overtaking its competitors fast.  It had its IPO within a year or two of that time.  And it was becoming one of the most used and well known sites in the world.

Again, this was the depth of the analysis at that time.

But even then with my limited knowledge I recognized what I would later call a moat.

Since I was, and still am, ultra competitive and wanted to win.  I dumped all the other stocks in the portfolio that we bought and put the entire fake money portfolio into this one company that was selling somewhere between $60-$70 a share if memory serves me right.

The company’s stock didn’t end up going up enough for our group to win the contest but I was proven right over the long-term.

The company the entire fake money portfolio of $100,000 was put into sold for between $60-$70 a share at that time.

If I would’ve held those 1428-1666 shares of stock until this present writing with the company now selling for around $793 a share I would’ve turned that original $100K fake investment into $1,132,404-$1,321,138 in eight years.

That comes out to a compound annual growth rate (CAGR) of 35.44% and 38.08% respectively.

As an example of how phenomenal that is, Warren Buffett averaged a CAGR of 20% over 40 years to become one of the richest people in the world.

This potential result while phenomenal was all luck because of the lack of research.  But it taught me a valuable lesson that I still adhere to today.

If you buy stock into a company that has huge market share and a sustainable competitive advantage.  Over time you’ll do great investing.

For those who haven’t guessed the company that I would’ve made a killing on if it was a real money portfolio.  It’s the worldwide search engine leader.  One of the biggest and most innovative companies in the world.  Google, stock ticker (GOOG.)

These first lessons in competitive advantage, market share, compound interest, and opportunity cost helped changed my life.

But we have one more thing to talk about before leaving high school.

Finding Love

I don’t do anything half assed.

I hate wasting others time and hate having mine wasted so I either do things 100% or I don’t do it at all.

This applies to all aspects of my life including relationships.

Ever since I can remember, every relationship I had I knew within a few months whether it should continue or not.  And any time I went into a new relationship I went in with the mindset it was going to last a while.

Even with this mindset I didn’t expect my next girlfriend to also be my last at the age of 16.

But great things don’t come along often in life.  So no matter what age you are, when greatness is possible, go for it.  Whether in business, love, or life in general.

And it turns out I was lucky when I found her.

She’s stuck with me through all the dizziness.  Through me not being able to do anything outside the house for years at a time.  And through me spending thousands of hours without making any money to become the best investor I can.  So when I did get healthy I could provide for my family.

The picture above is of my wife, two daughters, and me from last summer.

We’ve just celebrated our 12 year anniversary.  Six of those we’ve been married.  And I can’t wait to see what the future holds for us.

But this isn’t the only great thing to come from our relationship.

Becoming A Dad

At the point we got married I’d been dizzy for five years.

I went to an occupational therapist who gave me some exercises that helped my dizziness get slowly better.  But I still felt awful 90% of the time.

The little time I felt decent I started trying to figure out what I wanted to do when I got healthy.  Since I wasn’t able to go to college because of the dizziness, I had limited options.  And I could only think of three things.

I came up with becoming a local politician.  A writer.  Or learning about the stock market.

I figured the world didn’t need any more scum bag politicians and I’m a terrible liar so I ruled that out.  I decided not to become a writer because of what my high school teacher said to me.  So by default I picked learning about stocks.

Not because I wanted to or was excited.  But what I remembered learning in high school, it was the only thing I could think of that I had even minor interest in.

I started learning but lacked focus.  And I continued to use my dizziness as an excuse to do nothing.

That is until the day my wife told me I was going to be a dad.

I was sitting on the couch playing FIFA Soccer on my Playstation 3 one day when my wife tells me that she was pregnant.  I said ok because what she said didn’t register to me and went back to playing.

After a couple seconds what she said finally registered.  And I asked her to repeat what she said and it was something like this:  “I’m pregnant and you’re going to be a dad.”

After this I learned as much as I could when I didn’t feel terrible.  But still lacked focus and direction so I wasn’t retaining anything I read.

Until a trip to Best Buy gave my life direction.

Life Lessons Learned In Best Buy

A few months after this the wife and I took a trip to our local Best Buy to look at dishwashers to install.

We walked around the store like we always did when going there.  And then went to the appliance section to find our dishwasher.  While we didn’t find a dishwasher that day.  We found something more valuable that altered our lives.

As soon as we walked into the appliance section a smiling, tall, older guy with graying hair greeted us wearing khaki’s.  And of course the famous blue Best Buy associate shirt.

I don’t remember how we got on the subject that I was learning about investing.  But when we did he told me about the book Rich Dad Poor Dad by Robert Kiyosaki.  Said I had to read it.  And it would change my life.

He was genuinely nice and for some reason seemed to care about what I told him about me.  So after we got out of the store my wife and I went to Borders down the road and bought the book.

I’m always wary when people say something will change my life but he was right.

The book lit my imagination on fire and I read the book in a few days.  I took a bunch of notes.  And looked up anything I didn’t understand online.

Rich Dad Poor Dad changed my life.  Gave me direction and focus.  And set me on the path that I’m still on today.

I’ve been in the local Best Buy a lot before and after this, but I’ve never seen that guy any other time.  But if I saw him today I would give him a hug and offer to buy him a beer.  Because without this chance meeting I wouldn’t be where I’m at today.

But this isn’t the only book I read early in my investing journey that still shapes how I do things today.

Thinking Like A Champion

After years of not being able to do anything due to extreme dizziness I had no confidence in myself.  I thought I was a leech on society and my wife and family.  And even if I did get healthy I didn’t have any skills of value to offer the world.

But learning about investing took my mind off this horrible mindset.  And gave me hope that one day I would be able to contribute in a meaningful way.

Hope will only take you so far if you think of yourself like I did at this point in my life.

I needed to change my entire mindset but up to this point I didn’t know how… Until I came across Think and Grow Rich by Napoleon Hill.  Only 99 cents on Kindle now.

If you lack confidence you need to read this book.  It will teach you that if you have the right mindset you can do anything and become anything.

I can’t recommend this book enough.  And without it and the next two people I wouldn’t be here today.

John Chew Saved My Life…

A year or so after Rich Dad Poor Dad, and Think and Grow Rich revitalized me, my momentum stalled.  And I hit rock bottom sometime in 2009 or 2010.

At this point I’d dealt with extreme dizziness for almost five years.  The exercises the occupational therapist gave me weren’t helping anymore.  No other doctor or specialist I saw helped.  Most of them even treated me like I was faking.  And worst of all my stock portfolio just lost 50% of it’s value in a few months.

I was tired of not being able to do anything.  I was tired of feeling terrible all the time.  I was tired of leeching off my wife, daughter, family, and society.  I was tired of failing.  And I was tired of continuing to hope with no progress and no end in sight.

One night my wife left to work her overnight shift as an RN at our local hospital.  My daughter was in bed for the night.  And there I was, a ~24 year old man playing a game on my Playstation 3 bawling like I never had before or since.

I’d given up.  And as I sat on the couch bawling I thought about killing myself so my wife and daughter could have a better life without me dragging them down anymore.

I’d never had these thoughts before and they scared the hell out of me.  But I was in such a deep state of depression that nothing helped.  And I continued to flounder until I found John Chew’s CSInvesting a few months later which restored hope in my life.

If you’ve never been to the above site you need to click on the link and go now.  It’s one of the best investment sites I’ve ever been to.  And it saved my life.

Finding CSInvesting is what I imagine a religious person coming across a religious epiphany might feel.  Energized, hope restored, dark clouds of despair lifting, etc.

The site is so great that I went back from the start of the blog and read and practiced everything that was on it then.  Asked questions on the blog.  And became fanatical about learning everything I could.

Not only did this take my mind off the deep despair I was in.  But it replaced the despair with hope and knowledge that if I worked and practiced a lot I would become a great value investor over time.

The books, case studies, investment analysis, videos, and everything talked about on the blog is so phenomenal it lifted me from my years long depression.  And I’ve not looked back since.

While I devoured everything on the site he recommended something else kept my momentum going so I didn’t slip back into depression like I had many times before.

… And So Did Aswath Damodaran

I learned so much about investing and how to think from CSInvesting. Was so energized.  And worked so hard that I made myself feel even worse all the time.

But I couldn’t stop…

I had a newborn daughter that I had to develop a valuable skill for so I could provide for my family when I got healthy.  But more important in the short-term was I didn’t want to slip back into depression.  And I was afraid that if I slowed down I would.

So when John recommended a free MBA level course from a world-renowned value investing teacher I jumped at the chance.

Aswath Damodaran is a professor at NYU Stern in New York.  Consults with Goldman Sachs to teach it’s analysts how to value businesses.  Writes a great blog talking about valuing businesses.  And releases his valuation course online for free.

I was a part of the first online class he released where he shared everything he knows about how to value businesses using DCF calculations.

If you’ve followed this blog for a while you know I never use DCF valuations when evaluating companies.  So why is this course one of the things that changed my life?

Because he shared something even more important than just valuing businesses.  He taught how to think about businesses when you’re evaluating them.  And introduced Charlie Munger and his teachings into my life.   We’ll get back to Mr. Munger later.

I won’t ruin any of the specifics of his course for you.  But if you want to learn about DCF valuations.  And want to learn how to become a better thinker and investor you need to take his course at the link above.

Thank you John and Aswath for sharing information.   Because without you two I wouldn’t be where I’m at as an investor today.  And I might not be here at all… Thanks for literally saving my life.

The Single Person I’ve Learned Most From

Charlie Munger

I’ve studied and learned more from Charlie Munger than any other single person about investing and life.  Yes, this includes Warren Buffett.

Charlie Munger is Buffett’s right hand man at Berkshire Hathaway.  Was a great investor in his own right before coming to Berkshire.  And is a philanthropist and great thinker.

I think so highly of Mr. Munger that if I had to choose who to have dinner with out of he or Buffett.  And I could never have dinner with the other.  I would choose Mr. Munger without hesitating.

Below is a partial reading list from and about Mr. Munger that have influenced not only how I approach investing and evaluating businesses.  But also how I think and do everything now.

Without Mr. Munger sharing everything he has I would be a much worse person, investor, entrepreneur, and thinker.

But there’s something that helped my business analysis skill level explode.

The Journey Begins

When I started learning about investing almost every site, book, video, or article I watched about getting better said you need to write your ideas and analysis down.  They all said this because if you write things down you’ll remember more.  Learn more.  And become a better investor faster.

But because of stubbornness and laziness I didn’t do this until years after starting to learn about investing.  And this stunted my growth.

How do I know this?  Because after I started the original version of Value Investing Journey, I improved faster in a few months than I did in the years before this.

Not only because of the reasons above.  But if you write things down it’s easier to spot gaps in your analysis because you can go back and see what you need to improve on.

But this wasn’t the biggest help.

The biggest help learning was the feedback I got from Whopper Investments.  Red from the Red Corner Blog.  Readers of this blog.  And many others who gave me constructive criticism on how to improve going forward.

Without help from these people, I wouldn’t be helping others today.

But I was still struggling health wise and needed to find a way to become more efficient with my time so I could be more productive.  Turns out there was a book that was helping people become more efficient.

“Man This Guy Is Full Of Shit.”

After getting out of the doldrums of deep depression I worked any minute I could towards learning about investing.  But because of the extreme dizziness I couldn’t work as much as I wanted.  And wasn’t learning as fast as I wanted to.

One day I was talking to Taylor from ValuePrax who told me about a book called: The Four Hour Work Week by Tim Ferriss – only $1.99 on Kindle.

I read the cover and back flap of the book and thought to myself man this guy is full of shit.  There’s no way Tim Ferriss does this, and there’s no way this book will help me become more efficient.

But because a friend I respect recommended it, I decided there must be something in the book I could learn so I went ahead and read it anyways.

And I’m glad I did…

Turns out the book isn’t about working only four hours a week.  It’s a guide to become more efficient.  Become a better thinker.  Travel more.  Find better people to work with.  And how to live the kind of life you dream of.

In short it’s a book that teaches you how to achieve your dreams.

The Four Hour Work Week changed my life more than any other book I’ve read.

Without the Four Hour Work Week by Tim Ferriss I wouldn’t be an author of the acclaimed value investment education book How To Value Invest.  I wouldn’t get hired at a prominent investment newsletter.  I wouldn’t be here helping as many people as I can with the blog, book, and other services.  I wouldn’t be giving to any charities.  And I wouldn’t still be working towards my goals today.

Without this book I would’ve given up again at some point of adversity.

If there is one thing everyone needs to read in this post it’s The Four Hour Work Week by Tim Ferriss.

But there are still three more books I need to tell you about that changed how I approach everything.

Need Help Developing? Read These Three Books

At this point I was more confident.  Developing good habits.  And starting to become a real thinker, investor, and writer.  But I needed help taking the next step because I was still procrastinating too much.  And was using my dizziness as an excuse not to work.

From The Four Hour Work Week to this point several years passed as I concentrated more on things other than learning and improving.

I learned a lot in this time.  But the three books below I’ve read in the last year after getting on some new medicine that’s gotten rid of my dizziness.  Mostly.  Effect everything I do now.  And will continue to help me going forward as I work toward success and helping as many people as possible.

I’ve combined talking about the three books below because the lessons taught in every book intertwine with each other.  And reading each helps understand lessons in the others.

Choose Yourself

If you want to work for yourself, build businesses, and be an entrepreneur you need to read this book.

It goes over Mr. Altucher’s own journey of making millions.  Losing millions.  Getting divorced.  Thinking about suicide.  And how he bounced back to become the huge success he is today.

One of the main topics the book talks about is how you can become creative over time if you train yourself to do so.

I’ve never been creative so this was of particular interest to me.  I always wanted to be better at generating ideas but never knew how.

The advice in the book helped train me to become more creative and come up with more ideas.  This in turn made me a better thinker, investor, and entrepreneur.

If you have Kindle Unlimited you can read this book for free.  Or you can buy it on Kindle for only 99 cents.

The Power Of Habit

Below is part of my post Car Wash Psychology, Mental Models, and The Power Of Habit where I talked about the amazing book The Power Of Habit.

The Power of Habit is an amazing book.  And I agree with Mr. Pink above.

It’s changed the way I think about how I parent.  My investment processes.  Psychology.  And how I do everything in my life.  In short I cannot recommend that you read this book enough.

Below is author Charles Duhigg explaining in a three-minute video how we develop habits.  And how to break bad habits.

Mindset

I came across this book of all places when I was on SportsIllustrated.com.

The article details how a young kid from the video editing department worked his way up to become a two-time NBA champion head coach of the Miami Heat.

Below is an excerpt from the above linked article:

The first time Miami fell in the Finals, to the Mavericks in 2011, Spoelstra installed an organizational “improvement program.” He ordered coaches to read books and attend clinics, then write reports about what they learned. One staffer was instructed to mine every Malcolm Gladwell article for relevant thoughts. Spoelstra, who listened to John Maxwell leadership CDs on the drive to work every day, was taking the equivalent of 30,000 jumpers again. He discovered a book by Carol S. Dweck called Mindset and became consumed with the distinction between a growth mind-set and fixed mind-set.

“When you subscribe to a growth mind-set, you challenge yourself to do things differently, and you actually produce a drug in your brain that allows you to work more creatively,” he says. “That’s when you’re most alive.” For someone naturally wary of change, the material was revelatory. Spoelstra and his assistants got into peak shape so they could carry lessons onto the practice court, where they devised the pace-and-space offense that yielded two championships, along with a 27-game winning streak in 2012–13. Love them or hate them, the Heat were the first superpower of the Information Age. They had to be seen, heard and tweeted about. They simultaneously bemoaned the scrutiny and fed off it.

As value investors we have to be autodidacts – learn and teach ourselves things all the time.  So we continue to improve all our processes.

Mindset by Dr. Carol Dweck should be mandatory reading for everyone who self learns.  Especially so you know how to get yourself back into the proper mindset when you reach adversity.

This is just one of many examples why you need to read everything and not just investment related content…  You never know when you will come across something that will change how you approach everything.

You Can Do It

As a kid I hated reading and writing.  And never did it unless I was forced.  Too bad I didn’t know then what I know now or I could be even farther toward achieving my goals.

Because not only does money and knowledge compound over time.  But so do the decisions you make.

But I know this now.  And will continue to compound knowledge well into the future with the habits and proper mindset I’ve built over the last several years.

Of course there are other great things I’ve learned from over the years.  And some of them not mentioned in this post are teachings by and from: Sanjay Bakshi. Dream Big – The Story of 3G Capital which you can read for free if you have Kindle Unlimited.  Moonwalking With Einstein which helped me realize I could train my memory and get back what I lost to the epilepsy medicine.  My memory is better now than it’s ever been. Joel Greenblatt’s You Can Be A Stock Market Genius.  Bruce Greenwald’s Competition Demystified and Value Investing: From Graham To Buffett and Beyond.  The Berkshire Hathaway Shareholder Letters, and Warren Buffett’s Partnership letters.  And much more.

But now that I’m finally healthy after a decade of extreme dizziness and deep depression.  And still only 28 I can’t wait to see what the rest of my life has in store.

Now that I’ve built the proper mental foundation, when I do come across major adversity again I’m positive I won’t slip back into deep depression.  And think the way I was then again.

But I didn’t write this post for me.  I wrote it for you.

If you know someone who is struggling or you’re struggling yourself.  My hope with this post is that there’s something in it that will help you recover and contribute to the world and your own well-being.

Because if I can do it with my long-term extreme health issues and lack of formal education.  So can you.

But most important, don’t give up, don’t ever give up.

P.S.  If you’re dealing with a major struggle/deep depression, talk to someone who you’re close with or get professional help.  While telling my wife didn’t get me out of depression right away.  It did lift a burden off my shoulders and helped me start the process of recovering.

P.P.S. Shitty writer, HA.

Reading Ease of 75.4 and an FK score of 6 for this 29 page 6,992 word post.

For more information on the above go here.

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