*Repost* Warren Buffett And Charlie Munger Are Failures
I’m on vacation right now so I’m reposting some of the most popular articles from the blog until I get back on Monday August 3rd.
On Failure Part Two
I wrote a version of this post a few days after leaving my job almost a month ago and planned to keep it private. But it helped me get over losing my job. And helped me get over the anger, sadness, depression, fear, and other emotions I felt. So I’ve decided to share it with everyone.
Rough times happen to everyone from time to time. But destructive thoughts if left unchecked can lead to bad things. I’m sharing this post in the hopes of helping someone else who may be going through their own rough times.
But I’m not the best resource to learn from on failure… Let us learn from a couple masters who both failed before making billions of dollars. And helping millions of people around the world.
Warren Buffett and Charlie Munger Are Failures
Warren Buffett’s biggest failure is now his biggest triumph. And he uses this “failure” to help millions of people throughout the world.
One of Charlie Munger’s first major investments failed. But he used that “failure” to become rich and help the world too.
I have failed. And I will now use this “failure” to help make the world a better place like Buffett and Munger did.
But before we talk about that we need to talk about three major failures.
Warren Buffett’s a Failure
In the 1950’s and 60’s Warren Buffett started an investment partnership with $100,000 of his own money. And money he raised from family and friends.
Over time he built the firm by buying portions of smaller companies whose prices were cheap. He did this so well that soon after starting he was able to buy entire companies instead of just portions of them.
But he soon failed…
Berkshire Hathaway Is a Failure
The original Berkshire Hathaway was a textile company based in New England. When Buffett took it over no matter what he did the company continued to lose money. This was because new and cheaper foreign and non union Southern US companies made it impossible for Berkshire to compete on price. This led to the company losing millions of dollars over the years after Buffett bought it.
As this continued for years Buffett came to realize he was fighting a losing battle. And instead of continuing to pour money into Berkshire and letting the business fail. He used this money to buy companies that would make money instead.
He started buying smaller insurance companies. And used the excess funds from these insurance companies – insurance float – to buy even more profitable and undervalued companies.
In doing this he turned his original $100,000 investment funds into the $357 billion behemoth it is now. Today Berkshire is one of the biggest companies in the world. And it owns some of the most valuable companies and brands on Earth.
But by his own admission he wouldn’t have done as well without teaming up with another failure.
Charlie Munger Is a Failure
Charlie Munger was first a high profile lawyer. And then a property developer in California before becoming a full time investor in his late 30’s.
His fund did well for years as he built up the companies assets. And one of his first major investments was in a company called Blue Chip Stamps.
It was a stamp trading company that also produced a lot of float. For example, if you gained 100 stamps you could exchange the stamps for a prize like a vacuum cleaner.
When Munger bought Blue Chip it was growing and producing a lot of excess cash. At its peak in 1970 Blue Chip generated $126 million in sales.
But Munger recognized a problem a few years after buying Blue Chip. Sales began to decline fast. And nothing Munger did stemmed the tide of falling sales
Instead of letting it fail he used the excess funds from Blue Chip – which was still profitable while sales fell – and used these funds to buy other companies. He eventually bought Wesco which is an insurance/financial company. And used the float from this business to buy ever bigger stakes in profitable and undervalued companies.
By this time Buffett and Munger had met, exchanged ideas on a regular basis, and were friends. But they still didn’t work together.
Munger did such a great job running Blue Chip that Buffett bought Blue Chip and merged it into Berkshire Hathaway and then a change occurred.
The Change of Mindset
Buffett has said when this happened, Munger helped change the way Berkshire invested its growing cash machine. Instead of concentrating on just cheap companies that weren’t great businesses. They turned their focus to companies that were cheap or fairly valued. But now concentrated on good to great businesses.
Due to this combination of minds. The change in mindset. And the power of compound interest, Berkshire exploded…
But we will get back to that later…
I Failed Too
After overcoming debilitating health issues that lasted for 10 years. After teaching myself about investing. Writing my own full length value investing education book. And then being hired, I failed.
I thought my knowledge about how to analyze a company’s balance sheet and investment potential was all I needed… I was wrong.
I thought I had all the tools necessary to succeed but I didn’t. Hard work can only get you so far…
Without the proper mindset, and in my case purpose, you will still fail no matter how hard you work. And I don’t mean fail at your job. I mean you will fail yourself. Your principles. And what you are striving to become and build.
Buffett and Munger’s Failures Are Now Helping The World
Buffett and Munger grew to become two of the wealthiest, most powerful, and respected people in the world.
Mr. Buffett who has been one of top three most wealthy people in the world for years has gained 98% of his $77 billion net worth after the age of 65.
Charlie Munger is worth $1.3 billion. And has already given hundreds of millions of dollars causes he supports.
Both men not only plan to give billions of dollars to causes they care about. But the luxury of having all the money they do enables them to also give time to these causes as well. This is far more important.
While I can’t speak for Mr. Buffett and Munger on their motivations. I can speak for myself…
I wasn’t making an impact on anyone else’s lives other than my families. And I failed myself and what I’m striving to build. That changes now…
My Purpose is Helping Others
This is what I had to learn by leaving my prior company and coming back to this blog.
Together we can make not only the lives of our families betters. But those of the rest of the world as well.
This is my purpose…
This blog will no longer be about improving my own knowledge. It will be about teaching and improving others lives.
I have several projects that I will announce over the coming weeks. All related to finance and geared towards helping and educating as many people as possible.
While I can’t reveal what they are yet since they aren’t finished. I can tell you today that part of all sales from this blog will go towards helping, educating, and feeding kids and adults who need a hand up.
5% – to start – of all sales from this blog. My book. And all future unannounced projects will go to charities of my choosing in the Philippines. And also to local charities in my area.
The percentage given will grow over time as me and my family become more secure financially. And the scope of the charities will grow as well. But this will be a great start.
Together we can make a difference in people’s lives. Do great things. And improve the world.
Mr. Buffett and Mr. Munger are going to help tens of millions of people with the money and time they’re contributing.
How many people can a blog and like minded people help?
Let’s find out in the coming years.
Are there any books, articles, sayings, or lessons that you’ve learned that have helped you when you’ve failed in the past?
If so please share with everyone below so we all can learn.
To gain access to a free 20-page gift that will help you evaluate companies faster. And is something I use every time I research a company. And to make sure you get all future posted content. Go to this link.
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 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.
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.
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 CSInvestinga few months laterwhich 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.
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
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.
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.
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.
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.
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.
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.
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This got us most of the way there… But I want to push even higher.
Not only am I giving away a hard copy of The Snowball. But I’m now also giving away a $50 American Express gift card for free. You can use AMEX gift cards anywhere that accepts American Express cards.
The same rules still apply as before.
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The only difference this time is the amount of subscribers required to giveaway the items. Instead of 150 subscribers like before…
Because I’m adding to the prize pool, the subscribers needed to giveaway the prizes has risen.
Now 200 people will need to subscribe to this blog before the prizes are given away. And at last check there were 107 subscribers to Value Investing Journey. So we are more than half way to 200. This number doesn’t include Press On Research subscribers.
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