A Man's Search for Value

Almost immediately after posting my last blog I realised that maintaining my cadence of 1 post per month might be tricky if I’m true to my word and only invest when I have conviction that I’ve found a company with market-beating potential. The data tells us there isn’t an abundance of these companies and therefore investment opportunities available at any given time. The greatest value investors preach the virtues of patience and a concentrated portfolio that has been carefully constructed by investing only when the clearest of opportunities present themselves. Such opportunities might only arise once or twice a year, or even less!

Nevertheless, I set about my mission to scour the FTSE All Share index (from the bottom up!) looking for opportunities. This process was quite overwhelming. Doubt crept in…do I really know what a good company looks like? Will I know if I see one? Am I going to lose all of my money?

At the same time, I noticed that I was struggling to notch up my 7 hours of dedicated investing work per week. I was averaging 4 hours and I was adamant I had to get to at least 7 hours one way or another. Surely I could hit my target of 1 hour per day if I was dedicated. If not, was I really invested in this journey?

I set about looking for ways to eke out more learning time. Firstly, I switched my late night/bedtime reading to material relevant to my goal. I purchased Berkshire Hathaway Letters to Shareholders: 1965 – 2014 and committed to reading one letter per night. I started to find many gems in this publication after only a few letters. The cadence of one per night was manageable, regular progress fueled adherence, and because it’s a consistent topic, with the most recent letter relating to prior ones, I quickly started to build up a picture of the evolution of this amazing company.

I also purchased Poor Charlie’s Almanack. I honestly don’t know why I hadn’t read this sooner. It’s a thought provoking and inspiring set of talks in which Charlie provides a sufficiently insightful introduction to key topics, but purposefully doesn’t distill a clear path to success (spoiler alert: the main takeaway is there is no clear easily distilled path. One has to simply dive in, start learning, reflect on that learning and enjoy the process).

With this new reading habit I was now motoring towards my weekly hours target.

Next, I turned to YouTube, but for a very specific reason. I have a young family, one of whom is very young indeed. During the bedtime feeding routine I often found myself watching YouTube. I wasn’t mindlessly scrolling, but my content consumption was for entertainment only, and videos of cars, football and a man who eats a lot (shout out to the BeardMeetsFood subs!) were not aligned to my goal of becoming the best investor I can. So, I switched these videos for long form interviews with investors. 

Again, this new habit increased the hours I could record as dedicated learning. It was during this new habit that I came across an interview with Monish Parbrai. In the video Monish unpacks how to approach value investing in a highly practical and easily understandable format.

Monish confirmed what I knew. You just need to start looking, have extreme patience and discipline, continuously build up your body of knowledge, and then invest only when you find the most obvious of opportunities.

It was great to have my assumptions reinforced, but still, I was lost as to where to start seeking my first set of opportunities to appraise. Other than my strategy to crawl line by line through the FTSE All Share index from the bottom up.

Then, Monish mentioned the Value Investors Club (VIC). A place where likeminded value investors submit investment analysis, creating a massive source of potential ideas. This was perfect! I now had a place that not only had a source of pre-screened ideas, but also insight into how an array of investors think about opportunities. This leads me to my next action, which is to start reading one investment thesis a day.

In summary, in one month I have adjusted my habits so they’re more aligned to my goals and found a community that provides content completely aligned to my investment approach, value. The commitments I made (and honoured) in January got me started, consistently turning up has paid off, I’m finding my path forward, and really enjoying the process.

Key takeaways from this month:

• Turning up every day to fulfill my minimum dedicated learning time quota will naturally lead me to valuable insight and new ideas. It’s the turning up that matters.
• I don’t need to have a path to success planned out to the smallest of steps. I simply need to focus on my aim of being the best investor I can by continuously learning and seeking out new ideas. The next steps will present themselves as I progress.
• I don’t have to be first or reinvent the wheel. In this marvelous age of information I have access to a world of ideas put forward by intelligent and experienced people. By not learning from others I’m making the process harder than it needs to be.

Thanks for reading. My aim is to some time soon publish a post in which I share the analysis I’ve performed on an opportunity, regardless of whether I invest or not, and my learnings from the process.

P.S. – This journey is fun. Life is good.