The Art Of Mastering Investing

During their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed The Art Of Mastering Investing. Here’s an excerpt from the episode:

Tobias : I thought you’re gonna let me gather my thoughts. Well, it’s inspired a little bit by Anthony Jeselnik when he appeared on Joe Rogan. It’s one of my favorite style of Rogan episodes where he talks to a comedian, just because it’s so foreign to value investing. And I love it when they talk about their process about having to develop material over an extremely long, like two or three years–two years to get it to the point where you can then refine it and then deliver it and get it tight over another year and then deliver a special, dump the lot, start again, kind of an extraordinary way of generating new material, living your life.

Everybody has seen Jiro Dreams of Sushi by this stage, so that’s kind of a–just totally different again from comedy where, just by going through mechanically doing the same process over and over and over again. In a very small scale, Jiro has developed this, one of the finest restaurants in the world. Three Michelin chef’s hats, three Michelin stars?

Bill: Stars.

Tobias: Who gives out the chef’s hats?

Bill: Why do a bunch of brothers from a tire company get to decide what’s good food? That’s a better question.

Tobias: Because they travel around, I guess.

Jake: Chef Boyardee, I don’t know [crosstalk] hats.

Bill: [crosstalk] rating. I mean they rarely go somewhere that they mentioned that’s bad, but it’s a nice way to spin being rich into business.

Tobias: It’s a little bit self-fulfilling too, isn’t it?

Bill: Yeah, for sure.

Tobias: But I think about that in terms of investing, what does it take to master investing? And I don’t know if you ever actually master it. I mean, Buffett is a phenomenal intellect.

Bill: Has-been?
[laughter]

Tobias: Phenomenal memory, learned from the master. I missed it, what did you say?

Bill: I said a has-been.

Jake: He didn’t buy the dip, dude.

Tobias: Yeah, he did not. And has spent his entire life doing it. Investing is one of the–really the only endeavors, one of the few endeavors anyway, where you just keep on getting better. Like chess, the best chess players in the world, top out of 35, you’re mechanically or your ability to calculate peaks at about 35. And then experience can keep you in there for about another five years and by the time, you’re 40, you’re too old to compete at the top level. So chess. Maybe poker, you can keep on getting better, but then poker evolves so rapidly. It was–the kids came through who’d play a million hands online, which was the same number of hands that some 72-year-old guy would have played, if you’d just been sitting at a [crosstalk]

Yeah. If you’ve been–And so they develop this incredibly aggressive loose way of playing which would maximize returns. So investing is really one of the only places where you just keep on accumulating knowledge and sharpening your skills and getting better, but it’s complicated by the fact that the market moves in these very long cycles. Whatever you learned up to the–1999 didn’t serve you very well from 2000 to say 2009. And then what you learned in that decade didn’t work very well in the last decade and who knows what’s gonna work next, maybe being [crosstalk]

Jake: Are you calling out Robinhood traders right now with this?

Tobias: Well, I think they get a little bit too much–

Jake: Flak.

Tobias: Yeah, I think they get a little bit too much disrespect. I don’t really know. It’s hard to say. Everybody–they’re not very big accounts, they trade too much. But when you look at the stuff, they are dip buyers at least. And if you’re a dip buy, you’re either a bag-holder or a value investor. And at the moment, they’re both the same thing. So, I can’t be too critical of those guys. But I’m interested in mastering investing, getting it right, and I’ll keep on reading and learning. Not too much. I’m sure there are people out there who’d say, “Well, you should have evolved into a compounder by now.”

Jake: That’s fair argument.

Tobias: I got a point of view. So, I think that these valuations are stretched on that side. And I think that some evidence for that is the fact that I’ve been calling a bottom-in value for a long time, have had a couple of months of running now. It’s June 2nd, started at April 2nd. I think we’ve had a pretty good run for two months. Last year, we had one that ran from about August 27th through to about December 17, not to be too precise. So, I can’t tell you the hour of the trading day that it started and finished, but that’s about the performance. So that was about four months, so we need this one to go on for a little bit longer than that. Got a lot of ground to catch up for Valley.

Jake: Yeah, what happened in March?

Bill: Or from January?

Tobias: This year?

Bill: Yeah. I’m a little salty here. My retirement account who I treat, like the account I hate is–was pretty much long energies and financials for the year because of a tax advantage dividend strategy. Yay. It has just gotten hammered. So, any reprieve that I find over the last couple days or months or whatever is nothing compared to the drawdown it took.

Tobias: Is that more of a like a deeper value portfolio? You’re just like slinging it around doing whatever you feel like?

Bill: I don’t treat that like I treat the account that I would run that I care about and that I would run for people, so–

Tobias: This is where you get your gamble out.

Bill: I’m being a little more speculative with it.

Jake: It’s a grudge F account.

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