Ruane Cunniff: The Secret Sauce Of Investing

Johnny HopkinsRuane CunniffLeave a Comment

During last month’s investor day, Ruane Cunniff discussed the secret sauce of investing. Here’s an excerpt from the transcript:

The analogy that I always think of to illustrate the challenge is cooking, where if you put me in a room with a Michelin starred chef and you gave us the same ingredients and the same tools and the same recipe and all the same things, I guarantee you that my cooking would not taste the same as the Michelin chef’s.

The reason why, of course, is because the Michelin chef knows all the special tricks – knows how to put the pinch of salt here and the pinch of pepper there, to heat the pan to just the right temperature before he puts the ingredients in, and all the different sleights of hand that go into turning a set of ingredients and a set of tools that anybody can access into a special plate of food. And it’s no different in our business. You need to have all of the building blocks. You need to have the incredibly talented team.

You need to have the philosophy and the process and all that. But then you’ve got to wrap all of those basic building blocks in a culture and an environment that creates that special sauce. And it’s so many things. It’s who you hire. It’s how you train them. It’s how you act. It’s what you say. It’s more importantly what you do. What you do when your stocks go up. What you do when your stocks go down.

What you do when someone else’s stocks go up or down. How you respond to good decisions that produce bad results. How you respond to bad decisions that produce good results. How you think about strategic questions about how to grow your firm. What to do as a firm. What not to do. What kind of client you want to serve.

Whether you want to sell your services aggressively or ensure that they’re bought by clients who are aligned with you and the way you think. And then a whole bunch of other things, some of which we think about every day, some of which are almost knee-jerk reflexes that you hopefully train yourself to have over time.

So, creating that special sauce is a critical part of what we do, and if you bring all those building blocks together in the right way and in a consistent fashion, you earn the right to perform the way we want to perform over a long period of time.

You can read the entire transcript here:

Ruane Cunniff – Investor Day Transcript

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