In this interview with the Graham & Doddsville Newsletter, Li Lu explained why investors who figure out their own style, and stick to it, will have a huge advantage. Here’s an excerpt from the newsletter:
Li Lu: Part of the game of investing is to come into your own.
You must find some way that perfectly fits your personality because there is some element of a zero sum game in investing. If you buy, somebody else has to sell. And when you sell, somebody has to buy. You can’t both be right.
You really want to be sure that you are better informed and better reasoned than the person on the other side of the trade. It is a competitive game, so you’re going to run into a lot of very intelligent, hardworking fellows. The only way to gain an edge is through long and hard work.
Do what you love to do, so you just naturally do it or think about it all the time, even if you are relaxing, and even if you’re just walking in the park. Over time, you can accumulate a huge advantage if it comes naturally to you like this.
The ones who really figure out their own style and stick to it and let their natural temperament take over will have a big advantage. The game of investing is a process of discovering: who you are, what you’re interested in, what you’re good at, what you love to do, then magnifying that until you gain a sizable edge over all the other people.
When do you know you are really better?
Charlie Munger always said, “I would not feel entitled to a view unless I could successfully argue against the best counterargument of the smartest opponent.” He is right about that.
Investing is about predicting the future, and the future is inherently unpredictable. Therefore the only way you can do it better is to assess all the facts and truly know what you know and know what you don’t know.
That’s your probability edge. Nothing is 100%, but if you always swing when you have an overwhelmingly better edge, then over time, you will do very well.
You can read the entire interview here:
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