During his 2010 Columbia University Lecture, Li Lu discussed the insight and temperament required to be a great investor. Here’s an excerpt from the lecture:
When I started in the business in 1997, it was in the middle of the Asian Financial Crisis. A few years later there was the Internet bubble. A couple years ago was the Great Crash of 2007-2008.
They are billed as once in a century disasters but happen every few years.
Every time it goes against you, your net worth or value of your investments might go down 50%. This is really where that insight and temperament comes in.
In a sense, you have to have a certain confidence in your own judgement and not be swayed by other people’s views. It is not easy. But that is life. It is just a given. It happens to everyone.
Berkshire had at least three times when the stock went down 50%. It happened to Carnegie too. It happened to Rockefeller. It happens to everyone. If you really made a mistake, it would not stop at 50% but go to 0.
This happens to even mighty companies. Look at the top 50 companies in America every 10 years. By the time 20-40 years go by, 2/3rds of them will be gone. By the time it goes to 100 years, there might be only a couple left. It’s just the way it is. Look at what happened to the once mighty General Motors. So thats why I’m saying is, investing is a continuous learning process because your investments are constantly changing
You can read a transcript of the entire lecture here:
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