In his 2021 Annual Shareholder Letter, François Rochon compares successful portfolio management to art, suggesting both require individual vision and creativity. He criticizes group decision-making, citing Buffett’s opinion that it’s like “looking in a mirror.” Like artists who avoid complacency after success, good investors need to balance two seemingly opposing emotions:
Self-Confidence: This is crucial for analyzing companies, remaining patient, and buying undervalued stocks
Humility: This is essential for acknowledging what you don’t know, learning from mistakes, and avoiding arrogance after success. Humility is key to rational decision-making and navigating the punishing market
Here’s an excerpt from the letter:
Like art, portfolio management can rarely be done in teams (or worst in committees). We can add experience but we lose in personal creativity. Like Warren Buffett once said: “My vision of a group decision is to look into a mirror”.
Good artists also know that their number one enemy is the comfort that celebrity and success can bring. Marc Séguin added that after a successful show, he then would start on a totally new pictorial path.
So to really continue to move forward, as a money manager, we have to find a balance between two emotions that are seemingly opposite: Self-confidence and humility.
Of course, self-confidence is crucial to properly judge a company and its leaders. Also, it is the cornerstone of the huge patience often needed for a stock to be rewarding. Moreover, without self-confidence, it can be quite challenging to be able to purchase a stock that Wall Street rejects (and these are sometimes the best buys).
But at the same time, humility is widely needed: at the moment of analysis (to be humble enough to recognize what you know from what you don’t), when errors occurs and also – ironically – after one or two great years of performance. The market has a way of punishing, rapidly and severely, lack of humility.
Humility is important because it is the essence of reason.
You can read the entire letter here:
Francois Rochon – Shareholder Letters
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