I just got back from attending VIS 2019, the 2 day value investing conference in Kuala Lumpur. The organisers did a great job with the speaker-lineup, and I am sure most of the attendees took home some very valuable learnings, just like I did. However interestingly my main take aways from the 2 day event had very little to do with investing. I can possibly summarise it as “To be a great investor, has got much more to do with faculties that are completely unrelated to investing….”
One of the speakers was a gentleman from Thailand, Dr Niwes Hemvachiravarakorn. his story is quite fascinating. He was retrenched from his job during the Asian Financial crisis in 1997 when he was 44 years old. He went ahead and invested his entire savings of USD 600K into a portfolio of Thai stocks and over the next 2 decades compounded his wealth to about USD 200M….translating into an eye-popping CAGR of ~ 34%…which is way better than even Mr. Buffett or any other successful investor that you all know about. Dr. Niwes presented some of his portfolio holdings and the growth in these stock prices were obviously fantastic….
However the purpose of this post is not to dissect Dr. Niwes’ portfolio. I am very sure, a lot of Thai investors also had these same stocks in their portfolio in 1997 but most of them are probably not sitting on USD 200M right now….Dr. Niwes is! Many of those investors probably had a higher IQ than Dr. Niwes and probably were smarter in analysing the financial statements of Central Pattana PCL (CPN) in 1997.
However what most of these other investors could not do…was to sit and watch their holdings patiently for long periods of time when nothing much was happening…and Dr. Niwes did just than for long periods of time for several of his holdings.
It’s times like these when most investors end up second-guessing their original hypothesis, or the abilities of the management of their portfolio companies and suffer from excruciating urges of “doing something”. It is this calmness of mind that also allowed Dr. Niwes to retain his rationality immediately after his initial purchases, when the overall markets in Thailand dropped by another 70%. What would you have done?
Investment skills can of course be taught, but what cannot be taught is “patience” and ‘calmness of mind’, that is required to go over long periods (sometimes several years) without ‘doing’ anything. This calmness of mind is actually super-human. Many people don’t realise that it is this trait which plays a far bigger role in long term investment returns than anything else.
If one studies Warren Buffett’s track record carefully, this is exactly what comes out as one of the biggest contributors to his success..and Buffett himself often likes quoting Blaise Pascal “All of humanity’s problems stem from man’s inability to sit quietly in a room alone”….people just need to act!
Dr. Niwes told us another fascinating story….about an American lady by the name of Anne Scheiber, who
retired in 1944 from the job of a low level auditor with the IRS, at the age of 51. She never earned a salary of more than $4000 per year and never got a promotion in her job probably because she was Jewish and a woman. However when she died at the age of 101, she left behind an estate of $22M (which is ~ $36M in today’s money). Towards the end of her life, she quietly arranged for her fortune to be donated to Yeshiva University. The funds were devoted to a scholarship designed to help support deserving women. The donation came as a shock to everybody.
Dear readers, try and close your eyes for a moment and imagine the extent of mental calmness that Anne would have possessed! Her portfolio rode through several cycles of bull and bear markets, war and peace, and great societal changes, but Anne was not exactly ‘refreshing stock quotes’ during these times. Many novice investors let market volatilities and constant barrage of ‘noice’ trespass into each of their waking moments. What chance have they got against their own emotions?
I have a theory….monks or hermits who have gained a certain mastery over their minds through prolonged periods of meditation, would make excellent long term investors…only if they wanted to…
The other important take away from VIS for me was the importance of health. One does not need to be as skilled as a Buffett or a Dr. Niwes in identifying investments. Even moderately good investments (most committed people should be able to identify, with some education) compounded over a long enough period would result in very satisfying results. Dr. Niwes can out-‘Dr. Niwes’ himself with a much lower CAGR…simply if he lives for another 30 years…I wish him much more.
Here I would like to congratulate the organisers of VIS : Ken Chee, Clive Tan & Pauline Teo, not only for sharing investment ideas (which was a given) but for the fact that they encouraged a fair amount of discussion about leading a healthy lifestyle. Ken Chee shared his intermittent fasting schedule (a discussion on this in a later post as I am myself an ardent follower of intermittent fasting). Not only Ken and Clive are business partners but they are also cycling buddies. It is quite inspiring to see how they have themselves transformed their health to become much fitter than what they looked 10 years back.
I have convinced myself over the years that leading a simple*, calm, stress-free and healthy life (where one increases the probability of living longer) play a far bigger role in one’s long term investment success than just finding good companies to invest in. So dear readers….I urge you to spend enough time away from your investments, focussing on these aspects of your lives, that cannot be learnt reading an investing book or attending a conference…but are far more important.
*Dr. Niwes lives in a 2 bedroom apartment simply because he does not need more than 2 rooms [my head hung in shame :-)]. Enough has been written about Buffett’s simple lifestyle.
Comments