Ann: Revised December 2018 Trading Update, page-29

Great post @mal85, you are a true independent thinker.

I'm increasingly thinking (for what it's worth) that a critical component of long term investment success is a deliberate, and perhaps disciplined, intent to be open and flexible. The risk is that something that works for a period (especially a very long period), and especially when it carries the gravitas that comes with having a rigorous framework, eventually becomes an ideology. The antidote, I suspect, is true contrarianism (1). Perhaps this could be added to your list (though it could arguably be included under e).

I feel we should also add a category that deals with how market participants think about the market. The old Mr Market perspective espoused by Graham has become so popularised, that it needs additional meat to continue being of use. Every "value investor" is talking about Mr Market being their servant, not their master, but forget that they have become Mr Market. The missing leg is that Mr Market is a discounting machine, and if you are doing or thinking what a large group of participants are also doing, then odds are Mr Market has already discounted your thoughts and approaches. That means Mr Market has discounted what you think about Mr Market.

So yes, don't be swayed by the bipolar Mr Market - sure. But first, don't be Mr Market.

Finally, I'm not sure I agree with your comments about g (macroeconomics). Value investors have become so besotted by Buffett's dismissal of "the macro", and also comments by the likes of Peter Lynch, that they wear it as a badge of honour. What they should perhaps be thinking is that if 99% of value investors are dismissing macro considerations, then perhaps it may be a source of competitive advantage. I personally feel that Buffett's famous comment "be fearful when others are greedy, and greedy when others are fearful" is the ultimate endorsement of the importance of having your finger on the macro-pulse.


(1) I can't remember who it was that reflected on the fact that 40,000 people turn up to the Berkshire AGM each year, all thinking they are contrarians, and see no irony. When the method is rigorous and rooted in reason, it can be very hard for adherents to see that they have become groupies.