Nov 2016

Concentrated Investing, Allen Benello, Michael Van Biema & Tobias Carlisle

Strategies of the world’s greatest concentrated value investors.



Investors studied are Lou Simpson (GEICO CIO), Keynes, Buffett, Munger, Kristian Siem, Grinnell College and Glenn Greenberg. 

Key message is that if you are able and prepared to do the research then concentration just makes good common sense. It’s the simplest and surest way of achieving out performance. Bet seldom and only when the odds are heavily in your favour. Requires the right temperament for the investor and permanent or longer term capital helps.

Keynes started as a macro market timer and discovered notwithstanding his deep understanding of economics he could not add any value using this strategy. He in later life moved to a concentrated value investment approach.

Jan 2016

Charles Munger, "Poor Charlie's Almanack". Edited by Peter D. Kaufman


 This volume includes the key wisdom of Charles Munger which has influenced me in developing the Black Crane strategy and setting my daily habits. The book also includes the full text of his top speeches. 

The key secret to his and Warren's success is OBJECTIVITY. Good old common-sense in my parlance.

It’s not the maximum IQ that matters but objectivity, common sense and perseverance. 

He emphasises the importance of reading, curiosity and continuous learning. 

You need to know the basics of the key disciplines: probability, economics, physics, psychology and accounting. 

Multidisciplinary knowledge rather than deep specialisation is what's required to be a good investor.

Invert always invert. What can go wrong? What needs to be avoided? What if done would lead to failure? 

He believes that human psychology leads to poor decisions and has developed a 25 point checklist of mistakes.

He thinks that the pari-mutuel betting system at the race track is the best analogy for investing. As an investor, one looks for mis-priced bets.

Staying within your circle of competence; the size is less important than knowing where the boundary

is - that’s critical.

Life and businesses are complex so look for compounding effects. Charlie calls this the 'lollapalooza effect'. This occurs in both the positive and negative direction.

Concentration is essential to success. One can’t possibly attempt to know everything about everything. That’s a recipe for mediocrity. No one has 50 good ideas!