Is it possible to rewire your brain so you think more like Warren Buffett? In a recent Wall Street Journal column, Jason Zweig takes a look at one successful fund manager who has tried to do just that.
Guy Spier, whose fund has beaten the S&P 500 by nearly 5 percentage points per year since 1997, found that most investors, including himself, pay attention to the wrong things and fall prey to bad ideas, Zweig writes. “We think we control our environment, but in fact it’s our environment that controls us,” Spier said. “We can’t change the world. The only thing we can change is ourselves, by trying to get a better understanding of our own messed-up wiring.”
Spier, who won the chance to have lunch with Buffett back in 2008, has made a number of changes to his mindset based on the words of Buffett and Berkshire Hathaway partner Charlie Munger. “Worried that knowing the prices of his holdings would make him want to trade them, he checks their market values once a week at most and leaves his firm’s only data terminal switched off for weeks at a time,” Zweig says. “Mr. Spier avoids speaking to brokers; he puts in his trading orders by email, after market hours, so no broker can try swaying his judgment.” Spier also does not publicly discuss his holdings, afraid that that will impact his objectivity. He moved his office away from New York, the epicenter of financial news, and to much quieter Zurich; he reads financial commentary only after reading a company’s quarterly reports and other financial fillings and listening to its quarterly calls, to make sure primary sources come first.
Zweig says Spier’s approach offers tips for individual investors, who have advantages like patience and independence over the pros — if they are willing to use them. “Individual investors are constantly being exhorted to try beating Wall Street at its own game of trading like crazy to chase whatever is hot,” says Zweig. “But why should you bother trying to play a game that even most professional players can’t win? Instead, take a page from Mr. Spier’s book and play by your own rules. The faster Wall Street runs, the more you should slow down and step back from that madness. Buy and hold an index fund forever, or study a few stocks with all the peace of mind you can muster.”