As I last promised I am about to reveal to you the Secret to Becoming a Great Investor. But before I do, allow me to address a question of no less importance:
"Why do most individuals have little chance of becoming great investors?"
To answer this, I would like to take you back 900 years (indulge me, I beg you) and introduce you to one of Judaism's foremost philosophers - Rabbi Moses Maimonides. Now this chap was not your average run-of-the-mill Rabbi. Fluent in Arabic, Spanish, Greek and Hebrew, he was learned in Jewish mysticism, the exact sciences, medicine, astronomy, Greek philosophy and served as the Royal Physician in Egypt. Like I said a pretty cool guy.
Maimoides authored a text called 'The Guide to The Perplexed' (or 'Moreh Nevuhim') - an esoteric work that deals with Kabbalah and Jewish Mysticism. Not the easiest of books to read (Trust me, I received a copy on my 19th birthday from my best friend - and I still haven't finished it!). I digress. In Chapter 34, he explains why the average individual will never be able to grasp the secrets of Jewish Mysticicm - of Kabbalah. 900 years later, his explanation also applies to the question I posed - "Why do most individuals have little chance of becoming great investors?". I provide a loose translation below:
"Preparatory studies are of long duration and Man by his nature is focused on the end result, finds these tedious and is reluctant to engage in them. Know this, if a man were able to reach a worthy goal, without any preparatory studies, such studies would be futile and a waste of time. Now suppose you awaken any person, even the most simple, and say to him 'Do you not wish to understand the nature of the heavens, their number and their form; what beings are contained in them; what the angels are; how the creation of the whole world took place; what is its purpose, and what is the relation of its various parts to each other; what is the nature of the soul; how it enters the body; whether it has an independent existence, and if so, how it can exist independently of the body; He would undoubtedly say "Yes," and show a natural desire for the true knowledge of these things. But he would wish that this desire be satisfied and to attain such knowledge by only listening to a few words. Ask him however to interrupt his usual pursuits for a week, and devote his time to obtaining such knowledge, and he would not do it. He would rather be satisfied with simple imaginary and misleading notions and would refuse to believe that there is anything that requires extensive investigative learning."
Like I said - not easy reading. Simply put what the good Rabbi is telling us is that the average person wishes to know the 'secrets of the universe' but is unwilling to pay the price – and devote the long hours of study required. And that is why 'Hidden Knowledge' is not available to the
masses – it's not that it's physically hidden, but that people are not willing to apply themselves to the learning.
And so it is with Value Investing. It is not difficult and not rocket-science. In fact it's really quite simple. There is enough free material available on the internet that a person who willingly sacrifices time in front of the TV, and instead devotes several hours a week to research and learning, will in no time be viewing the stock market in a similar light to Warren Buffett.
And now for the Secret to becoming a great investor:
In the 2007 Berkshire Hathaway Annual Shareholders' Meeting, a 17-year old asked Warren Buffett:
'What should I do to become a great investor?'
Buffett replied:
"Read everything you can…. When I was ten I'd already read every book in the Omaha Public Library with the word 'finance' in the title".
In my next post - "The Value Investors Library" - I will provide a list of books that have been recommended by Warren Buffett, and his partner Charlie Munger, and others which in my opinion are essential if you wish to expand your investment horizons.
Signing off for now - "May you possess the wisdom to see what the market does not, and the courage to act on it.
* It may be no coincidence that the root of Maimonides' name ('Maimon - or M-M-N) is also 'money' or 'finance'.
** Thanks to Oded for the 'Perplexed' quote.
3 comments:
Maimonides, if I'm not mistaken, was one of the first to try and reconcile religion with the this-worldly philosophy of the Greeks (primarily Aristotle).
The chain from there is interesting, and I'll have to look it up to be sure, but I think it went from him to the teacher of Thomas Aquinas--who did for Christianity the same thing, a feat which helped Europe crawl out of the Dark Ages and into the Renaissance (as reason was reborn).
The Muslims had a figure like this as well. In fact, a lot of the achievements in the Arab world were made during the time that the works of Aristotle were discovered. They had an anti-Aristotelian philosopher soon after though and the rest is history.
Anyway, good blog. Your comments on the importance of reading are so true. I'll have to pick up the Guide of the Perplexed next time I make it back to the States. My Grandfather had it in his library but I never got around to reading it...
Hi Daniel,
Yes - that is correct. He wrestled with the question of how can a God exist in a world filled with evil -and with events such as the Holocaust. He solves this with the rationale which Aristotle used - that we all have 'God' within us - to a greater or lesser extent. Those who commit acts of pure evil possess God to a lesser extent - as a result of the ir absense of belief.
I am not sure with regard to the Muslim character that you are reerring to. Perhaps it was the Sufi Masters? Or Baha'allah - the founder of the Bahai Faith?
The person I was referring to was Averose, who influenced Maimonides.
The history of how Aristotle's thinking was picked up (and integrated or discarded from societies) around the world is pretty interesting--especially when you look at the consequences of one or the other choice. The Aristotle Adventure is a good book to read if interested.
Ah, but I can't speak of books too much..will start going into withdrawal.
Cheers,
Post a Comment