THE WAY TO INVESTMENT SUCCESS

When I first discovered the art of investing, learning from the legendary investors around the world became important to me. When I set out to write my book The Value Investors: Lessons from the World’s Top Fund Managers, the lessons I learned accompanied me well beyond the pages of the book.

Always pertinent is Irving Kahn’s wisdom from his experience of the Great Depression: “There is always something to do. You just need to look harder, be creative, and be a little flexible.” Kahn, who died in 2015 at the age of 109, lived through two world wars, the 1918 influenza pandemic, the Wall Street Crash of 1929, and eight bear markets. When life was difficult due to the COVID-19 pandemic, I often thought of Kahn and other successful investment managers I met, and I wondered what qualities enabled these investment stewards to thrive in difficult times.

I concluded that there are three major qualities: Humility, selfawareness, and moral ethics. As the world grapples with the aftermath of the pandemic, and the reality of the bigger challenges that lay ahead, I believe these qualities remain as relevant as ever.

Think of Yourself Less

Investment stewardship is about being responsible when allocating and managing investors’ capital. In bull and bear markets, a good steward requires humility. To best serve the interests of investors, hubris must have no place.

This does not mean that we should think less of ourselves. We still need to show confidence and conviction in our actions. However, we should think of ourselves less by putting the interests of investors first.

This quality is particularly helpful in moments of market stress, such as the market meltdown in March 2020 when the pandemic was taking hold and panicking investors. I knew this was the moment that our investors were counting on us more than ever. Whilst it was a tempting opportunity to jump back in, there was also considerable downside risk with many unknowns.

Keeping our investors in mind, we took a moderate approach and dollar cost averaged back into the market. That way everyone could still sleep at night.

Self-Awareness: Know Yourself

My interviews with investment legends gave me access to many of their investment principles, however it was also noteworthy that their unique personalities also added to their success. I concluded

that whilst their investment principles are extremely beneficial in providing a base framework, I knew that I also needed to overlay this with my own character, culture, and investment coverage to play to my own strengths.

When interviewing Walter Schloss, one of the “super-investors” according to Warren Buffett, Schloss shared his self-awareness: “I am psychologically built differently than Warren. I see that there are many people trying to be like him, but they should take note that he is not only a good analyst; he is also a good judge of people and business. I know my limitations, so I’d rather invest in the way I am most comfortable with.”

In order to have self-awareness, I have been honest with myself as to what standards I hold myself to and whether or not I meet them. Looking back and learning from my successes, and importantly from my failures too, I found my own framework in the market. I read that “life’s tempo is set to the beat of the ever-changing rhythm.”

To find a comfortable tempo, I have learned that there are several ways to fine tune an investment portfolio: concentrate or diversify, trade in and out or buy and hold, and use leverage or not. Although my rhythm is based on the value-oriented approach, the aforementioned methods help fine tune my tempo so that I can dance with the market’s ever-changing rhythm.

Moral Ethics: Do the Right Thing

An investment legend said to me, “Friends and clients may forgive you for the silly mistakes you make in the stock market, but never for a dishonest mistake!” — I know my responsibility goes much further than just my family and clients. Doing the right thing must extend to all the stakeholders including the broader society around us.

As investors, we have the power to direct the flow of money, which gives us the power to influence how companies act or don’t act. As the saying goes, “money talks.” The pandemic has further polarized the world.

The financial markets have performed exceptionally well whilst there is suffering in real life. The saying that “to get rich is glorious” no longer applies in the 21st century. Investors must now look both ways: to do no harm and to also help build a sustainable future. Within this, we must empower the next generation as well as being considerate socially and environmentally.

The worst of the pandemic may be behind us, but the world might not get any easier. Humility, self-awareness, and ethics may help serve as our guide.

Ronald Chan is the Founder and CIO of Chartwell Capital and the author of The Value Investors: Lessons from the World’s Top Fund Managers.