Mark Sellers: So You Want To Be The Next Warren Buffett?

Decent reading: http://www.manualofideas.com/files/sellers.pdf

Some interesting bits..

• And the reason is that it doesn.t much matter what your IQ is, or how many books or magazines or newspapers you have read, or how much experience you have, or will have later in your career. These are things that many people have and yet almost none of them end up compounding at 20% or 25% over their careers.

• You can make millions without being a great investor. You can learn to outperform the averages by a couple points a year through hard work and an above average IQ and a lot of study. So there is no reason to be discouraged by what I.m saying today. You can have a really successful, lucrative career even if you.re not the next Warren Buffett.

• Well, one thing that is not a source is reading a lot of books and magazines and newspapers. Anyone can read a book. Reading is incredibly important, but it won.t give you a big advantage over others. It will just allow you to keep up. Everyone reads a lot in this business. Some read more than others, but I don.t necessarily think there.s a correlation between investment performance and number of books read. Once you reach a certain point in your knowledge base, there are diminishing returns to reading more. And in fact, reading too much news can actually be detrimental to performance because you start to believe all the crap the journalists pump out to sell more papers.

• Another thing that won.t make you a great investor is an MBA from a top school or a CFA or PhD or CPA or MS or any of the other dozens of possible degrees and designations you can obtain. Harvard can.t teach you to be a great investor. Neither can my alma mater, Northwestern University, or Chicago, or Wharton, or Stanford. I like to say that an MBA is the best way to learn how to exactly, precisely, equal the market return. You can reduce your tracking error dramatically by getting an MBA. This often results in a big paycheck even though it.s the antithesis of what a great investor does. You can.t buy or study your way to being a great investor. These things won.t give you a moat. They are simply things that make it easier to get invited into the poker game.

• Experience is another over-rated thing. I mean, it.s incredibly important, but it.s not a source of competitive advantage. It.s another thing that is just required for admission. At some point the value of experience reaches the point of diminishing returns. If that wasn.t true, all the great money managers would have their best years in their 60s and 70s and 80s, and we know that.s not true. So some level of experience is necessary to play the game, but at some point, it doesn.t help any more and in any event, it.s not a source of an economic moat for an investor. Charlie Munger talks about this when he says you can recognize when someone .gets it. right away, and sometimes it.s someone who has almost no investing experience.

Last but not least..

• So what are the sources of competitive advantage for an investor? Just as with a company or an industry, the moats for investors are structural. They have to do with psychology, and psychology is hard wired into your brain. It.s a part of you. You can.t do much to change it even if you read a lot of books on the subject.

.... there are more interesting stuff but I am not going to paste everything here. So don't be lazy. Click the link and read. :D