Tuesday, May 25, 2021

Why you don't want to be one of the world's greatest investors


There's been a disturbing trend where authors interview extremely wealthy and successful people for generic self-help advice. These books sell very well because, in our modern society, it is difficult to disagree with wealthy people. 

Wealthy folks are more confident and they can back up everything they say with money. But that being said,  I'm not so willing to concede a point to someone who is wealthier than me. In fact, I would say that I derive meaning from my intensive wealth generation so that I don't have to kowtow to a wealthier guy. One approach is to become one of the 1%, then 99% of folks around you can't browbeat you because they are wealthier than you.

All this being said, Richer, Wiser, Happier by William Green is, when reading deeply, a fairly subversive piece of work. 

On the surface, it does its job deconstructing the successful traits of wealthy people by simplifying their thought processes for the layman reader. For example, Mohnish Pabrai is all about cloning other successful investors, and he does it so well that he can be construed as a fairly original guy. Charlie Munger is all about inversion and avoiding bad investments rather than looking for good ones. I guarantee that a reader of this blog will love this book.

If you read this as self-help fare, however, I think you will miss out on the real value of this book. 

Putting all the great investors together, there are very uncomfortable truths about becoming a great investor. 

Great investors are lonely. Almost all of them have troubles relating to others. To a much lesser extent, this resonated well with my own childhood experiences. I was an only child, I can't relate to others so I spend time on my books and role-playing. My secondary school classmates would create football league tables to compare school grades and they told me openly that I can't join their league unless I used only my Chinese grades. ( BTW, I'm not bitter, I was extremely flattered in those days )

Introversion allows a person to develop their thoughts in seclusion and this allows all great investors to take contrarian bets and do something different from other people. I tested a borderline extrovert, but my students in all my 20 batches have never tested extrovert in the history of my ERM program. I was forced into a world made up of my own involving a lot of mental models and D&D because I went to secondary school where I just could not make a lot of close friends. ( But it got better in NJC and NUS )

My latest Batch 20 is dominated by INTJs - a trait most conducive to FIRE.

The second thing that really jumps out is just how bad the best investors are at having families. 

Divorce is a constant theme around these investors with Warren Buffett as an exception. But Warren moved out of his house to live with his girlfriend while keeping relations friendly with his wife. I suspect you need to be really disagreeable to stick your guns in investing. This also makes you more competitive and want to win with stronger fund performance. A final hint to see how disagreeable a tribe is to count the number of law degrees in that tribe. If you self-select to study law, you definitely fall into the top quartile on disagreeableness. 

Therefore, it's not unreasonable to conclude that the greatest investors have extremely low EQ. There are really credible urban legends of Charlie Munger, the Abominable No Man, dissing his fans when he's in a bad mood in the book which is really fun to read. 

My final point is that ultimately this book is a great read not because of the surly investors featured, but by the author himself who is a very skilful writer. The author is a journalist who takes liberties peppering the book with ideas from philosophy to make the book accessible to the layman reader. 

You can review this blog article again after reading the book to see whether you agree with me.


  1. A recent interview with the author on this book & also reveals what he personally puts his & his family's cash in. Also has a titbit at the start of the podcast about a Credit Suisse report about a little-focused factor that has outperformed over decades.

    May 6 2021 interview with William Green

    Suggest you use your fav player & listen at 2X speed.

    1. Thanks. Looks like I will have to back-test the family factor for Singapore stocks one day !

  2. I have read the book before your post. I feel that this book is investment book of 2021. Seasoned investor may appreciate the book more.

    The book mentioned some commonalities shared by the great investors such as rational, emotionally less affected by losses etc. On 'having troubles relating to others', I feel that it is partly that they find it not worth the trouble doing so.

    My biggest takeaway from the book is probably that each investor (mentioned in the book) has their investing style (or lifestyle) fitted to their own personality.

    "you need to be really disagreeable to stick your guns in investing." --> Don't agree with this. It is more like you need to be able to think independently and have conviction in your ideas regardless how the market thinks.

  3. You are never going to think independently if people keep shoving ILPs and endowments into your face and you try to hard to be a people pleaser. I rank my disagreeableness one of my most important virtues because I can tell FAs to fuck off !