November 01, 2016
When Stealing Can Be Legal….and Profitable
I was very fortunate some years ago to be able to spend a few hours with Edward de Bono, professor, consultant, author of 57 books, developer of the concept of lateral thinking, and certifiable genius. The meeting had been arranged to demonstrate a computer program I had written based on one of de Bono`s techniques for creative thinking and problem solving. But the evening devolved into a general and fascinating conversation. I will never forget a piece of advice offered by this professional idea man which was that you cannot maintain control of an idea. Once it is out there, anyone can use it. You might be able to file a patent on a device or a process, but not on an idea.
The investment business is a wonderful one to be a part of because there are so many smart people operating in it and most of them are willing to share their ideas. For example, the annual meeting of Berkshire Hathaway is effectively a seminar on investing presided over by two of the most successful investors of all time, Charlie Munger and Warren Buffett. They also have written numerous articles on various aspects of investing. And they are not hesitant to talk about their specific portfolio holdings and why they selected those companies.
An interesting facet of the industry is that large investment funds have to disclose the holdings in their portfolios in regular filings to industry regulators. It is possible to see what the smartest money managers on the planet are buying and selling, although somewhat after the fact. Nevertheless, this can be a useful source of investment ideas.
Further, most managers are happy to reveal their investment processes that have been developed and refined only after years of experience. They will tell you what has worked for them and what has not. The latter is perhaps more interesting since most professional investors will admit that they learn more from their mistakes than from their successes. If you do well, it is hard to say whether it was a result of your own skill or simply due to good luck. But when you fail, it is probably your own fault.
No one has found the secret to investing, the one true path to wealth and success. Different approaches work at different times. Plus the world keeps changing and therefore investors have to continually alter their thinking to fit new circumstances. So we read everything and try to learn from as many industry gurus as we can. There is no shame in copying the best practices of successful money managers, or in checking your own views against possibly contrary views of others whom you respect.
It is a privilege and a pleasure to steal ideas from accomplished investors who have pioneered the way for the rest of us, if you have the time and the ability to learn from their examples. Of course, not everything they own is going to be the right fit for you. But it is useful to see what other smart people who manage billions of dollars are doing and learn what they think about the state of the economy and the capital markets. Thus we can steal some good ideas……but I guess it is not really stealing if they are giving them away for free to anyone willing to make the effort to learn.
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