The Value Investors: Lessons from the World’s Top Fund Managers [updated]

After finishing The Value Investors: Lessons from the World’s Top Fund Managers by Ronald Chan, I come to realize value investing is not just a concept in practice. It is highly dependent on your character – either you have it or you don’t.  It is no surprise that value investing attracts conservative group of investors who prioritize the downside risk of any investment above anything else.

In this book, you are presented with the contrarian views, the inspiration to go against the grain or crowds.

The Value Investors: Lessons from the World's Top Fund Managers by Ronald ChanThe Value Investors  is a series of interviews compiled, but it never feels like one.  90 percent of the content  is a compilation of biographies, but even if you don’t have time to flip through the entire book, I’d highly recommend that you digest Chapter 13 first. I don’t want to sound over dramatic but it is profound because it is about discovering yourself.

This book gives a whole new perspective and again – surprise, surprise, it has very less to do with the perfect valuation formula, as many value investors might laud as the holy grail in value investing.

Therefore you won’t see a single valuation formula in the entire book. That might frustrate beginner level value investor, therefore The Value Investors is best to be used as a complement “value investing bible” for intermediate or advanced value investors instead.

Thomas Kahn, one of the interviewee stated:

“If investment game were all about numbers, computer programs would be able to find the right stock all the time.”

It goes deeper, way deeper. It explores the mindset and life stories of prominent value investors, although out of the investing community, these personas are likely less known among normal households, unlike names like Warren Buffett. Although the 12 fund managers’ views on market outlook and their most recent investment performance are of interest of many, public aren’t too interested in who they really are, where they come from (US, UK, Japan, France, Spain, Hong Kong, Singapore) and how the ended up becoming who they are today. Diverse background, they all come from but their grasp on the very fundamental concepts of value investing do converge.

Some highlights:

We all know about the most admired and respected investing legend of all time – Warren Buffett, but let’s up it by one level.  How about someone even Buffett himself looked up to as a brother figure and singled out for praise in his 2006 letter to Berkshire Hathaway shareholders? He is the late Walter J. Schloss, the super-investor from Graham-and-Doddsville, as Buffett puts it, who passed away in Feb 2012. Yes, his investing biography is featured in this book, but let just summarize it by saying this man generated a 16 percent compound return annually from 1956 to 2002, without attending college or any business school. If this weren’t written by someone with credentials, I would shake my head is disbelief when I read some of Walter Schloss’ investing mantra:

  1. We try to buy stocks cheap
  2. Anything terrible that doesn’t happen to you is profit!
  3. First priority in the market – to survive and not to lose money
  4. Because I don’t like stress and prefer to avoid it, I never focus too much on market news and economic data. When people ask me what I think the market is doing, their guess is as good as mine!

Teng Ngiek Lian of Target Asset Management never subscribed to Bloombery or Reuter,s as he does not believe in keeping up with constant changes in stock prices. After all, value investing is about buying good businesses, and stock price fluctuations have nothing to do with it.

The strategies employed by all the fund managers are neither staid nor old-fashioned. Each have their own stories to tell, but they possesses similar personality traits. And temperaments.

That is the ability to suppress that desire for instant gratification that lure many people into investment hell hole.

Also, the ability to accept lagging behind their peers and that they would suffer psychologically and financially in doing so.

And being humble. Ronald Chan summarized this traits in his interview with all of them succinctly:

This quality allow investors to be aware that they are FAR from being invincible, and that they can be wrong at times. They acknowledge the fact that no one is certain about the future, so their priority is to avoid losing money, rather than to generate big returns. Although humility is a virtue in its own right, in investing it translates into margin of safety concept, which defends against uncertainty.

And above all, investing with honesty and integrity, especially with other people’s money, is all more critical.

“Friends and clients may forgive you for the silly mistakes you make in the stock market, but never for a dishonest mistake!”

All in all, the last takeaway from this book is – investing should be a fun and challenging process, not stressful or filled with anxiety.

And for those who complained they cannot find opportunities, then one of the fund manager had this answer for you:

“You either haven’t looked hard enough or you haven’t read broadly enough!”

Read also: 8 Reasons Why? Your Value Investing Isn’t Working And How To Fix This

24 thoughts on “The Value Investors: Lessons from the World’s Top Fund Managers [updated]”

  1. I does want to be value investor too but here is some of the problem how to calculate intrinsic value of a stock using a real life report.

    Hey LCF, I need your help, please show me example use real sample

  2. I want to be a value investor because value investing is a lifelong journey that gives me the financial stability to my steps to financial freedom to myself and my loved ones. I don’t want to live in Poverty but to be Financially Free and Wealthy when I finally retire and and enjoy the freedom that it gives me in my Golden Years. Last but not least, financial education can help us to become wiser, smart investor and prudent in any financial planning in the future.

  3. I just signed up for the value investing summit 2013 at Sg. Perhaps this book will be useful for me to have a basic before i attend the event.

    1. Hey CT, sorry to disappoint but I think the content here isn’t exactly the basics when it comes to value investing. But like I mentioned, it is a good complement to any value investors 🙂

  4. I want to be a value investor because of the potential returns and simplicity that value investing can provide. Warren Buffett has been widely known to achieve high returns, non other than through value investing. Index funds has been widely known to outperform managed funds and all this comes down to one simple trick, holding on to companies with strong fundamentals. It is just that simple. Why speculate and trade when we can just invest in potential growth companies and be a part of its long term success. Definitely a crucial investing technique for the modern day 9-11 workaholic who does not have time for daily trading.

  5. Value investing to me means more than earning decent returns from my investments. What is of greater value is the ability to exercise independent thinking and to have convictions in your decision making even though others may cast doubts. It is about being able to act rationally, to have control over your emotions and to display nerves of steel in spite of the roller-coaster of the markets. Being a value investor is a lifelong journey and to me, the personal growth and self discovery aspects of such a journey heavily outweigh the financial gains that you can make.

  6. I want to be a value investor because value investing is a lifelong journey that provides perpetual learning experience and skill enhancement. Value investing is more sensible in the sense that it is based on the intrinsic value of the company itself rather than predicting the future price by projecting technical charts, which is equivalent to gamble. By sticking to this strategy, I will be able to justify why I am buying or not buying a stock based on the background of the business and the fundamental parameters. In other words, it is a way to instill a more responsible/rational character into the investor like me and gradually become a better me. As the name goes, value investing brings VALUE (money and attitude) to investor’s life.

    Happy investing everyone 🙂

  7. Ronald Chow/Casper Chow

    I want to be a value investor because I’ve been investing in Mutual Funds & the KLSE stock market, trying to make a decent return. All I get is “you win some & you loose some”. Back to square one, mostly loosing most of the time. Could not get anything out of “Teaching you how to win in the Stock Market” type of books. Formulas & charts are impossible to comprehend. I also buy weekly business magazines just to get the “inside of what’s going on” in the business world & recommendations by brokers. What do I get? Lots of news and no decent returns. So I’ll be very interested in what Ronald Chan have to say. Surely I can learn from him to ease my heartaches & sleepless nights . Give it to me!

  8. I heard and I know, but I never follow …. that was me in value investing ….. but, recently, exactly 3 months ago, after the sudden death of my father, it makes me re-think and re-shuffle my thoughts, my way of investing, my way of living …. and i have digging a lot recently in value investing, trying to practise them, i do think this will bring in difference to my of thinking and behaving in stock market

  9. i had been trading forex since 2007, the more i trade, the more i feel anxiety and uncertain about the currency movement. mastering in technical analysis (but lagging in fundamental analysis) does not guarantee you a profit,
    self-discipline is crucial key to trading success — everyone agree on that… but what should be taken as the rules?
    i still remember the pressure and sleepless night i had during the economic crisis burst in year 2008. all the hard work and profit i have been making were gone in a glimpse. that really hurts, be frank, i almost had phobia about trading since then.
    many years after the incident, i realize that the very first thing i need to do before i go for any investment is — KNOWING MYSELF , know what kinda person i am and what will work well for me.
    value investing would be the answer for me.

  10. The content looks very informative. Hope to learn to become a value investor and stop losing money with my stock investments. Am trying to save up for retirement not burn a hole in my pocket

  11. Hi LCF and all!

    I want to be a value investor so that:

    Whether the market’s up or down,
    My face won’t have that frown,
    Sleeping soundly is my aim,
    Enjoying the journey all the same.

  12. Why do I want to be a Value Investor? Simple, I need my money to outlast me. In order to do that then I need to apply Value Investing as it holds the key to achieving this Financial Goal. I don’t want to live in Poverty but to be Financially Free and Wealthy when I finally retire and and enjoy the freedom that it gives me in my Golden Years. Isn’t that what we all Dream of?

  13. I want to be a value investor because I want to archive financial freedom without sleepless nights. For trader/speculator, whenever they stop income stop. Whereas for value investor, passive income will still grow with calculated risk. Hence, I will be able to spend more valuable time for myself, for my family and friends. After all, life isn’t just about money.

  14. I want to be a value investor because I want to sleep well while my wealth grows along the time goes by. I do not wish to monitor my investment portfolio in every seconds or every hour because value investing is a long term investment approach and it involves a thorough quantitative and qualitative analysis that you are so confident of your investment decision with the calculated risks.

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