Book Review: The Education Of A Value Investor

The PBS series on the Roosevelts paid tribute to the importance of having a role model. FDR walked in the footsteps of his fifth cousin Teddy, all the way to the White House. Guy Spier, who runs the Aquamarine Fund, found his role models in Mohnish Pabrai and Warren Buffett. (Spier and Pabrai are probably best known for their $650,100 charity lunch with Buffett.) He has yet to achieve Buffett’s extraordinary success, but he’s a lot closer today than when he started.

The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment (Palgrave Macmillan, 2014) is not so much about value investing as it is about becoming an investor of value—that is, a person of moral worth and inner strength who happens to earn his living investing on behalf of himself and others.

Spier may have gone to Oxford and the Harvard Business School, but he was a naïve soul, easily influenced. He started his career at a sleazy investment bank, D. H. Blair, and admits that it took him “far too long to grasp that this business was set up in such a way that, if [he] wanted to win, [he] would have to lose whatever was left of [his] moral compass.” (p. 18) In the wake of the D. H. Blair fiasco, he discovered the positive power of Tony Robbins’s “brainwashing” and began devouring books by other self-help gurus. And, oh yes, he also started learning about, and becoming fixated with, value investing.

He still couldn’t get a job, however. At this point his father came to the rescue and gave him about $1 million to invest for him. Within a year his father invested more, and two of his business associates joined in. The fund’s initial assets amounted to about $15 million. Spier named it the Aquamarine Fund, in homage to his father’s company, Aquamarine Chemicals.

Obsessed with improving himself and his business, Spier latched onto a book Charlie Munger mentioned in one of his speeches, Robert Cialdini's Influence: The Psychology of Persuasion. He read and reread this book multiple times and was particularly taken with a story the author told about a car salesman who sold a record 13,001 cars in 15 years, in part because he sent holiday cards to thousands of his former customers with the words “I like you” printed on each card, along with his name.

As Spier admits, “I have a tendency to go to the extreme: if an idea resonates for me, I don’t just flirt with it—I embrace it to the nth degree. So I decided that I would write three letters per working day, or 15 per week. I began to thank people for giving a great speech, for sending me their investor letter, for providing a great meal in their restaurant, for inviting me to their conference. I would send people cards to wish them a happy birthday. I’d send them research reports or books or articles that I thought would interest them. I’d send them notes saying how much I’d enjoyed meeting them.” (p. 58)

He started this letter-writing crusade as a way of marketing his fund, but he says that “it ended up giving me a richness of life that I could hardly have imagined. Rather than becoming a good salesperson, I found myself starting to care about the people I was writing to and to think about how I could help them. The paradox is that, as I became more authentic and discarded my agenda, people became more interested in investing in the fund. This was an unintended consequence of becoming less selfish and more honest about who I am.” (p. 59)

Spier used many tools to accelerate his inner growth—seven years of Jungian therapy, an assortment of other kinds of therapy, as well as religion and philosophy. But the greatest springboard for this inner journey was his participation in a “close-knit group of about eight to ten professionals” who shared their personal issues. (p. 172)

As far as his investing success is concerned, one of its springboards was his decision to turn off his Bloomberg terminal. He couldn’t bring himself to get rid of it completely, although he often goes for weeks without flipping the “on” switch. “Still, it’s there if I ever need it—my own exceptionally expensive version of a toddler’s security blanket.” (p. 107)

For Spier, professional success requires careful study and the deliberate application of the principles of value investing. But underlying this success, Spier is convinced, is inner strength, which increases as a person proceeds along his inner journey. He concludes: “The truth is that it doesn’t matter how you do this inner journey. What matters is that you do it. … For an investor, the benefits are immeasurable because this self-knowledge helps us to become stronger internally and to be better equipped to deal with adversity when it inevitably comes.” (p. 173)