Tuesday, May 11, 2010

 

Turning your personality into a strategic asset


Read Michael Lewis’ The Big Short. An enjoyable roll through the world of shorting the market.

In his introductory profile of one of the short sellers, Lewis makes this point:
[Michael] Burry did not think investing could be reduced to a formula or learned from any one role model. The more he studied Buffett, the less he thought Buffett could be copied; the lesson of Buffett was: To succeed in a spectacular fashion you had to be spectacularly unusual. ‘If you are going to be a great investor, you have to fit the style to who you are.,’ Burry said. ‘At one point I recognized that Warren Buffett, though he had every advantage in learning from Ben Graham, did not copy Ben Graham, but rather set out on his own path, and ran money his way, by his own rules… I also immediately internalized the idea that no school could teach someone how to be a great investor. If it were true, it’d be the most popular school in the world, with an impossibly high tuition. So it must not be true.’
The same holds true for strategic thinkers. One cannot copy Andy Marshall. The next Marshall won’t be anything like him. He or she will, rather, be supremely unique in a completely different way.
Think of it this way: in any sufficiently complex system, there will not be any universally dominant strategies. Therefore, there will not be any rote formula that one can memorize or copy to succeed. Success will be won through the discovery of fleeting opportunities and precarious asymmetries that others don’t recognize. Which, by definition, means that you have to be thinking differently to recognize what others overlook.
It is unavoidably difficult. This is not a cry for eccentricity for eccentricity’s sake. It is a deeper point. The first assessment a strategist must make is a self-assessment: what is my comparative advantage? What about my nature is spectacularly unusual and how can I turn that into an advantage? The rest is application.


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