Nevertheless, having a plan is always a must. There are countless pearls of wisdom on the art of planning, but Dwight Eisenhower summed it up perfectly when he remarked that: “In preparing for battle I have always found that plans are useless, but planning is indispensable.” The same is as true of investing as it is of publishing – without a plan you have no foundation and will flounder; having a goal will focus the mind, even if you get there via a different route.
Sometimes, when it seems we get lucky, it is in fact the presence of a good plan that has enabled us to make decisions that we maybe would otherwise have got wrong. There is a famous saying in golf, of disputable origin although often credited to Gary Player, that “the more I practice, the luckier I get”. Again, that’s equally true of publishing and investing – keep reading, keep researching, and decisions are more likely to go your way.
So, whether by luck or judgement or a little bit of both, a theme has serendipitously emerged in this week’s magazine, and that is the power of thinking differently to give yourself an investing edge. Indeed, when our US contributor, Todd Wenning, pitched a piece on the value of investing in idiosyncratic companies (page 22), little did I know that he had been partly inspired by the approaches of legendary investor and commentator Michael Mauboussin, who’s also caught the eye of Alex Newman as the subject of this week’s newly-introduced Further Reading feature on page 32.
Todd’s piece focuses on Mr Mauboussin’s observation that our natural tendency to categorise means we sometimes find it hard to recognise the value of companies that do not fit neatly into boxes. Not only does that mean they can be underpriced, but it is the very act of doing things differently that makes them more likely to create long-term wealth. Indeed, the power of the approach is encapsulated neatly in perhaps the most famous idiosyncratic company of all: Apple. Had you bought its shares in 1998, when the then loathed company told the world to Think Different, you would be sitting on a total return of 50,235 per cent. Truly mind-boggling.
Meanwhile, as Alex explores, Mr Mauboussin’s advice on investment chimes with the wisdom of Gary Player, or whoever it was that made the famous golfing wisecrack (some suggest Lee Trevino, famed for an idiosyncratic swing that only hours of practice could make work). And that is that professional investors often have an edge over private individuals not because they are naturally better investors, but because they put in the graft to eke out information advantages, and as such have the confidence to act against the crowd. In other words, the more you know, the luckier you’ll get.
