Tuesday, September 15, 2009

Seven principles on which to build your investment philosophy

These quotes come from the (out of print) book, The Merchant Bankers by Joseph Wechsberg. Fortunately for me I had just read this book when I received the most important interview question of my entire life: “Chris, what would you do with a hundred million dollars?” My response was: “...that is a phenomenal question and speaks directly to my investment philosophy. Why don’t I write that down for you and we can discuss it?” The answer was apparently acceptable because I got the job and my philosophy was soon part of the organization’s policy book. Here are the quotes - they speak for themselves - keep in mind most of these rules have been around for hundreds of years!

  1. “One can’t avoid being wrong once in a while, the important thing is not to be wrong too often.” Jocelyn Hambro (1700s).
  2. “The desire for instant gratification leads to consistent disappointment.” Robert Farrell (late 1900s).
  3. “The banker’s three cardinal qualities: First to be able to put oneself in the situation of the customer, second, courage as one approaches a task, and third, caution to know the extent of the risk.” Hermann Abs (1700s).
  4. “Between success and failure there is a margin no wider than a razor’s edge.” Mattioli (1700s).
  5. “Without complete integrity, there can never be complete confidence.” Rothchild (1700s).
  6. “You can do all the business in the world, if you do it for nothing.” Barings (1800s).
  7. “If I cannot understand something by reading my notes on the subject, I won’t buy it.” Lehman (early 1900s).

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