Li Lu is a well-known Superinvestor who has achieved a compounded annual return of about 30% since 1998.

He is also known for managing the money of his good friend Charlie Munger.

Today, he turns 56 years old, and on this occasion, here is some of his timeless wisdom👇🏼

Peter Cundill might be the least known Superinvestor of the last century.

The Cundill Value Fund he managed achieved a little over 15% compounded return over 33 years.

This is more than 100x on your initial investment.

This is his Investment Philosophy👇🏼

1. A Whole Lot Of Patience

Cundill’s most important trait is patience.

Great ideas often come early to you.

Reality is complex and things take time to play out.

The worst mistakes are made when investors decide to sell these great ideas because they fear opportunity costs.

2. Always Change A Winning Game

Never change a running system, but always change the game.

Nothing wins forever.

Create an investing framework and stick with it but change where you apply it.

Things that outperformed will eventually stop doing so and the other way around.

3. Be International

Great opportunities exist in all kinds of markets.

As discussed above, changing where you play can be important to stay on top.

One way to change your playing field is to expand into different countries.

4. Great Poets Borrow

Decades ago, Cundill already emphasized on the importance of what many call “cloning” today.

To find investment ideas, looking at what other successful investors own can be helpful.

Ideally, you build a network of investors you gather ideas from.

There are only a handful of investors with high-teen performance over decades.

Walter Schloss is one of them.

He achieved a 20% annualized return over 47 years.

$10,000 would've turned into over $50 million.

Here's how he did that👇🏼

1. Little Background

Walter Schloss learned investing from Benjamin Graham, just like Buffett.

Buffett also mentioned Schloss in many letters and in his article on the Superinvestors of Graham and Doddsville.

Accordingly, Schloss followed a value investing philosophy.

However, like every great investor, he also did things differently than Buffett or other peers.

Today, we will analyze the most critical points and the things that differentiate Schloss.

In the end, there’ll also be an Investing Checklist by him and his son.

2. Correctness of Judgement

More important than the predictions of analysts or experts is your own judgment.

And it’s your responsibility to make sure it’s correct.

Most people fail to test their judgment and decisions regularly.

How you approach upcoming news on your investments is critical for a correct judgment.

Being skeptical is much more helpful than trying to fit news into your thesis.

You shouldn’t need to convince yourself of an investment.

It should be convincing because of the facts.

“How do you know?”
You never know!

In investing, you have to act on incomplete knowledge.

I came across a great article by @honam lately.

In it, he discusses his decision-making under the condition of an unknowable future.

I think the learnings are worth sharing 👇🏼

“The truth is, in the beginning, we never knew how things would turn out.” - Ho Nam

When you analyze a company, you (hopefully) come up with an investment thesis at the end.

But it’s nothing more than that - a thesis.
The future is yet unwritten thus unknown.

Sequoia’s Mike Moritz has beautifully described an initial investment as a “giant step into the unknown.”

That’s why your work isn’t done after the decision to buy.
Investing is a journey.

You have to reevaluate your investments constantly.

Ho Nam’s article offers four questions (we’ll discuss three) that can help you do that and decide whether you should hold, sell, or double down.

Although they’re primarily VC (Venture Capital) focused, I believe we can all learn something from them.

1. Does the company generate cash?

Especially in the VC world, but also with bigger and more established companies, it’s not a given companies make money.

There’s a tendency to overpay for vision and underpay for value at the moment.

But Cash-Flow is a form of safety.

Charlie Munger said that reading was the main reason for his success in life.

As a generalist, he reads about all kinds of topics.

I’m sure a List of Charlie Munger’s Book Recommendations is among the top 1% of lists you can get.

So here it is👇🏼

Influence - The Psychology of Persuasion by Robert Cialdini

Charlie Munger probably read enough on human psychology to become a professor himself.

His legendary talk at Harvard showcased this.

Robert Cialdini’s “Influence” was one of the books he learned from.

The Outsiders by William N. Thorndike Jr.

The Outsiders is about extraordinary CEOs who outperformed their peers by being radically different.

It’s an industry classic and recommended by Munger and many greats of the industry.

Man’s Search for Meaning by Viktor E. Frankl

Viktor Frankl was an Austrian psychologist and Auschwitz (concentration camp) survivor.

Man’s Search for Meaning is Frankl’s autobiography and deals with his theory of “Logotherapy.”

A theory about finding meaning and purpose.

The Autobiography of Benjamin Franklin

Benjamin Franklin was an inventor, scientist, writer and political philosopher.

Oh, he’s also kind of known for being one of the United States' founding fathers.

Franklin is one of the eminent dead teachers of Charlie Munger.

Stocks are bought and sold based on short term price movements. Even institutions don't take more than four quarters view. As an individual investor, you can completely ignore short term and take a decadal view. That's why each one gets different result from the same stock.

I see a trend on SM of retail investors trying to copy stock ideas of those whom they view as knowledgeable investors. Please DO NOT do this. Do your own research & build/follow your own process. Buying a business on borrowed conviction is a terrible idea. 1/n

If you’re lucky, you’ll end up copying someone like @ishmohit1 or @itsTarH who are open about their thesis/anti-thesis pointers and entry & exit from a position. If you’re unlucky you might end getting manipulated or left with outdated info about someone’s invested position. 2/n

Either way, u cannot clone someone’s conviction, which is why you’ll never get their results. Better 2 make modest returns with conviction based on ur own research, instead of trying to clone others. Network, share ideas, data & views. But say NO 2 copy-pasting stock ideas. 3/n

If you respect & r impressed by someone, please study their process. Copy the parts that work for you. In the end, you get the results that you’ve earned. Taking the lazy approach of बस stock बता दो will never make you wealthy. Invest in yourself & the results will follow 4/n

Your view of the world and markets can change significantly when you close out your derivative positions and trading/leveraged trades v/s only hold a delivery-based portfolio.

The reason is psychological. The quick gains and losses that leveraged trades bring make you react with the same emotions you do in a regular portfolio at a faster rate. So what a 30% drawdown would make you think on a delivery portfolio ends up happening in days.

Suddenly you will find it easier to believe that negative conspiracy theory-based video or blog post than you would have otherwise.

It is therefore always a good idea to have an investment portfolio outside your trading positions to help you keep perspective of the big picture and ask the right questions.

The trading then is a subset of the big picture. Bull market cycles often go on for years and go through many bouts of hope and fear themselves. But stocks hold out better making higher highs and lows as long as the trend is intact.

The effect of instant information is immediate reaction, even when no reaction is warranted.

Once invested it's your duty to look for Anti Thesis pointers/disconfirming evidence. Don't get caught up in echo chambers. Investing is lonely because of this