Do you have an investment mentor? In many areas of life, mentorship plays an important role in our education. Investing should be no different. However, how do you go about finding an investment mentor? What are the qualities you look for in a mentor?
According to Wikipedia, a mentor is “a trusted friend, counselor or teacher, usually a more experienced person.” Benjamin Graham acted as a mentor for Warren Buffet. Plato had Socrates, Aristotle had Plato and Alexander the Great had Aristotle.
A mentor is supposed to “protect and guide” his mentee or protégé. I’m sure you’ve experienced some sort of mentorship. The first experience most of us have is with a teacher. You many find one that takes an interest in you or really inspires you. Also if you were ever involved in athletics, a coach or an older more experienced athlete might server as a mentor.
There are several people I would consider mentors in my career. Most of the time they served as either a sounding board or a source of advice or both. It’s relatively easy to find mentors in your field as your work brings you into contact with many people. However, how do you find a mentor for something like investing?
Money is a funny thing and it makes people act rather strange at times. Most people aren’t ready to divulge the details of their personal finances to just anyone. It’s hard for most people to talk about money with their families, let alone an acquaintance or a mere stranger.
I’m constantly asking people about their investment philosophy. I don’t pry into the details of their financial life, but rather try to ascertain their style or system. Do they invest in stocks or mutual funds or stay clear of the stock market? Do they invest in real estate? I do ask them how successful they were in their endeavors. What worked for them? What didn’t work?
I have yet to meet a person who made their fortune purely through investing. Most of the wealthy people I know made their money through a business (farming, ranching, banking, etc). Or they made their money by working at a good job for money years and shrewdly managing their money. These people are great mentors, however, they all made their money someplace else and then turned to investing to preserve their wealth.
There is probably something to that. According to the Millionaire Next Door, most wealthy people in this country get that way through small businesses and careful money management. Very few people made their money in the stock market.
Because of these reasons, I’ve developed a mentor by proxy system. I’ve chosen people who’ve written a lot and whose investment record is proven and whose investment philosophy makes the most sense to me. As you can guess I’ve chosen Warren Buffet as my mentor by proxy. He is very open and shares his opinions and insights freely in his annual shareholder letters. You can read most of his work for free on the Berkshire Hathaway site. You can also video of him online. He’s spoken quite a bit and answered many questions from the general public through the years.
And by way of Warren Buffet, much like Socrates to Plato, you have Benjamin Graham. Benjamin Graham’s book The Intelligent Investor is the best book on investing that I’ve read so far. Graham’s investment philosophy is clear and full of common sense. One doesn’t need higher math to understand the principles. A calculator, a notebook and a pencil will work fine.
I’m still reading as much as I can on other’s investment philosophy but so far Graham and Buffet make the most sense to me. I’ve seen “Mr. Market” go crazy. Buffet’s fortune in and of itself is validation of Graham’s principles. Also Buffet's lifestyle serves as a shining example of frugality and simplicity.
So I’ve found my “mentors by proxy.” What about you? Have you had success finding an investment mentor? If so, I’ve love to read how you did it. If not, have you found yourself in the same situation as me?
Leave a comment below and let me know.
Article Links
Wikipedia Mentor Article
Berkshire Hathaway Shareholder Letters
The Intelligent Investor on Amazon
The Millionaire Next Door on Amazon
Wikipedia Warren Buffet Article
Wikipedia Benjamin Graham Article
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Comments
1 Comment so far
Several years ago I found myself in the same situation as you and was given a stack of investing books by my uncle. They ranged from basic mutual fund investing, asset allocation and portfolio theory, dividend investing, and Buffet-style value investing. Out of all of these investment styles the one that resonated with me the most was asset allocation and portfolio theory–books by John Bogle and William Bernstein.