Previous Lecture Complete and continue  

  Follow Your Own Path - Arnold Van Den Berg

Arnold Van Den Berg: Oliver, I don’t think I can add much to what’s been written by Benjamin Graham, by Warren Buffet, by many of the great money managers. I think the best advice I can give any investor or any businessman or something is to figure out what it is you can practice with great conviction and faith and stick with that and perfect that for you, inside of you. It doesn’t come about by reading other people. Once you know the basic principles and just continually work on perfecting that technique. You could be a growth investor and have the faith that these companies do well. There’s many roads to heaven and you can find spiritual people in all religion, you can find great practitioners in every methodology of investing. I think the best advice I can give an investor who’s already developed his own technique is to keep on sharpening the saw. Keep on saying, “Okay, I made a mistake here. What was the mistake?”

Let me give you my favorite explanation of failure, which we all experience. “Do not despair because of failure. From your particular failure, there’s a special greatness, a peculiar wisdom to be gained and no teacher can lead you to that greatness, that wisdom more surely or swiftly than your experience of failure. In every mistake you make, in every fall you encounter, there is a lesson of vital import if you will but search it out and he who will stoop to discover the good in that, which appears to be disastrous, will rise superior to every event and will utilize his failures as winged steeds to bear him to a final and supreme success.” The advice would be to take whatever you have developed as a philosophy, to study the mistake that you make, which every investor makes, to search out what you could have done differently, to write it down in a book and then when you get together with your quiet moments, you get together and you say to yourself, “What could I have done different? How come I went wrong? Where did I go wrong?” Then to get in a quiet state and let that just develop in your mind. Eventually, as you get into the subconscious, it will give you guidance.

People talk about the small voice. Some people talk about it with regard to conscious. Like Abraham Lincoln said, “When I do good, I feel good. When I do bad, I feel bad. That’s my religion.” The best advice I can give an investor is to follow his own path and to develop it from within, not from without because as a value investor, you go through time of soul-searching. We’re going through it right now. We’ve made commitments to gold stocks. We bought them when they were way down, but they’re still lower and they most important thing in that decision is to say, “I really believe these are values, though everybody disagrees,” and all of these kinds of things. We bought them on a value and we believe they’re of value and eventually they will rise to the occasion. Sometimes you’re wrong, but as you gain that conviction, you learn to lean against the wind. I can’t think of anything more important from a value investor. At the time you get into things that are very unpopular and they’re not favorable, you have to have the conviction to stick with it. That comes out of doing your homework, writing down why you believe in it and moving on.