Book Review: The Education of a Value Investor by Guy Spier

If anyone would have told me that I would voluntarily read a book about investing, I’d have laughed; they clearly didn’t know me.

Well, the laugh’s on me. The truth is, I couldn’t wait to get started on The Education of a Value Investor by Guy Spier. I couldn’t listen to it fast enough on Audible.

Yes, it’s a book about investing written by an investor, but it’s also a book about life and all the trials and errors within it- a self-exploration that leads to continued, incremental arrivals to destinations of self-knowing.

Guy Spier is the managing partner of the Aquamarine Fund known for championing value investing. Value investing is an investment strategy that involves selecting stocks that appear to be trading for less than their intrinsic or book value. Value investors seek out undervalued companies, aiming to profit from market inefficiencies. This approach emphasizes fundamental analysis, a long-term perspective, and a margin of safety to minimize risk.

In The Education of a Value Investor, Spier takes us through his journey from his childhood in a prestigious preparatory school in Oxford, England, through his undergraduate degree at Oxford and his MBA at Harvard, writing that, contrary to how it may seem, this education did not prepare him for success.

He writes in a self-effacing manner about his experiences and failures at the start of his career. “Every mistake I made provided a crucial learning experience that helped shape me as an investor.”

He recounts how his morals and values were challenged working at the questionable D. H. Blair investment banking firm and how it led him to educate himself, learning all he could about Warren Buffett, co-founder, chairman, and CEO of Berkshire Hathaway and one of the best-known investors in the world, and befriending Mohnish Pabrai, founder and managing partner of Pabrai Investment Funds.

“Warren Buffett and Mohnish Pabrai were not just investing mentors, but also role models for how to live a life of integrity.” In fact, the landing page of his Aquamarine Fund website says that Spier is “an ardent disciple of Warren Buffett and closely follows Buffett’s principles on value investing and capital allocation.”

I learned from this book that my deep-seated distrust of the entire edifice of investing was not misplaced. I also learned that it didn’t have to be that way- that it could be done ethically. “Acting ethically is not only the right thing to do but it’s also the best way to create lasting wealth.” Since its inception in 1997, Spier’s Aquamarine Fund has consistently outperformed major benchmarks, delivering a return of approximately 94.71% over the past decade.

Honestly, I enjoyed learning about this world I had no idea about- and thought I had no interest in, but what I loved were his:

-psychological and behavioral insights, “Understanding the psychological traps that lead to bad decisions is crucial for becoming a successful investor.” This understanding applies to all of us- in our personal and professional lives.

-reflections on environment and habits, “I realized that my environment was profoundly affecting my behavior and my decision-making process.” I learned more about the importance of this in the next book I read, Atomic Habits by James Clear, which I will be writing about too.

What I loved most, what made me want to stop the car, jump out, hug myself, stretch my arms wide like one would when they’re on top of the world, and say, “I love you, Lara,” was the affirmation in the words, “It’s more important to be true to my inner scorecard than to worry about how others perceive my success.” It’s one thing for me to have known this about myself, to have lived it, every day with the, at times, challenging choices I’ve had to make, and another to hear it- to know that ethically successful people like Warren Buffet, Guy Spier, and Mohnish Pabrai don’t evaluate themselves against an external scorecard.

The book is replete with takeaways that would transform the life of the person who chooses to apply them, but this one- staying true to one’s inner scorecard- for me, is the ultimate one. Apply this and the rest, I think, will automatically follow.