The Education of a Value Investor by Guy Spier — review and summary

Guy Spier graduated from Oxford and Harvard Business School, went to work for a predatory investment banking firm, made money in ways he was not proud of, and then spent the better part of a decade reworking his character, his environment, and his investment practice until they were more consistent with each other.

The Education of a Value Investor is his account of that process. It is also an account of how he was influenced by Warren Buffett and Charlie Munger — and specifically what he understood from studying them that went beyond investment technique.

The environment design argument

One of the most useful threads in the book is about environment design. Spier moved from New York to Zurich partly to remove himself from the particular social and competitive pressures of the New York investment community. He found that being physically distant from the market's daily emotional temperature improved his decision-making.

He also designed specific rules for himself about when and how he would talk to management of companies he was analysing, and about when he would look at stock prices. These self-imposed constraints were not about discipline in the usual sense; they were about recognising that his own decision-making was predictably degraded by certain kinds of stimulation and removing those stimuli.

This is a form of system design rather than character development. Spier did not simply resolve to be less affected by social pressure and market noise. He reduced his exposure to both.

The character development argument

The book also covers what Spier understood as the deeper project: not just becoming a better investor but becoming a better person, in the sense of someone whose behaviour is more consistently aligned with their stated values.

He is candid about the Harvard Business School environment and the specific way it rewarded and reinforced certain kinds of self-interested behaviour. He is also candid about his own participation in that environment and what it cost him.

The Buffett lunch

Spier paid USD 650,100 at a charity bidding event for a lunch with Warren Buffett. The chapter about that lunch is one of the most referenced in the book. What he reports taking from it is mostly about Buffett's character — his consistency, the way his values and his behaviour are aligned — rather than investment insight.

Who this book is for

This book is most useful for people who are seriously interested in value investing and want an honest insider account of what the practice actually requires, including the character components that are usually left implicit in investment writing.

It is also useful for anyone thinking about the relationship between professional environment and personal character — specifically, how much of who you are is constructed by the environment you work in.

Practical reflection prompts:

• What aspects of your current environment are shaping your decisions in ways you would not endorse on reflection?
• What rules or constraints have you designed for yourself to counteract predictable weaknesses in your own judgment?

Bibliographic details

• Author: Guy Spier
• Published: 2014
• Publisher: Palgrave Macmillan