Interview of MoneyWiseSmart's team with Vietnam Value Investing - Value Investing
Short Summary:
This interview features the team behind MoneyWiseSmart, a value investing education and research firm. The core concept discussed is value investing, specifically the long-term, business-focused approach championed by Warren Buffett and Charlie Munger. Key points include the importance of understanding the underlying business, focusing on cash flow over short-term stock price movements, and the use of a rigorous research process to identify high-quality, long-term compounders. Specific examples of companies analyzed (JD.com, Inspirity, Apple) and industries (e-commerce, human resources) are provided. The application is building a portfolio of high-quality businesses held for the long term, with a focus on generating high returns on capital. The detailed process involves a multi-step analysis of businesses, considering factors like management quality, competitive landscape, and financial health. The team emphasizes community involvement and learning from others' experiences.
Detailed Summary:
The interview is divided into several sections:
Section 1: Backgrounds and Transition to Value Investing:
This section introduces RuPaul and Fanliang, the founders of MoneyWiseSmart. RuPaul details his journey from the gaming industry in Gibraltar to becoming a full-time value investor after realizing his initial short-term, speculative approach was flawed. He emphasizes the transformative impact of studying Warren Buffett and Charlie Munger's teachings. Fanliang shares a similar story, transitioning from corporate finance to value investing after discovering Peter Lynch and Warren Buffett's work. Both highlight the inadequacy of traditional education in teaching financial literacy and investing. A key quote from RuPaul: "Just because I had a successful career doesn't automatically make me a successful investor."
Section 2: The Value Investing Philosophy of MoneyWiseSmart:
This section explains MoneyWiseSmart's approach to value investing. They emphasize a deep understanding of the underlying business, focusing on long-term compounding and avoiding short-term speculation. Their investment criteria include high return on capital, strong tailwinds, global scale, and high-quality management with excellent capital allocation skills. They use a funnel approach to filter potential investments, conducting extensive research only on those meeting their strict criteria. The team highlights the importance of operating within their "circle of competence."
Section 3: MoneyWiseSmart's Educational Offerings and Community:
This section details MoneyWiseSmart's educational programs: Investing Fundamentals, Option Series (using options strategically for long-term investing), and the upcoming premium Multibagger Wizard Series. They also discuss their active online community, emphasizing the collaborative learning and idea-sharing that occurs within the group. They mention the value of diverse perspectives and the ability to leverage the expertise of members from various backgrounds and geographical locations. The weekly investment quiz and subsequent recruitment of a winner into their team is a prime example of this community aspect.
Section 4: Geographic and Sectoral Diversification:
This section addresses the team's approach to diversification. They prioritize investing in high-quality companies regardless of geography or sector, provided they understand the business. They emphasize that their diversification is based on the quality and characteristics of the underlying businesses, not on arbitrary geographic or sector allocations. Currency risk is addressed by focusing on companies with strong global operations and pricing power, which they see as the best hedge against inflation. A key concept discussed is the distinction between knowable and unknowable information, focusing energy on analyzing the fundamental business rather than speculating on macroeconomic factors or currency fluctuations.
Section 5: Successes and Mistakes:
The final section details both successes and mistakes. Fanliang shares a mistake of investing in a "story stock" without sufficient attention to execution, while RuPaul highlights the importance of analyzing cash flow statements, citing a case involving a potentially fraudulent Chinese company. RuPaul also discusses the mistake of selling Apple shares prematurely due to perceived overvaluation, emphasizing the importance of having a superior alternative investment before exiting a high-quality business. Both discuss successful investments, such as JD.com, highlighting the importance of thorough research and conviction in their investment thesis. The interview concludes with a reiteration of their long-term, value-driven approach and the importance of learning from mistakes.