Investing for Survival
12
things I learned from David Tepper: #3
3. “We won’t stop if we’re down
a little bit. We don’t freeze. We keep investing with a disciplined, logical
approach.”
Michael Mauboussin points out: “You must recognize that
even an excellent process will yield bad results some of the time. If you are
going to be the in the business that David Tepper is in you need to stay
focused on your process, rather than any specific short term result. If you
make an investment and the odds are substantially in your favor and you
generate a loss, that is OK as long as your process was sound.
A sound process exists
when the process is net present value positive (i.e., genuine investing). If
the process is net present value negative, that is gambling/speculation/a
fool’s errand. Howard Marks points out the key elements in his process as follows: “a) have an approach b) hold
it strongly c) accept that, no matter what, there will be times where your
approach doesn’t work, and d) work within your own skill set and personality,
not someone else’s.” David Tepper, Howard Marks, John Bogle, George Soros are
not you and vice versa. Your investing approach should be consistent with who
you are. Everyone is different. In addition to being disciplined and logical,
David Tepper believes: “We’re pretty unemotional when we invest” which is a very good thing since most
mistakes in investing are based on emotional or psychological errors.
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