Lessons with an investment professional - nine more tips

I’ve been working in investment for 18 years and as a happy amateur golfer, wanted to see if I could distil my professional experience into 18 'holes' of investment wisdom. You can see my front nine here. 

Here’s the back nine. 

Hole Ten: Par 4.  
There is a trade-off between quality and value 

The market is quite efficient and hence great companies are not always great investments. If you can see a company has quality and is desirable, so will others and that will probably get priced in.

Opportunity arises when it’s not.

Hole Eleven: Par 4.  
Quality is a tailwind.

A quality company – financially sound, well-managed, with low levels of debt and competitive in the markets it serves – should almost certainly do better over the long term, whatever the conditions.¹ This improves the odds of a better return – if you buy at the right price (see hole 10!). 

Hole Twelve: Par 3.  
Investing is not a static problem.

Look, look and look again. You need to constantly reassess your investment case versus the latest fundamental realities. 

Hole Thirteen: Par 5.  
Working relationships get better over time and affect performance 

It doesn’t matter whether you’re a C-suite team or analysts and portfolio managers running a share fund. Regardless of the personalities involved, working relationships get easier through time as shared understanding compounds. Cohesion is an often-misunderstood element of management - it can be crucial to success.²  

Hole Fourteen: Par 5.  
Your memory is selective - write things down. 

You can’t improve - at anything - unless you analyse your process. That’s why professional investors document decisions. Did you have all the data? Were you looking at the right data?  Did you over-analyse the opportunity or draw too heavily on one source? If you don’t document your thinking, you won’t learn – and you’ll make the same mistakes over and over.  


In golf - and investing - you keep score so you know how to improve. 

Hole Fifteen: Par 3.  
Our biases get in the way 

“The easiest person to fool is yourself.” The earliest and biggest lesson of my Platinum career was an introduction to Behavioural Finance before it went mainstream.³ 

Hole Sixteen: Par 5.  
Headlines are sensational. Stories are seductive

A headline’s first job is to catch attention, so it must involve emotion. Because the go-to emotions in investing are fear and greed, media headlines rarely take you to the truth of what’s happening in markets. 

It’s not just the media that falls into this trap. Since humans started drawing on cave walls, we’ve created stories about what’s happening around us. Even professional investors can get sucked in. They see a green energy boom or a tariff war and miss what’s really going on.  

Hole Seventeen: Par 5.  
What seems novel to you is normal to an expert

As investors, we get experts to help us understand an issue – a biologist to quantify the danger of Covid for different age groups, a chipmaker to understand AI use cases or a Chinese retailer to foretell the fate of Chinese shopping centres. Their depth of understanding helps contextualise decision making.  Similarly, young analysts seeing things for their first time often forget that many experts have pored over these companies for years. 

Hole Eighteen: Par 4.  
If you ever think you’ve mastered investment, you solved yesterday’s problem, not today’s

“The past is a foreign country. They do things differently there”.  You can never rely on past success to underpin your approach to the future.  Markets are always evolving, so what seemed to work in the past often breaks down just as it is being touted as a defining paradigm. 

Like to know more? 
 

• The inspiration for these articles was Douglas' thinking on the difference between amateur and professional investing.
• Want to invest with Platinum?

1. There are exceptions. Cheap money – a period of sustained low interest rates – can support weaker companies. But history shows a reversion to normal monetary conditions often punishes those hunting at the bottom of the quality basket. 

2. I’ve done a lot of work with GAIN LINE analytics on the importance of team cohesion in driving performance in sport and in business. It’s hugely under-rated.  

3. A whole section of our website discusses how inherent biases skew our investment thinking.