What is a self-taught person, or autodidact? The Larousse dictionary defines it as someone who learns by himself, without a teacher. Did you know that Charlie Munger, Warren Buffett’s partner, became famous in the investment world despite having studied in mathematics, meteorology and having finally graduated in law? Did you also know that George Soros, an emblematic billionaire in the investment world, graduated with a master’s degree in philosophy? There are many examples of people who had great success investing their money and other people’s money without having an academic background in this field. In this new series of article that I will call ”The self-taught investor”, I will share some thoughts and advice to hopefully help you become better investors. I strongly believe that success can be achieved by anyone if they put in the required efforts and have access to the right resources.
For those who don’t know me, my name is Mathieu Martin, I am 27 years old and I am currently a full-time private investor. I spent many years working for my parents’ businesses while simultaneously being successful as an online poker player. My journey into stock market investing began in March 2014 when I became curious about Philippe Bergeron-Belanger’s strategy and I decided to invest in microcaps like he did. In my first 3 years as a microcap investor, I managed to multiply my starting capital by more than 3 times and this, without any academic training in accounting or finance. Thanks to my self-taught skills, I was able to learn the investing basics and through this series I hope to be able to convey to you this curiosity and desire to learn more.
For me, emotion management and work ethic are two very important areas where I try to improve every day. I would like to start by sharing what I think are the 7 personality traits that are crucial for the self-taught investor to succeed in the markets.
- He dedicates the necessary time
The self-taught investor understands that in order to master a skill or domain, it requires time and efforts. Thus, he makes room in his schedule to learn more about specific concepts but also to perform research and due diligence on potential investment opportunities. He may be very busy in his everyday life, but he makes the necessary sacrifices and knows that there are no shortcuts to success.
- He follows his portfolio companies closely
The self-taught investor understands the importance of knowing his portfolio companies better than most people in the market. This allows him to make rapid and accurate decisions when new information is made available (news release, financial statements, etc.). He makes sure to use the right tools, such as Conference Call Transcripts and online forums, in order to always be aware of new developments that relate to his portfolio companies or those on his watch list.
- He is not scared of talking to management teams
When he performs his due diligence on a company, the self-taught investor almost always tries to reach out to the management team to ask some questions. This approach allows him to gain superior knowledge about the ins and outs of the business. If he’s able to better understand what positive and negative aspects to look for as the business evolves, he will again be able to make better and faster decisions than other market participants. In illiquid microcap stocks, being able to decide quickly and accurately is extremely important.
- He maintains and builds a good network
The self-taught investor understands that it is difficult to uncover most of the good investment opportunities all by himself. Therefore, he is active on online forums, goes out to networking cocktail events and, when possible, travels to international conferences. He surrounds himself with investors who are better and more knowledgeable than him to continually learn but also to know what investment opportunities the people in his network like the most at any given time.
- He always seeks to learn more
Learning is at the heart of the self-taught investor’s strategy. Since he doesn’t necessarily have a background in accounting or finance, he is very curious and does a lot of research to understand the important financial concepts. He reads a lot in books and on the Internet, and is not afraid to ask questions to his friends or on online forums when he has difficulty to understand something.
”An investment in knowledge pays the best interest.”
– Benjamin Franklin
- He leaves his emotions at the door
When performing due diligence on a publicly traded company, the self-taught investor ensures that his decision-making process is rational. He must understand the fundamentals of the business and make sure to pay a fair price. Subsequently, he does not let his emotions interfere with his investment thesis, nor does he care about short-term price fluctuations. He understands that in the long run, the share price will always be determined by the fundamental performance of the underlying business. This gives him the conviction to hold the stocks in his portfolio despite price fluctuations, as long as the fundamentals still meet his strict investment criteria.
- He is a skeptic and does not follow others blindly
Because he goes to networking events, participates on online forums and regularly reaches out to company’s management teams, the self-taught investor is bombarded with various investment opportunities. However, he understands the importance of focusing on his best investment ideas and thus constantly says no to opportunities that are not extraordinary. His investment criteria are strict and he does not derogate from them. He is open-minded but looks at new opportunities with a skeptical eye at first. Finally, he acknowledges that people in his entourage are usually inclined to give him buy recommendations but unlikely to tell him when it’s time to sell. Thus, he ensures that he always carries out his own due diligence prior to buying a stock in order to determine the right buying or selling parameters specific to his investment strategy.
If you would like to improve your knowledge about investing, I invite you to read our excellent selection of educational articles on the blog or our partners‘ blogs. Also, don’t miss out on our networking cocktail events in Montreal, where more than 60 passionate investors gather on a regular basis. The next event will take place at Bier Markt Montreal in April (exact date to be determined).
The month of April promises to be very busy with two major microcaps conferences at which Philippe and I will participate: The MicroCap Conference in New-York on April 4th, and the Planet MicroCaps Showcase 2017 in Las Vegas from April 26th to 28th. In my next article, I will share with you my preparation for these important conferences.
Looking forward to communicate with you again soon,