Stick to Your Process, Even When It's Painful

Episode #357 | April 15, 2024

Episode #357 | April 15, 2024

Stick to Your Process, Even When It's Painful

In This Episode

On this week's Stansberry Investor Hour, Dan and Corey welcome Gary Mishuris back to the show. Gary is the chief investment officer and managing partner at investment-management company Silver Ring Value Partners. As a long-term concentrated value investor, Gary believes in using behavioral biases and mental models to aid in decision-making. And he joins the podcast to share some of the financial wisdom and investing psychology he has learned over the past 20-plus years.

Gary kicks things off by talking about today's market being one of the most challenging periods for bottom-up investing since 2007. In terms of the quality of a business versus its stock price, there isn't a lot of opportunity right now. But he emphasizes that transparency and candor with clients is essential, as is prioritizing the long-term process over short-term performance...

My approach has always been, look, if things are tough, I tell people things are tough. By the way, the corollary of that is that when I tell people, "Hey, this is a really attractive time to add capital or put new capital in," I think I have a lot more credibility than the guy who says it's always a great time to invest.

Gary also describes what sets Silver Ring Value apart from other fund managers. He shares why he left the "sausage factory" of larger firms behind, how his firm makes money for clients rather than off of clients, and how his unique temperament and behavioral models allow him to make better investing decisions.

After that, Gary goes into detail on the psychology behind investing and compares it with a game of poker. He talks about trying to avoid making mistakes, continuously learning from past errors, the importance of having guardrails in place, and cutting your losses. As he says...

Investing at its heart is two things: It's processing information, and it is self-control – so acting on information. And I think that a lot of us investors think of investing like, "OK, so we do a bunch of work and we make a 'buy' decision. And then we have some rules, and they'll tell us when to sell." But a lot of the decisions are in the middle... You have a thesis. Constantly you have new information – most of it is noise, but some of it is not – and you have to keep updating your thesis.

Lastly, Gary explains why you should never be ashamed to change your mind, even when you haven't received any new information. It's OK to reanalyze the same set of facts and admit that you were wrong, and he cites several examples of investors who have learned and grown from their past mistakes.

Dan and Corey finish out the show by discussing the consumer price index and gold. Inflation came in hotter than expected, while gold has broken out to new highs. Dan and Corey speculate on how long gold's bull run can last. Plus, they detail gold being a good hedge for retirement against the government's money-printing addiction.