Take a Step Back
A lot of people express interest in being a professional investor. Why? For some it might come from having seen a lot of people become very wealthy as an investor. For others it's the variety; you get to look at lots of different businesses, not just one. There is also a smaller number of professional investors than there are professionals generally. It's much more common to have a job at a big company than it is to be a professional investor, so it becomes more prestigious.
But there is a risk when so many people want to be professional investors. Venture capital and private equity firms (1) don't require very many people, and (2) are not always sustainable for everyone (e.g. not every venture capital or private equity firm will actually make money.) But the more people who want the job, the more of these firms will pop up.
So the most critical thing you can do is evaluating WHY you want to become an investor, and HOW you want to become an investor. Be thoughtful of the balance between building something, maintaining something, and supporting those who are building and maintaining.
Builders: “Too many smart people go into finance. That’s both a compliment and a criticism.” (Elon Musk)
Elon Musk is a builder. Steve Jobs was a builder.
Maintainers: "Another flaw in the human character is that everybody wants to build and nobody wants to do maintenance.” (Kurt Vonnegut Jr.)
The world also need people to maintain. Tim Cook is a sustainer.
Sustainers: "You know what the difference is between you and me? I want to be the guy. You want to be the guy that the guy counts on." (Jed Bartlett; The West Wing, speaking to his Deputy Chief of Staff)
Investors should generally be people who want to support the builders and the maintainers. Removing the obstacles for them by helping provide capital and then getting out of their way.
This is NOT the only way to think about what you want to be. Not everyone will fit nicely in one of these categories. And different people will fit in different categories at different times. What's more important is that you think deeply about your "why."
People Don't Buy The What, They Buy The Why
"If you hire someone because they can do a job they'll work for you for money, but if you hire someone because they believe what you believe they'll work for you with blood, sweat, and tears." (Simon Sinek)
You have to think deeply about your own motivations in life and why you want to be a good allocator of resources. It isn't enough to say "I want to use my time effectively." You have to understand your internal motivations for that desire.
In Plato's "Republic" he talks about three classes:
- Laborers: Motivated by Pleasure
- Warriors: Motivated by Honor
- Philosophers: Motivated by Truth
The world needs different people at different times. Michael Jordan can be a philosopher in his personal life, a warrior on the court, and a laborer in his hobbies. But ultimately you have to understand deeply your "why" for wanting to be an investor. And it's an individual "why," there is no one else who can answer that question for you.
"Investing is not a team sport—company building is a team sport, but investing is an individual sport."
Even when you find yourself at a firm on a team of investors, there is a still need for personal self-reflection and individual motivation.
"We're not a basketball team. We're a track and field team. We're on the same team but we're running different things and have different strengths. But we're wearing the same team name. We all do better if the team wins." (Dan Sundhein, Founder of D1)
You Have to Find Your Own Style of Investing
From an interview with Gavin Baker...
I think the most important thing in investing is there's many ways to succeed as an investor and ultimately investing is all about finding the right balance between humility and conviction and you have to find an investment style that fits your own personal emotional makeup because I think the most important factor in investing is the ability to be rational when wrong.
So you have to find an investing philosophy or style where you really believe in it, you're really comfortable, you're going to stay with it, but that helps you be rational when you're wrong, because you're going to be wrong a lot and it's really hard for most people to be rational and wrong. So I always think it's very strange that people have such strong views...You know this is not science where there are established facts or where theories are so well established, it's so well proven that they're basically facts...
Investing, there's many, many ways to win, there's many ways to succeed, you could succeed as a value investor, you could succeed as a growth investor, you could succeed it as a technical investor, you could succeed as a momentum investor -- by the way momentum investing and growth investing are often conflated, they're not the same. So I find it so strange that people have such strong views that their way of investing is the only way of investing. There are many ways to succeed, you just have to find the way that works for you as an investor, your own particular emotional makeup, and you have to stick with that.