The learning metamorphosis
“I'll send you my lawyer if you ever insult me like that again.” You have to expect such an answer if you ask André Heller to stay the way he always has been. He does not want to stay as he is - he wants to use the time for change. “And that is not over-ambitious, that seems to be the purpose of my presence here”, said André Heller - multimedia artist, poet, singer and much more, he recently stated in an interview.
Education completed, school finished or graduation celebrated, now that is finally behind us, no more learning. Wrong! Now learning is just getting started. What is taught is, what can be taught easily. Yesterday's knowledge, well prepared over the semester, brings us to the starting line, every additional education closer to pole position. Then the race of life begins, where we always have to be curious, interested and ready to learn. The American psychologist Carol Dweck calls it the “growth mindset”. “Transforming yourself by learning.” is how Mr. Heller forges the words.
Creative destruction
There are times when little change is forced on us from the outside - interrupted by events in which reassessment is virtually essential for survival. The stock market is a reflection of life with similar mechanisms. Buy stocks, take sleeping pills and stop looking at the stocks, as André Kostolany once recommended and this is not the solution. Anyone who has gone to sleep at the beginning of the year and wakes up today no longer understands the world. The so-called "disruption" of business models is in full swing - in other words, the development in which traditional business models are shaken or even completely destroyed by new technologies. Does anyone still use Kodak film? It disappeared thanks to digitalization. The winner at the time, the digital camera, has been replaced itself by the smartphone.
As an investor, you just cannot get every new development right. One protection against ignorance is diversification. Investing everything in one stock, going all in as it were, works for very few people; a handful of stocks usually still does not work either. Studies show that the maximum diversification effect is reached somewhere between 20 and 30 stocks.
Investors should not regard constant change as an enemy, but as an enriching fact. The successful investor studies new developments with interest and weighs up the effects on different business models. The investor lives with the contradictory demands of active, almost hectic, perhaps even manic desire to learn and hesitant implementation. If you completely rearrange your portfolio every quarter, you will above all make your broker very happy, who charges a fee for every transaction.
Transformation is always possible
Disruption affects not only business models but also investment styles. Value investing is dead, so we hear. What is that anyway - value investing? An investment method with a focus on the stock market valuation of a company. A company is only bought if the quoted price is below the assumed fair value of the company. In my opinion, this philosophy is never passé. But the way it is implemented is changing. The forefather of this philosophy - Benjamin Graham - still found stocks that traded below the liquidation value. Passé! His student Warren Buffett adapted and took the quality of the business model into account in his assessment of the value of the company. Despite his close friendship with Bill Gates, he never bought technology stocks for decades.
At 86, he transformed himself by learning and began buying Apple stock. Today, the value of this investment is over $100 billion - 20 percent of Berkshire Hathaway's market capitalization. Since the purchase, the value of Apple shares has tripled.
André Heller rightly said in an interview, “Standstill is a catastrophe”. This is why we never stand still and face change in our equity strategy. Several investment themes of the Gutmann equity strategy even bear change in their names: evolution of the consumer and demographic change.
Constant transformation is not a question of age - it is rather our inner attitude.
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On October 26, 2020 André Heller gave an interview on Radio FM4. Quotes taken from that interview and translated into English.
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