Widely read:
Anand Kumar
Our cover story of 'Wealth Insight' October 2023 issue is about investing guru Francois Rochon. Surprised? Never heard of him? Well, your surprise is justified. If I search Google for "Peter Lynch" (with the quotes), I get 20+ lakh results. For "Francois Rochon", I get 17,700. That's quite the difference.
And yet, here we are, declaring this relatively unknown person as an investing guru. So, what makes a guru a guru? In the context of investing, what qualifies an investor to be called a guru? To take a name from a very different background, would one call Rakesh Jhunjhunwala a guru? Surely not.
When we were planning this cover story, I was forced to think through this problem of defining gurudom. Here is my conclusion regarding what is an investing guru.
In the context of investing, an "investment guru" typically refers to someone who has:
One, a proven track record that incorporates a long-term record of generating significant returns on investments. Not just one or two bets or a year or two of beating the indexes but many years, preferably decades, and over many different kinds of market cycles and conditions.
Two, a distinct investment philosophy. I won't say unique because there's nothing new under the sun, but it has to be something that is differentiated in some substantive way. Warren Buffett and Peter Lynch are extreme examples, but that makes it clear what distinct means in this context.
Three, influence. In today's context, this is the tricky one because the word 'influence' has been completely demeaned by social media. Once upon a time, people did something in life much better than others that made them influential. Nowadays, being influential has become an activity by itself. However, the way I think about it, when you combine it with the two previous characteristics, then influence is a good indicator.
Four, for want of a better word, thought leadership. I hate the smell of fakeness that this phrase emits, but in this context, what I mean is that the gurus must have articulately described their approach in some public way, like books, articles, talks, interviews, etc. They must have contributed to the intellectual tradition of thoughtful investing. Again, look at Peter Lynch. Decades after retiring, his great investment track record just validates his books, but the latter are actually more important to us.
Five, honest self-appraisal and humility. No investing guru ever has a chest-thumping 'I'm the greatest' attitude. If anyone does, that's an instant, 100 per cent disqualification from guru status. This is not just about character but about being honest. The markets are a great leveller. If you have been investing for more than a few years, then you have made mistakes. You have been stupid and thick-headed many times. In fact, you have probably started that way. The only way to learn investing (and many other things in life) is to recognise those mistakes and make sure you never do them again. Unless someone does that, they will not get the kind of investing track record that bestows gurudom upon them.
To my mind, this covers the basic qualifying characteristics of an investing guru, and Francois Rochon certainly fits them. In fact, when you read the cover story that my young colleagues have written, you will see that Rochon has this great (brief) list of things that you should not do. The interesting part is that, in a way, a certain chunk of his approach to investing lies in the vacant space created by not doing the wrong things. This is a concept I like and one that I have written about many times. If you don't do things that are known to be wrong things, then you're highly likely to do well.
Unfortunately, there are many more ways to make mistakes than there are to be right. Imbibing the wisdom of gurus is one way to improve your chances.
Also read: Learning from great investors
This editorial appeared in Wealth Insight October 2023 issue. To read the cover story and other insightful analyses, columns and articles
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