A career as an equity analyst is like building a bridge. Each unique insight is a plank in the bridge. Each plank gets you closer to the other side of the ravine. Every investment decision you make requires a jump from the end of your bridge to the other side of the ravine. The more planks you have in your bridge, the shorter the jump.
The name of the game is to make your jump as short as possible. Shorter jumps mean fewer mistakes and better investment decisions. Long jumps are risky and prone to error.
Warren Buffett has been building his bridge for decades. He doesn’t jump. He steps across to the other side.
An equity analyst fresh out of school has an impossible jump. He has no planks. Mistakes and poor decisions are almost inevitable.
A good mentor accelerates the building of bridges, especially early in a career. A good mentor hands you plank after plank. All you need to do is nail them down.
Eventually your mentor runs out of planks and you have to build your own. Creating planks from scratch means identifying something in the investment landscape that prevailing theories and narratives do not explain. You create a new theory or insight that better explains the incoming facts.
The market is sometimes slow to respond to incoming data that doesn’t fit neatly into an existing narrative. A bridge built with planks consisting of better theories than those that exist in the market is a well-built bridge.
A well-built plank does not always have immediate utility. It is time well spent, in our view, to nevertheless build those planks with no immediate utility but with enormous long-term potential. Those types of planks are the homeruns of the future.
Planks should be firmly secured to the bridge for future use. A well-written document are the nails and glue that secures the plank to the bridge. The act of writing not only focuses the mind, but creates a document that preserves the moment for a lifetime of use.
The best investment managers with great track records almost always surround themselves with like-minded plank builders. Networking with like-minded plank builders is a wonderful way to extend your bridge further than you could ever build it on your own. You build your planks. They build theirs. You then exchange planks.
A final way to accelerate bridge building is to train others in the art of building planks. Proteges once enlightened in the art of plank building sometimes build better planks than the mentor. Mentoring pays big dividends.
