I attended the “Value School” summer school a few days ago and this has been a great opportunity for people like me, who have a critical spirit, who question everything we learn at school and university, to form our own opinion based on more accurate principles.
Young university students simply learn what they read on the whiteboard and apply the theorems and functions to try and model the real world. However, before we memorise what we learn and consider that it is correct per se, we must debate about it and confirm and corroborate it. This might seem like a simple exercise, but not everyone does it.
My expectations were high before the start of the course. I read through the list of topics and these included three I view as essential:
- The economy from the point of view of the entrepreneur, and not as a consequence of millions of individuals trying to maximise an unreal utility function.
- Saving: The need to include the concept of saving in our culture, since we cannot trust on the State to guarantee future incomes for us.
- Investment: The importance of learning how to invest our savings and stop losing buying power. Value Investing will be the investment strategy we will learn about, which is simple and very profitable in the long-term. It is based on common sense, patience and discipline.
In addition, the teachers of the course are all leading Spanish fund managers, analysts and traders. And, on top of that, I couldn’t wait to meet my new colleagues, a group of young people who are passionate about the world of finance, just like me.
We all met each other on the first day of the course. There were students of different fields of study: engineering, economics, mathematics, etc. Any profile is valid to start learning about the world of investment.
Iván Martín, Fund manager at Magallanes, attended the opening ceremony and Francisco García Paramés, Fund manager at Cobas, attended the closing ceremony. Both were very friendly with us and gave answers to the barrage of questions we had prepared for them. We must make the most out of having so many and so good references, who are very keen on becoming part of the talent pool of young investors and on sharing their methods. This was unthinkable in Spain 15 years ago.
The classes were outstanding:
- Emérito Quintana (Numantia), explained the life cycle of a business and compared the ideas of the Austrian School and Value Investing, demonstrating a more efficient approach to analyse the economy.
- Pablo Martínez Bernal (Amiral) talked about the history of value investing, as well as about the strategies of its top representatives: Buffett, Graham, Lynch, Fisher, etc.
- Mayte Juárez (Cobas) demonstrated in a very interesting class how human beings have common behavioural biases, making it essential to learn about behavioural economics.
- Luis Torras (Japan Deep Value), discussed the importance of investing in real assets and the differences between inflation, the CPI and the M3 money aggregate. He recommended Carlos Tusquets´book: “Investment decisions in haste are a waste of time”.
The talks of Emérito, Pablo, Mayte and Luis were the introduction we needed to set us in a common context, since we all study different degrees. Xavier Brun (Solventis) and Alejandro Muñoz (Equam) gave us a more in-depth account of company valuations:
- Brun gave a masterclass on fundamental analysis, explaining how to interpret all of the quantitative information we find in the statements of financial position of companies.
- Alejandro Muñoz focused on qualitative aspects, illustrating us with examples of companies that met the competitive advantages (moats) he explained.
The course was not all about classes. I had a great time with my colleagues, most of us had lunch together every day to learn more about each other, discuss investment ideas and, why not? do some networking for possible future projects.
In spite of the obvious differences, and I hope you forgive me for this comparison, this gathering of passionate young people at the Value School summer school was like the one that took place on 17 December 1927 to commemorate the third anniversary of the death of Luis de Góngora. We all know that the most important authors of the Spanish Golden Age were in this meeting.
The course moved away from theory and we worked on examples based on real-life situations. We have explored the terrain on which we will now move and the classes have helped us plant the seed in relation to how companies are valued. It is now up to us to make this seed grow and plant other seeds. To achieve this, we must continue to learn on our own: reading, analysing, investing and making mistakes. It is necessary to test your self-control capacity, be a contrarian thinker and to stand behind your ideas when everyone is making money and it seems that you are wrong.
I am very happy and proud of my colleagues, some of whom presented very interesting investment ideas to the analysis of Cobas. You could see the talent in the people there.
By writing this post at home, I notice that my ideas are clearer and that I am more inquisitive than before. My expectations were met and exceeded, since we learnt about the importance of saving and of giving up a portion of current consumption in favour of future consumption. We also learnt to use common sense when investing to protect us against the effects of inflation.
To sum up, we complete the course with a desire to continue learning, analysing and creating our own portfolio. Because we learn by trial and error, as I mentioned above. In addition, they also insisted we focus on reading and polishing our English skills. So, let’s get on with it!