3 Lessons from an Investing Giant

Few would have ever heard of Jean-Marie Eveillard.

But despite not having a level of fame that’s on par with the likes of other great investors like Warren Buffett or Peter Lynch, Eveillard does boast of his own phenomenal track record.

Eveillard graduated with an economics degree in France and started working in finance in the country in 1962. In 1968, Eveillard relocated to the U.S. and joined the SoGen International Fund two years later.

From there, Eveillard climbed the ranks and eventually became the manager of the fund – which was later renamed as the First Eagle Global Fund – in 1979, a position he held till he retired from the investing business briefly in 2004.

Over that multi-decade period from 1979 to 2004, Eveillard had notched up annualised returns of 15.8%, turning every $1,000 invested with him at the start into more than $45,000 at the end.

With his storied accomplishments, there are bound to be great lessons for us to learn from. Here are three.

1. Staying humble

Eveillard believes that the future’s always uncertain, and so he prefers to stay humble by admitting that he may get many decisions wrong. To overcome this, he looks for stocks that carry a big discount of 30%-40% to their intrinsic values and diversifies widely across more than a hundred stocks.

When Eveillard was once asked why he’d not opt for a concentrated portfolio approach like what Buffett does and is famous for, he said:

“Number one, because I’m not as smart as Warren Buffett. And number two, because truly, people say, “Well, why don’t you just invest in your best ideas?” But I don’t know in advance what will turn out to be my best ideas. So, that’s why we’re diversified.”

In Singapore’s context, it may be easy to achieve some form of wide diversification through the SPDR STI ETF (SGX: ES3). The exchange-traded fund tracks the fundamentals of Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI). As a result, an investment that’s made into the ETF would instantly give investors stakes in all of the 30 stocks that make up the market benchmark.

2. Not wanting to meet with management

While many investing luminaries like Lynch and Philip Fisher have advocated for the importance of meeting with a company’s management team to assess their quality and integrity, Eveillard actually does not find meeting management to be all that important.

This goes along with his thoughts that you can’t be assured of investing success even if you’ve analysed the finest details to the bones.

For retail investors, this is actually an encouragement of sorts – you can still invest well even without having regular access to a company’s top management.

Eveillard’s also not alone in being a successful professional investor who does not place any emphasis on meeting a company’s management. Tom Gayner, the Chief Investment Officer of the U.S.-based insurance firm Markel Corp, is another good example.

3. Believing in gold

Buffett’s widely considered to be one of the best investors the world has seen. He’s also widely known to have a big disdain for gold as a long-term investment. This is Buffett on the topic:

Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

But interestingly, Eveillard has a different view. For him, gold is an important part of one’s portfolio as it can act as form of insurance against extreme outcomes (like large-scale wars or huge natural catastrophes).

The theory goes like this: In the event where stock markets around the world collapse due to extreme outcomes, the price of gold will be heading in the opposite direction (up) and thus help to offset negative returns in one’s investment portfolio.

Foolish Summary

You may have noticed that there are some important differences between the investing approaches of different investing greats. This is an important lesson (a bonus!) in itself: There’s no one investment approach that’s inherently better than the other.

As such, it is vital that we develop our own investment approach that’s best suited to our own character. That’s how we can stay the course and give time for any sound approach that we’ve chosen to work.

There're a lot more interesting things about investing to talk about and if you'd like to do it in person, you can come meet David Kuo and the rest of the Fool Singapore team on August 15! 

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.