There’s one asset I’ll never be able to get more of; time. Time is something I’m losing every day, it’s my most precious asset, and how I spend it down is the most consequential decision I make day to day in terms of wealth accumulation and happiness. If I spend my time correctly, I’ll live a rich, happy life, and if I don’t, I won’t. How I spend my time is everything.
The way I spend my time is broken down into four buckets; business, investing, health, and family. Business is the day to day management of my operating companies, what we call work. Investing is something I really enjoy doing and will one day be my full time occupation and also be how I spend my business time. Health time includes sleep, exercise, relaxation, cooking, and entertainment, the stuff I do to keep myself healthy and happy. And family time is the time I spend as a husband and father. Those are the four buckets of time that make up my life.
When it comes to the investing time block, I find myself spending my time in four areas, broken down as the following.
1. Starting With The A’s (Treasure Hunting)
“How do you find investment ideas?” That’s a question I’ve seen asked of Warren Buffett multiple times, I’ve seen it in videos of old Berkshire shareholder meetings. Buffett general responds by saying there’s not a set way that he goes about finding investment ideas, it just sort of happens. But then he also talks about how back in his investment partnership days in the 1950s he would open the Moody’s Manual and simply “start with the A’s” and flip page by page examining all the companies listed.
And I do the same. I have a list of all the publicly listed companies on the three stock exchanges in the United States, and I “start with the A’s” going down the list, looking at each company, starting with the smallest market cap and moving my way up, one by one. This is my treasure hunting time, as it feels like hunting for treasure, and I’m looking for no-brainer investment ideas. This is how I found Ring Energy, and there are thousands of listed companies, so just like Mohnish says, the job is to reject ideas as quickly as possible.
2. Being An Owner
I’m a lot of things to a lot of people, I play a number of different roles in my life. But my primary business role, the way I view myself and carry myself, is that of an owner. I own assets, those assets produce cash for me, and I love cash. It’s a simple life.
My primary job as an owner is allocating capital, à la Buffett and Munger. I’m one man, sitting in a room, deciding where my cash should go.
But another job as an owner is overseeing that cash while it’s invested in a business, overseeing the businesses I invest in.
Overseeing my investments, is a major way how I spend my time. I’m constantly reading more about the companies I’m invested in, their industries, their competitors, their histories, everything. I don’t look at stock ownership as an abstract thing, although of course it can feel like that sometimes. Instead, I try my best to conduct myself like a real owner and to honor Ben Graham’s teaching that a stock is not just a piece of paper, rather that it represents real ownership in a real business.
So I spend a lot of my time trying to grow my knowledge of companies I own and their industries.
3. Increasing My Circle of Competence
Another major way I spend my time is trying to grow my circle of competence. Generally speaking, I want to grow it both wider and deeper. I want to go wider and gain knowledge on more industries and businesses, and I also want to go deeper and increase my knowledge level of industries and businesses that are already in my circle of competence.
I want a wide circle of competence because I want to be able to strike when an industry in troubled times serves up investment opportunities. For example, when the spot price of oil hits negative $40, it’s a good thing to have oil and gas in your circle of competence already as opposed to trying to learn the industry on the spot, which is a recipe for disaster.
And once I feel like I have my footing in a new industry, I like to constantly be taking a look at as many businesses as possible, in order to have a base level of understanding of those businesses, so I can put them into my investing universe. And then when those businesses do happen to be selling at bargain levels, I’ll already have a level of familiarity with them.
And I want to grow my circle of competence deeper because once I’ve found an industry and companies that I’m a natural fit to understand and thrive in, I want to continue to grow my edge over Mr. Market and continue to do better and better in those spots that I happen to be smart in.
I increase my circle of competence in individual companies by surveying Value Line each week, by looking up companies listed in the Wall Street Journal’s 52 week highs and lows, by looking up companies that my 13F investors invest in, and by reading 10-Ks, articles on Seeking Alpha, presentations, and earnings call transcripts.
And I increase my circle of competence in industries by reading 10-Ks, reading industry websites, reading books, and also by watching YouTube videos.
4. General Reading (and Content)
When I’m not treasure hunting, acting like a 10% owner even if I own a tenth of a percent, or making a dedicated effort to increase my circle of competence in a specific company or industry, I’m generally trying to become a better investor and a better person.
I primarily do this through reading books, magazines, and newspapers, but I also do this through listening to audiobooks and podcasts and by watching YouTube videos. I’m an observer, and I observe, think, and improve on a daily basis.
The collective human history has produced a wealth of knowledge, and the written word and the internet have made it extremely accessible. I look at it as my duty as a human to become wiser, smarter, and more effective on a daily basis, and I also enjoy living that way.
Time is the most precious thing we’ve got, and I try to stay conscious of how I spend mine.