WHO AM I?

Building a permanent capital holding company (PCHC) is no easy feat. The success of Charted Holdings is largely dependent upon my ability to invest capital successfully. For example I am either investing in public equities or investing in the acquisition of a private business. While owning 100% of a business requires other skills, it starts with my ability to make decisions about investment opportunities. For this reason I have determined that reading The Intelligent Investor written by Benjamin Graham is the perfect place for me to begin. As Warren Buffett writes in the preface:

“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must supply the emotional discipline.”

Emotional discipline is something I’ve developed over the past six years of day trading. What I need to do now is develop “a sound intellectual framework for making decisions”. Without the proper mindset it would be difficult for me to successfully implement the following skills:

I just wrapped up the first chapter of The Intelligent Investor. There are two major concepts that stood out to me. The first is the difference between investing & speculating which can be derived from the following statement:

“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”¹

The second is the difference between the two types of investors, defensive and aggressive. The former is defined as “one interested chiefly in safety plus freedom from bother.”² While the “determining trait of the enterprising (or active, or aggressive) investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average.”³

This is an important distinction to make early on because “If you don’t know who you are, [the stock market] is an expensive place to find out.”⁴

I can certainly attest to that. As I mentioned before I spent the last six years day trading. Starting out I certainly didn’t label myself a speculator. Had I known who I was then there’s a chance I could have spared myself from enduring a bit of financial pain. That’s a mistake I won’t make twice.

“Before you buy any stock or other financial assets, the first thing to understand isn’t what you are buying, but rather who you are.”

This quote from Jason Zweig found in chapter one’s commentary reiterates what I mentioned in earlier, every other skill listed has to do with understanding what I am buying or have already purchased, but the first step is to understand who I am, an investor or a speculator.

If you haven’t picked up on it already, I have learned from my past mistake by deciding now, before I begin purchasing anymore securities, to be an investor as I believe that’s what this project requires. To be more specific, I am deciding to be an enterprising investor because I am willing “to devote time and care to the selection of securities” whether those selections are “both sound and more attractive than the average” remains to be seen.

I do, however, want to give myself the best chance of doing just that, which is why I have decided not to allocate any further capital until I not only understand who I am, but also how to conduct thorough analysis that “promises safety of principal and an adequate return.”

Thanks for reading!

- Eric Seel