Guy Spier – Aquamarine’s Investing Principles


I received the Annual Report for the Aquamarine Fund  which was sent to me by Guy Spier who is the managing partner of the fund. What I found very interesting about the report was a section which covered  a set of principles which gives one great insights as to how the fund is managed as well as some of the principles learnt by Guy Spier who is a value investor and had lunch with Warren Buffett and has a great network of investors including Monish Pabrai

I have now updated this report with the latest investing principles sent to me by Guy from his principles in 2016

The principles from the report are as follows

The Miracle of compound interest

When growing your wealth you need to focus on growing your net worth over the long term (not just say last 6 months or year) and getting the miracle of compound interest to work in your favor

Don’t loose money

Warren Buffett uses the following rule



Avoid Leverage

The way to get rich is slowly – so Guy does not lever up his portfolio( that is he does not borrow to invest) – whenever a really bright person who has a lot of money goes broke – it is because of leverage(borrowing too much) – it is impossible to go broke without borrowed money being in the equation

Pay attention to incentives

The power of incentives has a large affect on human  behavior- Guy incentive is driven by the fact that he has his family’s money invested in the fund – a good incentive to do well

Some fund managers do not even invest in their own funds – no true incentive to do well

Play center court

Rather play by the rules and do not go close to areas of high risk(foul line)  – if you do the “foul  line” that you are playing close to may move

Buy better businesses at bargain prices

Guys focuses on businesses that are mispriced rather than identifying great businesses and trying to pay a high price for them

Work with great partners

The best way to find good partner is to be  a great partner – a Hillel quote – when Guy does something good for someone or some cause – it has resulted in remarkable good results for himself

Use a checklist

This comes from the book The Checklist Manifesto by Atul Gawande’s – before making any investment Guy runs it through a checklist – this helps in preventing past mistakes and helps with rational decisions

Become a hydra of the investing world

Guy now tries to cater for all states of the world economy  – especially after the past losses in 2008

Overcoming adversity 

Learn from  lessons of heroes of yours that you have studied  – pick yourself up when you fail  – keep going – then you will be successful

Some of the latest investing principles:

Make the Market your Servant, Not your Master 

Use oppurtunities when the market is down to buy and also reducing exposure when the crowd is exuberant- Guy does not buy or sell stocks when the market is open

Act Counter Cyclical

Buy when other are fearful and sell ( are at least reduce risk exposure)when othesr are greedy

Tread carefully around Salespeople 

Do not buy anything that is being sold to you e.g Guy stopped speaking with corporate management because they are skilled salespeople

Rub My Nose In My Mistakes

Guy understands what went wrong, is honest about it, and then moves on

Construct the Right Environment

Guy moved to Zurich from New York to shut out the noise – working in an environment which is serene and slightly boring – Guy also has a quiet room/library wher he shuts out the falshing screens and he also surrounds himself with people who keep him in check including his family

Don’t Just Predict Rain:Build and Ark

Guy practises the following to adhere to above – he writes out the reason he is buying the stock, also focus on the worst case senario and looks at the quality of earnings if it is getting worse

Be the Last Man Standing

Try and assume less risk than others eg Berkshire Hathaway takes this approach by by maintaining 10x more capital than anyone else and resists the temptation to to underwrite too much risk- build a bridge to carry 30 000 pounds, but you onlky drive 10 000 pound trucks across it

Keep Life Simple

Only runs one fund- tries not to take on too much

Embrace Adversity 

Edison said he did not fail 700 times – he succeeded in proving 700 ways how not to build a light bulb

People who learn their lessons, who pick themselves up and keep going,have earned the right to consider themselves truly successful