Is liberal arts education good preparation for becoming an investor? Perhaps . . .
George Soros majored in philosophy. So did activist investor Carl Icahn. Larry Fink, the CEO of BlackRock, majored in political science. Peter Lynch studied history, psychology, and philosophy. Stephen Schwartzman, CEO of the Blackstone Group, had his own interdisciplinary major incorporating psychology, sociology, anthropology and biology. He described it as “really sort of the study of the human being.”
Then again, there are investors who went the straight economics/finance route. Sir John Templeton, Seth Klarman, and Warren Buffett were economics majors. Howard Marks studied finance, but also did a minor in Japanese studies.
We don’t really think it matters what you study. But we do think you need the broad thinking and judgment across disciplines that liberal arts education develops. In this age of hyper-specialization, we have a soft spot for liberal arts.
In investment, you do need some technical skill, and there is a certain body of investment knowledge you must have. But really, you need to be reading widely and making connections across disciplines so that you can see what others do not see.
Howard Marks has said that being an above average investor requires “second-level thinking,” or going beyond conventional wisdom: “You must think of something [others] haven’t thought of, see things they miss, or bring insight they don’t possess. You have to react and behave differently. . . Second-level thinking is deep, complex, and convoluted.”
That is not a vocational skill. That is a liberal arts skill. But without it, you will be no better than average.
How do you get it? Warren Buffett once suggested while holding a stack of papers, “Read 500 pages like this every day. That’s how knowledge builds up, like compound interest.”
And remember, investment is a field for thinkers who like to wander far from their home turf.
Consider Benjamin Graham, widely considered the father of modern security analysis and author of the classics The Intelligent Investor and Security Analysis (with David Dodd). Upon graduation, he was offered teaching positions at Columbia in three different areas: Greek and Latin philosophy, English, and mathematics. He wrote about valuation and monetary policy. But he also held a patent for an improved slide rule, wrote an original Broadway play, and translated a Uruguayan novel. One of his favorite hobbies was translating Homer into Latin and Virgil into Greek.