Last month, I found five quotes from Markel (NYSE:MKL) CEO Alan Kirshner that any long-term investor can appreciate. While Kirshner doesn't spend much time in the spotlight, Markel has risen more than 5,900% under his leadership since going public in 1986.
Even so, it's also safe to say Markel President and CIO Tom Gayner is another big reason the company is often compared to a mini-Berkshire Hathaway (NYSE:BRK.B). Of course, few people doubt Gayner knows what he's doing considering he has helped the stock become an easy 21-bagger since he took the helm of Markel's investment division in 1990.
With that, here are five key quotes from Gayner to give us a better idea of what it takes to be a successful long-term investor:
On knowing your limits
When asked last year whether he saw opportunities in underperforming large bank stocks, Gayner replied "There might well be, but I have decided that they're beyond my circle of competence to invest in them."
While his statement seems a bit surprising on the surface, Gayner effectively illustrates it's perfectly acceptable to admit when certain investments are outside our core areas of expertise. I don't know about you, but in today's age of arrogance and over-inflated egos, I find his rare spark of humility downright refreshing.
On perspective in a volatile market
"Things are always getting better or worse, and it's no different this time."
This echos one of my all-time favorite quotes from mutual fund pioneer John Templeton, who wrote "The four most dangerous words in investing are: 'this time it's different.'"
To be sure, investors tend to have a hard time remembering nothing goes up forever, only to react badly when inevitable wider market pullbacks occur.
Case in point? Since the Great Depression, the United States has endured 13 gut-wrenching recessions, each of which undoubtedly caused long-term investors to question whether their patience was merited. Sure enough, each time, the market bounced back stronger than before, and now the indexes currently sit at all-time highs -- and have more than doubled from their 2009 lows.
Of course, this is the perfect segue into Gayner's next words of wisdom...
On why value investing works
"There are certainly times when it goes out of favor, and that's always been the case... and that's why it works. If it were always easy, that's what everyone would do. Part of being a value investor is being willing to lean against the wind and to do things that are unpopular."
Sure enough, our most recent recession perfectly illustrated one of those times long-term value investing seemed to have gone out of favor, with market pundits too often regurgitating headlines like, "Value investing is dead!"
However, as fellow Fool Morgan Housel pointed out just a few days ago, one of the most valuable lessons investors can learn is that the market eventually, inevitably rewards those patient investors who "stick it out."
On "forever" as a holding period
"In general, we hope to be able to buy a stock and never sell it. [...] I think that if you limit your buying to things you will be able to own for a long time, you will put more thought in to whether to buy it or not and that leads to better long-term decisions."
If there were ever any doubts that Gayner's investing methods closely mirror those of Warren Buffett, the above statements should go a long way toward removing them. Like Buffett, Gayner focuses on finding steady businesses that Markel can hold indefinitely.
As a result, it not only pays to listen to what Gayner says, but also to note the stocks in which he sees value; according to my Foolish colleague Jessica Alling, Gayner has recently built positions in stocks involved in the energy sector, including Alpha Natural Resources (NYSE: ANR), Arch Coal (NYSE: ACI), and Peabody Energy (OTC:BTUU.Q). Given Gayner's proven, methodical decision-making process, these coal producers might be worth a look.
On cash as a necessary evil
"It's a pathetic investment, with the yields you're not making, and it's subject to ongoing depreciation each and every day. [However], I'm willing to give up some current investment return in order to have options that cash carries with it."
As safe as cash may seem, Gayner's absolutely correct in describing it as a "pathetic investment," prone to the relentless value destroying effects of inflation. Going further, Gayner reminds us that to hold too much cash is to sacrifice returns from the wide array of superior investments that exist in the stock market.
However, Gayner also recognizes cash brings with it the flexibility to act quickly when good investment opportunities arise.
With this in mind, despite his distaste for cash, and as I suggested last month, Gayner appears to have plenty of options on the table considering the fact he's currently "tactically building" Markel's cash position. Investors would be wise, then, to keep an eye on how Gayner chooses to deploy that cash in the coming quarters.