"Warren Buffett has become one hell of a lot better investor since the day I met him, and so have I. If we had been frozen at any given stage, with the knowledge we had, the record would have been much worse than it is. So the game is to keep learning." - Charlie Munger
What I'm reading now
My Thoughts On This Book: This book was recommended by one of the heads of equity investments in a large wealth fund. Upon more research, I saw that it was also recommended by Warren Buffett in one of his Annual Letters (or something... can't remember where exactly). Still on the first few chapters, but so far - simply amazing.
The book analyzes the traits of CEOs who have managed to increase per share value of their companies consistently over many years. Definitely no one-trick ponies here! Thorndike deeply analyzes the common qualities these managers have, and finds out that they think so differently from the "mainstream" firm put in the spotlight by Wall Street. They do things 180 degrees differently from their peers in the same industry, primarily because they are "Outsiders" in many aspects. They are unassuming, and they are literally outsiders to the business (in the book, Will mentions Tom Murphy as having assumed the role of managing Capital Cities even though he had little knowledge about the media industry).
The common thread in these chapters is that these outstanding managers have an independent mind and are laser-focused on doing what they do best (Will describes them as 'iconoclasts'). They also are, more importantly, terrific capital allocators. They make selective, but big deals when the opportunity arises. In essence, they think like a true value investor.
That's all I have for now. I'll update my thoughts as I finish the book.
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My Book List Recommendations
"Invest Lah! The Average Joe’s Guide to Investing" by Ser Jing, Sudhan, Wei Lin
A lot of friends ask me, "How do I start learning about investing?"
I immediately point them to this book. (Only available in Singapore, as far as I know!)
Not counting the fact that it's written by three of the most humble and knowledgeable investors I know, the book is laid out in a very clear and logical way for a newbie investor to quickly grasp the key concepts (I couldn't have done it better myself!).
Apart from that, if you had been befuddled by terminology and cannot relate to examples of US companies (as most other Investing books are written by US authors), take comfort in this book because their case studies and writing have been written specifically for the local Singaporean audience (concepts are still universally applicable, though!).
All in all, a great primer for a new investor who wants to navigate the complexities of the stock market!
Difficulty Level: Novice
"The Tao Of Warren Buffett" by Mary Buffett & David Clark
This is one of the first few books I read when I first started learning about investing. This sparked many things for me - I began reading more about Buffett, and a huge part of how I think about stocks is influenced by his teachings about long-term value investing.
Contrary to mainstream Wall Street, value investors don't simply pick "value" stocks by their low P/Es or P/Bs. As one of my professors like to say, value investing is a way of life. Everything Buffett does has some logic of value investing behind it. And this, you can see it in this book.
This is a really light and fun read, and also a great starting point for novices. It's not many pages - so it's un-intimidating. It's essentially a collection of Buffett's quotes, broken down and explained simply by Mary and David.
Don't underestimate it - these quotes pack a ton of wisdom in them!
Difficulty Level: Novice
"Investing: The Last Liberal Art" by Robert G. Hagstrom
If you're into investing (value or not) and you're also mathematically/quantitatively inclined, you need to read this book. Successful investors (like Peter Lynch) have said that investing is more art than it is a science. It is a deceptively simple/innocent statement, but one that cannot be taken lightly - if you want to be a great investor.
I chanced upon this book serendipitously and was floored by the wisdom filled within the pages. One key idea that sets out the structure for the entire book is the concept of a "Latticework of mental models". Hagstrom credits Charlie Munger for this concept - and once you read the different chapters - you will see how innately multidisciplinary value investing is. And Hagstrom implies, to do value investing well, one must understand all these different facets well and become a master at them.
Difficulty Level: Intermediate
"Financial Analysis and Security Valuation" by Stephen H. Penman
If you're already an experienced value investor/fund manager/analyst, consider reading this book by Stephen Penman. Okay, it's not really a book - but a textbook. (Yawns) Don't switch off yet, though!
Penman is one of the few academics who pursue a value investing approach to investing as well. He is, not surprisingly, a distinguished professor at Columbia Business School, the alma mater of Warren Buffett and Benjamin Graham.
As value investors, we understand how difficult and frustrating finding the intrinsic value of a stock can be - especially if the underlying company has checked all your qualitative criteria. Penman rationally looks at the current valuation methods and picks out the parts of those methods that serve value investors, and chuck those that don't. He introduces alternative valuation models and more importantly, alternative ways to think about valuation.
It is a refreshing read, although it can be quite technical at times. The first time I read some of these methods, I was blown away. It challenged much of how I thought about valuation - and to date, I have incorporated some of these methods when doing my own valuations.
Be forewarned, although you may get the initial "Aha" moment from reading Penman, it WILL cause more confusion and challenge many beliefs and concepts you currently have about valuation...
Difficulty Level: Expert
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