Good reads from around the Web.
Last week I offered some suggestions for investing books for Christmas presents. All those books would be great reads for you, friends, or family.
That said, one of the best investors I know claims he’s only read a couple of investing books in his lifetime, and one of those by accident!
This fellow is no intellectual slob, but he argues it’s better to read books about business and the wider world if you want to be a great investor.
Perhaps he has a point.
UK passive investors need only read Smarter Investing
Even active investors should probably read more about business than spend too much time in legendary investor worship.
I found The Snowball as interesting as anyone, but I’ll never be Warren Buffett. The Sage himself says understanding companies and being a businessman is the key to his success.
Handily enough, Warren’s pal Bill Gates has just published a list of his best reads of 2013.
Here’s a handy cribsheet, then, for those of us who want to raise our game – whether in investing terms or intellectually, or just to have something to discuss should we end up next to a billionaire on a plane!
Bill Gates’ best books of 2013
The Box by Marc Levinson
Gates says: “Makes a good case that the move to containerized shipping had an enormous impact on the global economy and changed the way the world does business.”
The Most Powerful Idea in the World by William Rosen
Gates says: “I’d wanted to know more about steam engines since the summer of 2009, when my son and I spent a lot of time hanging out at the Science Museum in London.” [Who knew?]
Harvesting the Biosphere by Vaclav Smil
Gates: “As clear and as numeric a picture as is possible of how humans have altered the biosphere.”
The World Until Yesterday by Jared Diamond
Gates: “It’s not as good as Diamond’s Guns, Germs and Steel
Gates: “Jerven, an economist, spent four years digging into how African nations get their statistics and the challenges they face in turning them into GDP estimates.”
Why Does College Cost So Much? by R Archibald and D Feldman
Gates: “Until you get an excess supply of graduates, then you don’t really get any price competition.”
The Bet by Paul Sabin
Gates: “Sabin chronicles the public debate about whether the world is headed for an environmental catastrophe. He centers the story on Paul Ehrlich and Julian Simon, who wagered $1,000 on whether human welfare would improve or get worse over time.”
Gates has a few more things to say about these on his blog. And if any of my family are reading, feel free to pop one into a stocking for me… 😉
From the blogs
Making good use of the things that we find…
Passive investing
- My index fund is smacking the S&P 500 – Rick Ferri
- Will the stock market ever return to “the good old days”? – Mint
- Beware backtests built to anchor expectations – Abnormal Returns
Active investing
- Q&A with Warren Buffett – University of Maryland blog
- Do you really need to pay up for growth? – mcturra2000
- Searching for reliable, profitable, dividend growth – UK Value Investor
- Growth investing versus value investing – Wexboy
- The key to being a great trader – Finance Trends
- US market not expensive by most measures – The Reformed Broker
Other articles
- Market risk and the fear of flying – Rick Ferri
- The Soldier of Luxury – Mr Money Mustache
- Falling living standards and what to do about them – S.L.I.S.
Product of the week: Sitting down to watch TV at set times will soon be as old-fashioned as buying the latest vinyl LP. The Guardian reviews your on-demand streaming options.
Mainstream media money
Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1
Passive investing
- In praise of index fund inventor, Jack Bogle – HBR blog
- Have index funds become too popular? [Video] – Yahoo
- Swedroe: Hedge funds not worth the fees – Index Universe
Active investing
- Whisper it: You can time the market. Cautiously. – Morningstar
- Why diversification is so hard these days – MarketWatch
- Investing in bonds after the not-so “great rotation” – iii blog
- A hedge fund needs $300m in assets just to breakeven – CitiGroup
- Equities the new bonds [unfortunately for economy] – FT Alphaville
Other stuff worth reading
- Adventures in art market commodification – Reuters
- Foreign ownership of UK homes up 40% – Telegraph
- An easy Q&A guide to the Volker Rule – The Guardian
- 20-somethings should be saving 12% for retirement – The Guardian
- Women: Not so risk averse, after all [Search result] – Economist
- Lessons we should learn from Madoff – Washington Post (via Mike)
Book of the week: Finance folk are raving about A Giant Cow-Tipping by Savages
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- Reader Ken notes that: “FT articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.” [↩]
Re: My index fund is smacking the S&P 500
Small & mid caps have indeed outperformed by an oddly high amount in recent years, with a very high PE compared to large caps. Ripe for a huge reversal no doubt. The total market index is still dominated by large caps so when the smallcaps die it won’t matter much, it will just mean the 500 outperforms slightly.
“If you are managing only $1 million, then you should be able to beat the S&P 500 by 10 percentage points with no risk or leverage.”
Elaborate please Warren.
Thanks Monevator for another great set of reads! Yes, I went straight to the Buffett interview.
Yes mucgoo – that claim caught my eye too. The clue may be in his earlier answers – cigar butts.
The other quote I particularly liked was: “The most important decision you’re going make is who you’re going to marry.”
“Why do I do it? I get to paint my own painting.”
And finally: “We generally think the value of a company is the PV of cash flows until judgment day.”
The value out performance isn’t 10% unless your Warren Buffet.
Maybe for unlisted small businesses but in that case your also going to be providing management services and taking on much more risk.
Yes, Buffett was a bit loose there, and really means something closer to “one should be able to” and perhaps he means “me, or someone as unusually gifted (/lucky if you prefer) when it comes to investing as me”.
When he was managing small amounts of money he did much better than 10% outperformance, and he has often said he thinks he could get 50%+ a year if managing under $1million. I believe him. It’d be by investing in small/micro cap value.
Not a place for the average person to go fishing. 🙂 And of course Buffett himself says most of us should use index funds, remember.
Cheers for the comments, all! 🙂