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Summer reading plus 2019 in review and 2020 in prospect

  •   Lex Hall
  •   1 January 2020

With a decade behind us, suddenly it's 2020, but we still have time before the year really kicks in to stretch out with a good book, reflect on 2019 and consider what a new year might bring.

Morningstar's experts from many parts of the business discuss the highlights of 2019 and what lies ahead, and then reveal which books they especially enjoyed in the quieter moments.

Morningstar's 2019 Year in Review


The ultimate gift for many of us is the gift of time. Time to save, time for the interest on your savings to compound, time to stop, time to think. And of course, time to read.

We asked Morningstar staff what they planned to read this summer and they responded with an eclectic mix of psychology, self-help, business management, current affairs and American history.

When senior equity analyst Brian Han is not picking the bones out of Telstra’s balance sheet, or spilling ink for his monthly Brianstorm column, he’s devouring books. This year, he found time to read The Blind Side by Michael Lewis, the journalist capable of turning a seemingly humdrum business yarn into a page-turner. For Hollywood script writers, a Lewis book – such as The Big Short, Lewis’s account of the subprime loan scandal that led to the financial crisis – is like gold dust.  

“Although published more than decade ago, this remains my favourite of all Lewis’s books,” says Han, “which is saying something, given his incredible collection of works (The Big Short, Liar’s Poker, Moneyball, The Fifth Risk). Ostensibly, the book is about American football, its evolution over time and the rise of this one innocuous left-tackle position whose primary role is to protect the most important player in any gridiron side, the quarterback.

“On the other hand, it is about a poor African-American kid from a broken home, adopted by a wealthy white family through whose support the kid gets a chance in life and becomes a professional left-tackle player. The appeal of the book lies in how Lewis weaves and juxtaposes these two subjects, delving into the human aspects of the sport and the American social class debate. And, as with most Lewis books, there are lessons that can be applied in the investment sphere, such as the importance of identifying cause-and-effect, and the psychology of winning, whether in sport, life or the stock market.”

Like Han, equity analyst Nicolette Quinn, who covers some of Australia’s biggest healthcare names, such as CSL, is looking forward to curling up with Lewis. Quinn is reading The Undoing Project: A Friendship That Changed Our Minds. “This is the true story of the relationship between arguably the two pioneers of behavioural economics, Daniel Kahneman and Amos Tversky,” says Quinn. “It is not a textbook, but rather focuses on how their unique partnership was an essential ingredient in creating the ground-breaking work and how their own very human messiness was also their undoing.”

Another book on Quinn’s bedside table is Where are the Customers’ Yachts? Or A Good Hard Look at Wall Street by Fred Schwed Jr.

“You will never guess that this book was written in 1940 because its satirical look at the characters of the financial markets is as applicable today,” says Quinn. “Testament to that is the title would have been a perfect alternative for the royal banking commission. It is laugh-out-loud funny, and you will have a queue of people waiting to borrow it from you!” And if you wanted further incentive to read, there’s a foreword by none other than Michael Lewis. "Once I picked it up I did not put it down until I finished … What Schwed has done is capture – in deceptively clean language – the lunacy at the heart of the investment business."

Director of equity research Mathew Hodge, who covers resources companies among others, is reading Principles: Life and Work by Ray Dalio. In 1975, Ray Dalio founded an investment firm, Bridgewater Associates, out of his two-bedroom apartment in New York City. Forty years later, Bridgewater has made more money for its clients than any other hedge fund in history and grown into the fifth most important private company in the US, according to Fortune magazine.

As its title suggests, this 593-page tome is essentially two books in one. Every business luminary, from Bill Gates to Michael Bloomberg, waxes lyrical about the effect of this book – part bio, part business instruction manual – on their careers. So what are you waiting for? Read it over summer and then start your own hedge fund.

In the time it takes you to read Dalio, you could probably just get through the title of another book on our list. Thrive: The Third Metric to Redefining Success and Creating a Life of Well-Being, Wisdom, and Wonder by Ariana Huffington. What she lacks in concision, Huffington – co-founder and editor-in-chief of the Huffington Post news website – makes up for in wisdom and entertainment, according to marketing associate Laura Zakeli.

Huffington likens our drive for money and power to two legs of a three-legged stool. It may hold us up temporarily, but sooner or later we’re going to topple over. We need a third leg – a “third metric” for defining success – in order to live a healthy, productive, and meaningful life.

“I read it when I didn’t know what to do with my career or how to go about it," says Zakeli. "This book helped put things in perspective for me. It’s light-hearted and she’s a good writer. I particularly enjoyed the way in which she talks about her personal life.

"She tells you about her upbringing, what led to her eventual burnt out, and how she overcame that and learned how to prioritise things. She draws a lot on Greek mythology and ancient philosophy too. Although she quotes old white men, that’s perhaps not the intended audience!”

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Summer, it seems, is the time to reassess life and see if you’re going about it the right way.

Just ask Morningstar analyst, manager research, Donna Lopata, who sought emotional and intellectual nourishment in the somewhat dauntingly titled How Will You Measure Your Life? by Clayton M. Christensen. After beating a heart attack, advanced-stage cancer and a stroke in three successive years, the world-renowned innovation expert and author of one of the best-selling and most influential business books of all time – The Innovator’s Dilemma – Christensen delivered a short but powerful speech to the Harvard Business School graduating class. That speech became the basis for this book.

“This book isn’t new (published 2012) but it has some timeless wisdom by an author best known for his studies in disruptive innovation,” says Lopata. “It introduces a management consultant framework to reflect on your career, achievements, goals and values. Perfect for some summer break contemplation.”

Quiet: The Power of Introverts in a World that Can’t Stop Talking, by Susan Horowitz Cain.Susan Horowitz Cain is an American writer, lecturer and former negotiations consultant. Quiet, published in 2012, stemmed from Cain’s apparent fear of public speaking. In the book, she argues that modern Western culture misunderstands and undervalues the traits and capabilities of introverted people, leading to "a colossal waste of talent, energy, and happiness".

One person this book speaks to is senior portfolio manager – and self-confessed introvert – Nimalan Govender. “I am an introvert and this book, naturally called out to me,” Govender says. “We are in a world where information is passed around at an incredibly fast pace. Often it’s the people who shout the loudest that get our attention. This is not the way of an introvert who values persistence over loudness.

“However, there are those people (like myself) who are comfortable in solitude. I learnt a lot about personality types and how to cope with more extroverted colleagues.”

The book’s examination of introversion is also pertinent to investing, Govender says. “As an investor, the book helped me realise that as an introvert, I am more likely to delay gratification to have a better outcome further out. It is also not surprising that most value investors are introverts.” 

Management and biography are two genres that are often intertwined. Jason Prowd, Morningstar director, product management, will spend the summer ensconced in books on management and a biography of British polymath and long-serving editor-in-chief of The Economist, Walter Bagehot. 

Nine Lies About Work: A Freethinking Leader’s Guide to the Real World by Marcus Buckingham and Ashley Goodall. Despite the book’s lofty title, Buckingham and Goodall have set themselves an honourable mission: to lay bare those cliched mantras that pervade the 21st century workplace. “You crave feedback. Your organisation's culture is the key to its success. Strategic planning is essential. Your competencies should be measured, and your weaknesses shored up. Leadership is a thing.”

Rubbish, say Buckingham and Goodall. Forget what you know about the world of work. Genuine “freethinking leaders”, the authors tell us, “recognise the power and beauty of our individual uniqueness. They know that emergent patterns are more valuable than received wisdom and that evidence is more powerful than dogma.”

Bagehot: The Life and Times of the Greatest Victorian by James Grant. Journalist, essayist, businessman, and at one time the “greatest conversationalist in London”, Walter Bagehot (pronounced “badge-it”) lives in on the eponymous weekly column in the Economist. Bagehot’s father founded and owned the esteemed newspaper – and Bagehot went on to become its editor-in-chief for 17 years from 1861. Grant offers a witty and elegant portrait of one of the 19th century’s greatest public thinkers. 

No summer reading list for the investment-minded is complete without The Intelligent Investor by Benjamin Graham. Published in 1949, it is, as Morningstar product manager Mark Lamonica notes, roundly considered as the bible of value investing.

“Earlier this year, my wife Haley asked me for a book she could read to learn a little more about investing,” Lamonica says. “After considering several options I thought you couldn’t get much better than The Intelligent Investor. It was a great experience for us as we discussed how the foundational concepts outlined by Graham influenced our own investing approach. The only downside is that Haley now expects me to read something related to her profession – I’m starting to regret marrying a neuropsychologist.”

Aman Ramrakha, director, manager research ratings, Asia-Pacific, has a couple of books on the go. One is The Globalisation Paradox: Why Global Markets, States, and Democracy Can't Coexist by Dani Rodrik. Turkish economist Rodrik surveys the history of globalisation from its 17th-century origins through the milestones of the gold standard, the Bretton Woods Agreement, and the Washington Consensus, to the present day.

Rodrik argues that while economic globalisation has enabled unprecedented levels of prosperity in advanced countries and has been a boon to hundreds of millions of poor workers in China and elsewhere in Asia, it is a concept that rests on shaky pillars. 

These Truths (A History of the United States) by Jill Lepore. Will Donald Trump be re-elected in 2020? Or will Michael Bloomberg emerge as a credible threat to unseat him? Lepore’s sweeping survey of US history is the ideal primer ahead of momentous year in American – and world – politics.

Senior editor Glenn Freeman is also focused on the evolution of world affairs. He’s reading The Levelling – What's next after globalisation by Michael O’Sullivan. O’Sullivan argues we are witnessing a “levelling-out” of wealth between poor and rich countries, of power between nations and regions, of political accountability from elites to the people, and of institutional power away from central banks and defunct 20th-century institutions such as the WTO and the IMF.

“O'Sullivan's book is named after an English political movement that existed in the mid-1600s,” says Freeman. “The Levellers were committed to populism and religious tolerance, among other things, and reached the public through pamphlets and petitions.

"From an Australian perspective it resonates very clearly. For example, the current efforts by our Reserve Bank to stimulate growth by cutting rates sprang to mind several times while I was reading."

Editor Emma Rapaport has been poring over Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World by Bradley Hope, Tom Wright. “Wall Street Journal reporters Tom Wright and Bradley Hope chronicle how fugitive Malaysian businessman Jho Low allegedly pulled off one of the greatest financial heists in history, masterminding the theft of billions from a Malaysian sovereign wealth fund known 1MDB,” says Rapaport. “With his wealth, Low rubbed shoulders with A-list Hollywood celebrities like Leonardo DiCaprio, socialite Paris Hilton and Aussie model Miranda Kerr. Low’s influence touched some of the world's leading financial firms.

“Wright and Hope's revelations stoked public anger against the Malaysian prime minister Najib Razak, who was defeated in a historic election upset last year.

“Beyond the outrageous details, which are fantastic to read, I loved this book for its glimpse into the world of sovereign wealth funds in the post-GFC era, and the US financial firms that assisted their rise. Wright and Hope say Low's success is rooted in the failures of the 21st century global economy. I can't help but agree. If you like international scandal, financial corruption and luxury lifestyles of billionaires, this book is for you.”

As usual head of equity research Peter Warnes will take a break from the financial press to instead focus on the form guide. Why? "Because I want tomorrow's results today." And in between races, Warnes recommends you visit - or revisit - Not A Penny More, Not A Penny Less, the debut novel of Jeffrey Archer. Said to have been inspired by Archer's real-life experience of near-bankruptcy, the novel, published in 1976, recounts the story of Harvey Metcalfe, who gets in hot water by selling inflated oil stocks to the wrong people.


Lex Hall is Content Editor for Morningstar Australia.



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