As we close out the financial year, a roller coaster year with many learning moments, our investment team is pleased to share some of their favourite all time investment reads. Many of these inform how we look and think about our approach to investing our members’ life savings. Our reading list is long, here we’ve picked five stand-out books that you might enjoy. Many lessons can be learned from Charlie Munger, Warren Buffett and Peter Bernstein, and of where corporate America found itself back in the '80s.
Please join the conversation and let us know some of your favourites in the comments below.
Book: Buffett: The Making of an American Capitalist
Author: Roger Lowenstein
First published in 1995 and still a best seller, author Roger Lowenstein provides an insight into the remarkable life of Warren Buffett, the greatest investor off all time, and his investment approach. Buffett recently announced his retirement at the ripe old age of 94. Since 1965, his investment vehicle, Berkshire Hathaway, has returned 20% compound per annum, an extraordinary track record. Buffett led Berkshire Hathaway for 55 years, he is very much admired by our investment team.
Book: Poor Charlie’s Almanack
Author: Complied by Peter D. Kaufman
Learning is a lifelong journey best done through multiple disciplines as the differing perspectives help in making better decisions. That’s the key takeaway from this wonderful compilation of talks given by legendary investor and Berkshire Hathaway’s deputy chairman, the late Charlie Munger. Compiled by his long-time friend Peter Kaufman, it includes valuable lessons across a range of topics including investment strategy, philanthropy, and living a rational and ethical life. It’s also available as an audio book.
Book: Against the Gods: The Remarkable Story of Risk
Author: Peter L. Bernstein
“Risk touches on the most profound aspects of psychology, mathematics, statistics and history” says the late Peter Bernstein. Here Bernstein takes us on a journey to explore man’s efforts to understand risk and probability going back to ancient times. The book lays the groundwork for how the finance industry thinks about risk in investment portfolios and provides great insight into our need to try to control, predict and better understand risk. Risk isn’t just a whim of the gods, it’s inescapable and central to investing.
Book: Barbarians at the Gate
Authors: Bryan Burrough and John Helyar
A behind the scenes look at the fight to control RJR Nabisco during October and November 1988, written by two The Wall Street Journal reporters. The book takes us to corporate America and Wall Street in the 1980s focusing on what was the largest takeover in Wall Street history, it was later made into a movie. It’s a lesson on leadership and governance highlighting the destructive nature of excessive leverage, short term business plans and misaligned management incentive packages.
Book: When Genius Failed: The Rise and Fall of Long-Term Capital Management
Author: Roger Lowenstein
First published in 2000, When Genius Failed is a postmortem on the collapse and bailout of the hedge fund LTCM, which prided itself on its quantitative prowess and boasted Nobel Prize winners amongst its staff. The story reinforces the one great lesson of all financial disasters – the danger of leverage. Financial markets are inherently volatile, and it is leverage that transforms price volatility into the permanent loss of capital. Additional takeaways include that intellectual superiority, and the rigorous application of mathematics and science alone doesn’t guarantee success in investing. In light of the financial crisis that followed, it also raises question about the moral hazard of bailouts.
Happy end of financial year, we look forward to sharing more insightful content over the coming months.
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