I had another small talk with Geoff today. The topic was about some investing books I read. Last time, I was asked to describe each investor in one word each. This time, I will describe investment books in one word each.
#1 Security Analysis: Comprehensive
This is the first investing book I read. Without any experience, I did not grasp all the ideas. However, I found Ben Graham’s ideas in most books I read later. That’s why I think if one has the chance to read only read, I would suggest Security Analysis.
#2 The Intelligent Investor: Defensive
I read The Intelligent Investor not long after Security Analysis. I felt that Ben Graham wanted to devise a system for average investor. He spent a big part of the book talking about the approach defensive investor. So, my impression of the book is defensive.
#3 You Can Be a Stock Genius: Intelligent
I described Joel Greenblatt as “tricky.” Intelligent can be a better word. What’s the better word to describe his tactics to take advantage of special situations?
#4 The Aggressive Conservative Investor: Disagree
Martin Whitman said that small investors should buy a stock at the hope of someone buying out later. Therefore, he looks at private owner value. I have a different view. Warren Buffett buys a whole company but never change the management. I see no difference between buying a share of a company and buying the whole company if we trust the management and capital allocation. Therefore, I value a company as something to hold it forever, not as something that other people will buy at a higher price.
#5 Common Stock and Uncommon Profits: Perfect
I used to focus more on business as Buffett said he want companies that can be run by idiots. I now realize that for a long-term investment, people factors are very important. In my search for perfect investments, I found a great framework in Common Stock and Uncommon Profits. If we analyze a company and all answers to Phil Fisher’s 15 questions are positive, I think it is very likely that we’ve found a perfect investment.
#6 Conservative Investors Sleep Well: Undervalued
This is one of the “other writings” in Phil Fisher’s Common Stock and Uncommon Profit and Other Writings. Yet, I think this is the best investing book ever. I think one need only to read this book and Ben Graham’s Mr. Market metaphor to become a real investor.
#7 Value Investing: From Graham to Buffett and Beyond: Simplify
Geoff has a different view. He thinks Bruce Greenwald makes value investing more complicated in this book. I agree with him in the sense that Bruce Greenwald is an economist and he wants to describe value investing in formula. But I think that formulas help newbies see the approach of value investing more clearly. That can be misleading though.
#8 One Up on Wall Street: Original
Peter Lynch is not known as a value investor. But I see he’s very much like Warren Buffett. He buys companies that he understands. He likes obscure stocks, especially those in no growth industry. He only buys a company that is getting better, whether growth or cyclical stocks. And he use common sense approach. So, I think Peter Lynch’s ideas are very original.
#9 The Snowball: Compounding
The Snowball is a great source about Warren Buffett’s investments. However, compounding is the word I use to describe how Warren Buffett built his personal wealth. He started making money since he was 6 years old. He was a businessman before reading Ben Graham’s book. After learning the right approach to investing, he continued compounding his wealth mostly without debt or taking risk.
#10 The Curse of Mogul: Media
This is a good book about in the media industry. The book talks about competitive advantage in the whole media value chain. It focuses on the idea that the value of media companies is in their distribution and challenges the conventional belief that “content is king”.
#11 Fast Second: Scale
Fast Second breaks the myth that the most innovative companies are usually the winners. However, successful companies are usually not the first to innovate a product. They usually have the skill to scale up the dominant design, which emerges from many designs pushed to market in early period.
#12 Hidden Champion: Forgot
I remember the book is about many manufacturing companies with dominant market share in their niche market. But I forgot the discussion about the traits of these companies. I will re-read the book in the near future. It’s Geoff’s favorite business book.
#13 Built to Last - Ideology
The book is about how to build a company that lasts forever. I think the most important idea in the book is core ideology. A company needs a core ideology around which they will evolve and adapt to changes in the market.
#14 Good to Great – Hedgehog
The book analyzes some companies that have a period of phenomenal stock return after a long period of mediocre performance. I find the hedgehog concept is the most interesting finding in the book. It condenses the success of a company into a simple idea on which managers can focus.
#15 How the Mighty Fall - Overconfident
The book discusses the process of how a great company falls. I presume to summarize it in one word “overconfident”. A successful business becomes overconfident. They become obsessed with growth and pursue growth carelessly. Hubris leads to ignorance of threats, and starts the falling of the company.
#16 Great by Choice - Discipline
This is another book by Jim Collins about great companies. I think discipline is the best word to describe these companies. They are disciplined in executing their goals, in growth, in R&D, and in exploring new opportunities. They are even disciplined in limiting their growth.
#17 Competition Demystified – Academics
This is a good book about competitive advantage. However, I think one can find all the same ideas in a microeconomic textbook. In the real world, competitive advantage comes in many different forms. For example, invisibility of quality and irrational buyers can create competitive advantage although there’s no economy of scales, network effects, switching cost or searching cost. I now think product economics and competitive position are both important to a company’s profitability. Not just competitive advantage.
#18 The Big Short – Corrupted
The book tells the story of my favorite investor, Michael Burry. But it also helps me see the corruption in the financial system. People in investment banks, in bond funds, etc. are not stupid. They’re just greedy and maximizing their self-interest.
#19 Poor Charlie’s Almanack – Omniscient
Omniscient is the best word to describe Charlie Munger. I’m intrigued by his ideas about multi-disciplinary approaches and using mental model. He inspires me to read more about different subjects other than just investing books.
#20 Made in America – Learning
Like Warren Buffett and Charlie Munger, Sam Walton was a learning machine. He didn’t initially come up with the idea about low cost and high volume. He just started a grocery store. But he always spent time going to other stores to learn from competitors, even when he traveled with his family.
#21 Selling the Sea – Marketing
This is a great book that I would recommend to any marketing students. The book is about the cruise industry. There are great lessons about market intelligence and market positioning in an industry in which brand seems to mean nothing.
#22 Fooling Some of the People All the Time – Difficult
The book is about David Einhorn shorting Allied Capital since 2002. After reading the book, I felt short selling is… difficult. The level of in-depth research is incredible. For example, David Einhorn hired some detectives to inspect the company. I think that kind of approach is out of range for average investor. There’s also a lot of hatred for short-seller.