This weekend I read: Just One Thing: Twelve of the World’s Best Investors Reveal the One Strategy You Can’t Overlook. Like an idiot, based on the title, I thought the book was about one thing that twelve great investors agreed on. In fact, it’s individual chapters written by twelve different people, each about something different.
But, don’t let my stupidity keep you from reading this book… I thought it was pretty interesting throughout. The standout chapter, in my opinion, was the one on human behavior/psychology by James Montier. It outlines ways that humans are wired to make bad investing choices, which is something we’ve all heard before. But it’s pretty exhaustive, and describes the justification and relevant psychological studies very clearly. In some cases it also suggests ways to counteract our human deficiencies. I liked this chapter best partly because it was applicable to short-term trading (whereas a lot of the book is investor-oriented), and also just because I am intrigued by the way people work.
Another memorable chapter is by John Mauldin, the editor of the book. It describes trends in place now that are likely to shake up the world in decades to come. Again, it’s stuff you have heard before if you are interested in such things, like: the population in the West and Japan is set to decline, even as it ages. Looking ahead, what might that mean? I disagree with some of the conclusions he makes, though, about the population and the workforce. I think he’s forgetting how much technology can help us in those areas. For instance, he talks about how the west needs to desperately import young educated immigrants to fuel our workforce and support retirees. But, who’s to say that elderly people will need (or even want) to retire, or need a lot of care from human workers? If I’m going to live to be 150, I don’t want to be out of the game and bedridden from age 65 on… and I’m betting I won’t have to be.
Common themes in other chapters were: Don’t hold on to losses. You can’t make money with information everyone knows. Compounding works.
July 22nd, 2007 at 7:30 pm
I like John Mauldin’s work. I read his free weekly letter every week. I think he’s got a very rational view on macro conditions. He’s also a local–his office is in The Ballpark in Arlington where the Texas Rangers play. He has collaborated a lot with Ed Easterling, who has a great site at http://www.crestmontresearch.com . He’s also a professor at SMU (another local) and I have a friend who’s in an MBA program who has taken his class. They are not much good to active traders like us, but for the buy-and-hold types they offer a lot of good information. I’ve read Mauldin’s Bull’s Eye Investing and Easterling’s Unexpected Returns. I never read the One More Thing book, though it sounds interesting.
Richard, there was a bunch of psychology stuff like Montier’s (I think he co-authored the chapters, actually) in Bull’s Eye Investing. Head by your library and check it out, anyway. A few of Mauldin’s past weekly letters dealt with that subject, too IIRC. His letters are archived at http://www.2000wave.com/gateway.htm (have to give him your email addy, but it has been safe for me so far).
July 22nd, 2007 at 9:55 pm
I’ll just give them a spam.la address whenever I check it out.