If you’re like me, reading your first investment book must have made you super excited.
“I can do this! It sounds totally reasonable. And getting rich is a nice byproduct.” Thoughts like these arose as I was eager to grab the next book.
Fast forward, and I’m sure you’ll agree that after reading the first 5-10 investment books, the messages start to become repetitive or controversial.
Either way, it only takes a few months for the typical person to convince themselves that they know enough to strike it rich in the stock market.
Too bad those books lie to you. They overpromise and underdeliver.
Most serious investors have read many of the investing classics, yet the data indicates they still don’t materially outperform. (At least they don’t even come close to the level of outperformance of people like Warren Buffett and Peter Lynch.) Have you ever thought about this?
The reasons may be twofold: (1) investing is a profession, so while reading is a good start and essential, it alone won’t make you successful, and (2) there’s no incentive for Buffett or any other professional to educate the masses on how to compete with them.
Let me add a third, thought-provoking point: the stock market keeps evolving (changing), as it is a complex adaptive system built on many investors’ personal views and transactions (and their behavioral biases). There’s always money to be made in the market, but winning strategies do not stay constant! You need to keep learning and adapting.
The biggest investors are the best examples of this! After all, Warren Buffett’s current investment approach has absolutely nothing to do with his initial strategy. The hardwired value investor Howard Marks has just recently made the leap to recognize the value residing in profitable growth. And last but not least, a telling example from Morgan Housel:
“The Intelligent Investor is one of the greatest investing books of all time. But I don’t know a single investor who has done well implementing Graham’s published formulas. In each revised edition, Graham discarded the formulas he presented in the previous edition and replaced them with new ones, declaring, in a sense, that ‘those do not work anymore, or they do not work as well as they used to; these are the formulas that seem to work better now.’ Graham died in 1976. If the formulas he advocated were discarded and updated five times between 1934 and 1972, how relevant do you think they are in 2020? Or will be in 2050?”
On a positive note, while ancient formulas may not work today, and no strategy produces outstanding returns forever, there IS an attitude that has more than stood the test of time! That’s the love of reading, learning, and discovering.
For my part, I keep devouring 50-70 books per year, and half are still investment related (almost a decade after reaching financial freedom). It may be embarrassing to admit, but nearly all of what I read pertained to investments when I was starting out.
After hundreds of titles, I certainly know a thing or two about them being repetitive and controversial. That said, whenever an experienced investor releases a new book, I regard it as a gift, a wonderful gesture. After all, no such publication can be priced too high compared to the experience and lessons delivered.
All books are underpriced. This is the most underpriced “asset class” in the world. That’s been my opinion since I turned 20, and nowadays, I see this echoed by renowned investors and business people.
When was the last time you read a book that had a lasting impact on you? Your values, identity, and life are shaped by the books you read and the people you meet. While meeting in person and learning from the best is out of reach for most, your ability to read and your love for it can be a true blessing.
Ending on a semi-selfish note, if you’re looking for the book with the power to question your long-held beliefs and take you to the next level as an investor, look no further than Beyond Dividends (authored by yours truly).
This compilation encompasses my evolution from a hardwired dividend investor to a more versatile quality-growth mindset with a strong income focus. If you’re tired of theoretical academic lessons and prefer practical advice and conclusions from decades of investment experience, all this delivered in an entertaining, easy-to-digest manner, you should give my latest book a shot.
This recommendation is semi-selfish in the sense that you’ll benefit much more from reading than I will from your purchase. Don’t withhold your feedback!