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Best Investment Books?, Suggest your favorite investment books
nipper
post Posted: Jul 28 2020, 01:31 PM
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This book is the new 'Moneyball' (and every investor should read it)

The subject of Maria Konnikova's terrific new tome, The Biggest Bluff, is ostensibly poker, but it has plenty of lessons for anyone who wants to make money.

by Joe Nocera

When Moneyball by Michael Lewis was published in 2003, it quickly gained a big following on Wall Street. The book is ostensibly about baseball, but it's really about how to seek out value in places others aren't looking.

"There are all these biases that infect the human mind in making intuitive value judgments," he said in one interview. The protagonist of Moneyball, Oakland A's general manager Billy Beane, takes advantage of those biases by using a data-driven methodology to find good players that traditional baseball executives tend to overlook. As a result, the A's have fielded competitive teams despite having far less money to spend on players than other franchises.

You did not have to be Warren Buffett to see how the lessons of Moneyball apply to investing. The book's implicit but easy to see message is that the most successful investors usually have a way of finding value that most investors miss. Successful investing virtually requires that skill.

Maria Konnikova's terrific new book, The Biggest Bluff: How I Learned to Pay Attention, Master Myself, and Win is, to my mind, the new Moneyball. Its subject is ostensibly poker. Konnikova, 36, is a writer with a doctorate in psychology, and she decided she wanted to learn to play poker to explore the interplay between luck and skill. There are few exercises as ready-made for such an exploration as the most popular of poker games, Texas Hold em.

What prompted her adventure, she writes, was reading Theory of Games and Economic Behaviour by John von Neumann and Oskar Morgenstern, the book that essentially created modern game theory. Konnikova was taken aback upon learning that this seminal book about strategy was largely inspired by poker. Von Neumann, a brilliant mathematician and strategist, believed that poker represented, in Konnikova's words, "that ineffable balance between skill and chance that governs life".

She adds: "If he could figure out how to disentangle the chance from the skill, how to maximise the role of the latter and learn to minimise the malice of the former, he believed he would hold the solution to some of life's greatest decision challenges."

Spoiler alert: Over the course of the year and a half the book spans, Konnikova goes from being a rank novice who doesn't know a straight from a flush to an accomplished pro who gets to final tables in tournaments - sometimes winning - and makes serious money - $US350,000 ($489,000) and counting, she told an interviewer. She even had a sponsor for a time.

How does she do it? First, she finds the perfect teacher in Erik Seidel, a poker legend who's a kind of Delphic presence in the book. He tends to guide her towards knowledge rather than imposing it, so that her poker breakthroughs feel like her own discoveries at least as much as his teachings.

Second, she goes all-in, devoting herself fully to the task at hand, even though there are many discouraging moments along the way - moments when her lack of poker smarts allow better players (usually men) to goad her into making mistakes.

And third - and this is the part that truly grabbed me - she learns a mode of thought that is vital to winning poker. This is where The Biggest Bluff intersects with Moneyball. What Konnikova has to say about thinking can also be applied to investing. "It's all about thinking well," Seidel tells her during one of their first meetings. "The real question is can good thinking and hard work get you there?"

In one of her few direct references to stock picking, she quotes the Nobel laureate Daniel Kahneman: "For a large majority of fund managers, the selection of stocks is more like rolling dice than like playing poker." He continues: "The successful funds in any given year are mostly lucky; they have a good roll of the dice. There is general agreement among researchers that nearly all stock pickers, whether they know it or not - and few of them do - are playing a game of chance."

Thinking like a poker player could well be an important way to minimise the element of chance in investing, and heighten the element of skill.

Konnikova's first lesson - and it's a painful one - is that she's going to need to lose to get better. "The benefit of failure is an objectivity that success simply can't offer," she writes. "If you win right away - if your first foray into any new area is a runaway success - you'll have absolutely no idea to gauge if you're really just that brilliant or it was a total fluke and you got incredibly lucky."

Lesson No. 2: How do you react to losing? She quotes Dan Harrington, the author of several widely read poker strategy books: "Everyone plays well when they're winning. But can you control yourself when you're losing? And not by being too conservative, but trying to still be objective as to what your chances are in the hand. If you can do that, then you've conquered the game."

And so it goes: A good poker player has to be comfortable with uncertainty - just like a good investor. She has to have a good reason for every single decision she makes. She has to be able to acknowledge mistakes - and adjust accordingly. She has to be able to shut out all the white noise while searching for meaningful patterns. She can't get too high when she wins a big pot or too low when she's on a losing streak. A player who is self-aware enough to clearly see her own strengths and weakness has a big advantage. All of these attributes are important for good investing as well.

Konnikova stresses the importance of not dwelling on bad luck - those times when you have a good hand that you played correctly but lost because your opponent got lucky when the last card was turned over. What matters is whether your decision was sound.

At one point, when she is complaining about a hand she lost, Seidel tells he doesn't want to hear the result of her hands any more. He just wants to hear her explain her decision-making. "When you're telling me hands, don't even say how it ended," he says. "I want you to do your best to forget how it ended yourself. That won't help you."

"Poker taught me not to be focused on the outcome, but on the process," Konnikova told me when we spoke a few days ago. "And that has been liberating in everyday life. It feels nice to wallow when things go wrong. Give me some sympathy! Poker just knocked that out of me. You are just wasting valuable emotional resources. It serves no purpose."

More than just about anything, Konnikova learns how to take emotions out of her decision-making. That may be the single most important thing Seidel and several other mentors taught her.

What surprised me the most is the idea that you can be taught to think in a less emotional, more rigorous way. You don't see many adults changing their thought process - and I asked Konnikova if it were really possible on a wide scale. After all, not everyone has a doctorate in psychology like she does or undertakes a task they will fail if they don't learn to think differently.

Yes, she replied, she was convinced that modes of thought could be taught. "My graduate adviser was Walter Mischel," she said. Mischel was a psychologist who conducted one of the world's most famous experiments: the marshmallow test.

That's the delayed gratification test in which children were put in a room with a treat (often but not always a marshmallow), which they could either eat right away or hold off, knowing their reward for doing so will be a second marshmallow. The marshmallow tests were conducted in the 1960s, and Mischel then followed the subjects for decades afterwards. He found that those who were able to hold off eating the first marshmallow fared better in life than those who lacked that self-control.

"There were actually two other fascinating trajectories that no one talks about," Konnikova said. "There were children who couldn't wait to eat the marshmallow, but learnt self-control later in life. And there were some who did wait for the second marshmallow but whose self-control ended up deteriorating."

Guess what? Those who were taught self-control had the same life outcomes as those who had that mindset at the start and never lost it. "A lot of these skills can be taught," she said "And the same is true of critical thinking."

Maybe it's time for investors to start learning how to play poker.

(Joe Nocera is a Bloomberg Opinion columnist covering business(



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Feb 23 2020, 03:52 PM
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Just picked up a 2003 edition of Peter Thornhill's Motivated Money (in a street library)

A quick skirmish..... It reads well, one for the ages. Not out of date in the least. And this gem needs reinforcing:
QUOTE
An asset is defined as something that pays you, something that brings a return. A liability is defined as something you have to pay for.

- classic example: a car. We think it has value because we paid for it and put it on our 'domestic balance sheet', but to run and maintain takes money and its tradable price usually declines with time.





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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Dec 15 2014, 07:07 AM
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The Manual of Ideas by John Mihaljevic

In 140 characters or less:


An excellent and detailed review of 9 of the most popular value investing styles. Why they work, and how to apply them.

Why you should read it:

While there are many investing books available to help beginners there are precious few that add value for those that have already mastered the basics. The Manual of Ideas steps in to the breech, providing a concise survey of the best value investing has to offer. It is written with the intermediate-advanced investor in mind.

The bulk of the book is 9 chapters, each reviewing a different value investing approach and asking the same questions of each. Why do they work? How can they be used and misused? How can we find these type of opportunities? How should we analyse these opportunities once they are found?

The value investing approaches covered:
  1. Deep Value: Ben Graham Style Bargains
  2. Sum-of-the-Parts Value: Investing in Companies with Excess or Hidden Assets
  3. Greenblatt's Magic Search for Good and Cheap stocks
  4. Jockey Stocks: Making Money alongside Great Managers
  5. Follow the Leaders: Finding Opportunity in Superinvestor Portfolios
  6. Small Stocks, Big Returns? The Opportunity in Underfollowed Small- and Micro-Caps
  7. Special Situations: Uncovering Opportunity ini Event-Driven Investments
  8. Equity Stubs: Investing (or Speculating?) in Leveraged Companies
  9. International Value Investments: Searching for Value beyond Home Country Borders
Despite being less than 300 pages, The Manual of Ideas took me a surprisingly long time to finish. The content wasn't particularly tough, but it was so jam-packed with value and thoughtful insights that I found myself re-reading paragraphs several times over.

Key lessons:

I endeavor to follow Farnam Street's (and Mortimer Adler's) guide 'How to Read a Book' and scribble down my key takeaways as I read a book. The Manual of Ideas makes this even easier by breaking down 10 key takeaways for each chapter. Rather than recreating that exhaustive list I will just point out a few key ideas that stuck out for me personally. There are literally hundreds more great insights that could have made this list.

#1: Cast yourself as the world's chief capital allocator

This was my biggest take away from the book. If you can stick to this, you avoid most of the pitfalls of the market, and are never holding a poor investment while in search of a greater fool

"While most investors do have a negligible impact on the overall market, the accompanying small fish mind-set does not lend itself to successful investing. Even when I invested a timy amount of money, I found it helpful to adopt the mind-set of chief capital allocator. I imagined my role as distributing the world's financial capital to activities that would generate the highest returns on capital."

"If I directed the allocation of the world's capital, I would not be able to rely on the market to bail me out of bad decisions. The greater fool theory of someone buying my shares at a higher price breaks down if the buck stops with me. Successful long-term investors believe their return will come from the investee company's return on equity rather than from sales of stock"

#2: Your process must be tailored to the value investment strategy you are pursuing.

This is both obvious and easily overlooked. All too often investors will talk themselves out of a deep value opportunity because the business is in turmoil. Or out of a fast growing company because it has a relatively higher valuation.

The core premise of The Manual of Ideas is that a distinct investment process, screening tools, and analytical framework must be used for each of the 9 investment approaches discussed. Mixing and matching tools between different frameworks is a recipe for disaster.

Case in point, a business with high returns on capital provides the investor no advantage if it pays out all of its earnings as dividends.

"The return on capital earned by the business is irrelevant when the payout ratio is 100%. As the payout ratio declines, the economics of the business becomes increasingly important."

#3: Capital light businesses are the most easily threatened

"When something other than capital employed drives the profits of a business, that something can change quite easily unless the business has a sustainable moat. Businesses with low capital intensity may be more likely to exhibit winner-take-all dynamics, as capital is not a barrier to scale. Consider how quickly Apply crushed well-established companies Nokia, Research in Motion, and even Sony."

#4: Investing might be a zero-sum game, but investors decide the average return

The idea that investing is a zero-sum game gets a lot of airtime. But this ignores the role that investors, as capital allocators, have on the average return.

"Many investors [have a] correct but incomplete view that public market investing is a zero-sum game. While not all investors can earn above-average returns, the average return is far from predetermined. If investors consistently made terrible decisions, for instance by investing only in money-losing Internet companies, there might be just as many relative underperformers and outperformers as there are today, but the market return would be considerably lower."

The last word:

On top of these key lessons there were literally hundreds of excellent insights in to the best way to pursue the 9 strategies. I am sure this will not be the last book that we see from John Mihaljevic and I look forward to the next.

http://solothink.wordpress.com/?p=189



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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arty
post Posted: Sep 28 2014, 03:34 PM
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If anyone is interested, I'm offering Guppy's books and a few other introductions to various topics.
Better they find a new home than sit unused on my bookshelf. All in clean unscribbled condition.
  1. Catherine Davey "Contracts for Difference"
  2. Daryl Guppy "Chart Trading"
  3. Daryl Guppy "Bear Trading"
  4. Louise Bedford "The Secret of Candlestick Charting"
  5. Regina Meani "The Australian Investor's Guide to Charting"
  6. Ron Bennetts "The Australian Stockmarket - a guide for players, planners, and procrastinators"

    ... and ...
  7. Dr. Ravi Batra "The Great Depression of 1990" (written 1985)
Any reasonable offer considered; postage extra, Australia-wide approx. $7/single, $10-15 the lot
OR local pickup can be arranged. Please IM or email me.



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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
ross46
post Posted: Feb 16 2013, 11:35 PM
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Jim Rogers' latest book Street Smarts is a really great read. Lots of wisdom from a wonderful life.

 
nipper
post Posted: Feb 4 2013, 12:18 PM
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In Reply To: nipper's post @ Sep 24 2012, 09:59 PM

will try again

Books I Read in 2012, by Rudi Filapek-Vandyck, Editor FNArena

1.) Currency Trading for Dummies. Brian Dolan. Forex.com. 327 pages.

This book is in essence a self-help guide for aspiring traders, placed inside the context of global currency markets. Basic introductions about what makes FX crosses move up and down flow into themes such as "Developing a trading plan" and "Ten habits of successful currency traders". Author Dolan has two decades of market experience under his belt and the book presents itself as "your plain-English guide to currency trading". That's exactly what it is.

2.) Bulls, Bears & a Croupier who stopped gambling and made millions. Matthew Kidman. Wiley. 376 pages

Ever wondered how professional stock pickers view the share market? This book shares many an insight, including career mistakes Kidman made when on the job for Wilson Asset Management. Concrete examples make for a lively, recognisable context against the background of pre- and post-2007 experiences. Kidman writes a regular stockpickers column for Fairfax newspapers nowadays. One of the themes in his book is that individual investors can do better than the professionals given less restrictions, red tape and regulatory requirements. In my humble opinion, this is one of the better investment books around, if only because it talks "Australian stocks" against a very recognisable and knowledgeable background.

3.) Get Rich with Dividends: A proven system for earning double-digit returns. Marc Lichtenfeld. Agora. 200 pages.

I read a handful books on dividend strategies this past year and Marc Lichtenfeld's is probably the best and most practical one. Lichtenfeld is Associate Investment Director at the Oxford Club and leads a day-to-day investment fund that lives and dies by his dividend oriented investment strategies. This book largely confirms my own analyses and calculations from recent years. Nevertheless, it's good to have support from a professional at hand. Not for get-rich-quick trading oriented market participants, but if you are willing to let time do all the necessary work for your own financial benefit, Lichtenfeld's 10-11-12 system will prove a sure winner for you.

4.) The Quest: Energy, Security, and the Remaking of the Modern World. Daniel Yergin. Penguin Press. Circa 800 pages.

I don't even know where to start to describe the wealth in knowledge this book offers. Whether it be oil, electric cars or natural gas, you will become a mini-expert by simply reading this truly magnificent effort. Pulitzer Prize winning Yergin (for previous book The Prize) has an incredible eye for detail and facts and has managed to embed the emergence of China and India in this modern encyclopaedia for all matters energy. Recommended reading for lovers of modern history as well as for anyone who's interested in energy, but in particular crude oil.

5.) The Little Book of Behavioral Investing: How not to be your own worst enemy. James Montier. John Wiley and sons.129 pages.

James Montier once upon a time sat next to Albert Edwards at Societe Generale and both predicted the S&P500 was heading for 666. That was shortly after the share market peak in late 2007. Nowadays, Montier is part of the team at Canada's GMO that studies financial bubbles. You probably would have noticed: there are quite a few bubbles around, here and there. This book, on behavioral biases in all of us, is a very entertaining read. It's about bad choices and bad habits and how they destroy your investment returns. And not just yours. A must read for anyone with only the slightest interest in investing. Must have good sense of humor.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Sep 24 2012, 09:59 PM
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just finished Geoff Hiscock's new book, Earth Wars: The Battle for Global Resources, published by John Wiley & Sons, May 2012.

there is an extract in the Australian (Hiscock is a senior editor there:) http://www.theaustralian.com.au/business/m...f-1226373625804 .
QUOTE
Decline of West not inevitable in resources battle

If you listen to the global miners, they have absolutely no doubt that China is and will remain the defining market for energy and resources, and they make their 10, 20 and 100-year business plans accordingly. Some of the miners liken China's position now to North America's in the late 19th century, when the great surge of development began that took the United States to global pre-eminence for 100 years or more.

The demand and development momentum, the miners argue, has irrevocably moved from West to East, and the world must get used to that. North American entrepreneur Robert Friedland, the founder of Ivanhoe Mines and one of the intriguing and controversial characters of modern-day mining, goes further. In his view, Africa will be the next frontier of greatest promise, after China, India, Indonesia and resource-rich countries like Kazakhstan and Mongolia have provided the impetus for many millions of new middle-class consumers to emerge.

But equally there are plenty of economic forecasters who see no inevitability about the rise of China and the decline of the West.

Being the mother of all markets or having access to the fantastic resource potential of a Congo, Mozambique, Zambia or Liberia is not the same as being an Earth Wars winner. There are matters of technology, logistics, markets, skills and funds to resolve, plus the ever-present risk of cultural conflict, social breakdown and natural catastrophe. Institutional, legal and financial reforms within China are moribund.
The chapters are full of fact on major mining projects, and has a good geopolitical overlay; it is a good read - although amazing how much has changed in the last few weeks - just reading this while the iron ore price was falling out of bed induced some sort of schadenfreude.

A vastly different book on similar themes, but all 'warm and fuzzy' with much less data, was The Growth Map: Economic Opportunity in the BRICs and Beyond by Jim O'Neill 2011.



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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triage
post Posted: May 19 2012, 06:23 PM
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My currrent reading struggle is "Why Nations Fail" which is an investment / economics book of sorts for those who work from the "big pitcher" on down.

I've read a few efforts with similar goals to this one, including the work of Jared Diamond and more recently "Why the West Rules ... for now" by Ian Morris (who prescribes a "maps not chaps" theory of why some civilisations have done well and others not so much).

It has become apparent even to me that the authors of Why Nations Fail took a very narrow blinkered view of things, perhaps to make their arguments and conclusions appear stronger (?). For one, they ignored or dismissed the effects of access to energy - in that it was those civilisations that could harness the most energy that were able to develop the most. Also there seems little recognition in the book that changing weather and climate patterns were extremely influential on whether various civilisations could prosper or struggle.

Anyway Jared Diamond has put out a fairly detailed review of "Why Nations Fail". He gives it at best a qualifed thumbs-up.

http://www.nybooks.com/articles/archives/2...or-poor/?page=1

If you are in any way interested in this subject Tyler Cowen, of the blogsite Marginal Revolution, has undertaken to air any response to the Diamond review from the authors of Why Nations Fail, Daren Acemoglu and James Robinson.

http://marginalrevolution.com/marginalrevo...tions-fail.html



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
Elliott
post Posted: Mar 29 2012, 06:13 PM
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In Reply To: Elliott's post @ Mar 22 2012, 05:28 AM

I am sure you'll learn plenty from the book Carsha.

I hope you get even more from the service which I'm sure you will. Any queries you have don't hesitate to contact him. He is more than happy to discuss and answer any questions you may have.



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My posts are for discussion and educational value only. They are not to be construed as advice in any way.
 
Carsha
post Posted: Mar 29 2012, 03:43 PM
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In Reply To: Elliott's post @ Mar 22 2012, 05:28 AM

Just received my copy of Unholy Grail
Looking forward to a good read when time allows.
Planning on reading the book then signing up to Nicks service
to watch how he puts the strategy into action.

CS

 
 


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