books to make you a better investor

Books to make you a better Investor

By Cameron Fen

Investments Books

Value Investing from Graham to Buffet

• A good book that lists the basics of value investing

• Also talks about famous investors

• The two value investment workshops next week is based on this book

• Greenwald also teaches a class for Columbia on the internet

The Manual of Ideas by John Mihaljevic

• Good for beginners and advanced investors

• Teaches 9 different strategies for finding value stocks ranging from cigar butt style investor to following well known investors

You can be a Stock Market Genius: (Even if You're Not Too Smart!)…

…Uncover the Secret Hiding Places of Stock Market Profits by Joel Greenblatt

• Joel Greenblatt averaged a 50% annual growth rate of capital over the 10 years that he ran his fund

• He teaches you the basics of investing especially special situation investing

• Teaches you how to find information on spinoff, bankruptcies, rights offerings, and equity stubs

Margin of Safety by Seth Klarman

Margin of Safety by Seth Klarman

!!!!!!!!!!!!!

Margin of Safety by Seth Klarman

• Never Fear! Copies are available on pdf– If you can’t find one on the internet ask me I have

a version• A good primer into value investing• Klarman emphasizes finding

undervalued/cheap stocks trading significantly below intrinsic value

• Stocks may be unloved and hairy

One Up on Wall Street by Peter Lynch

• Mainly a growth investing book

• Talks about how to use the knowledge you know as a consumer on the stock market

The L’eggs Story

• Peter Lynch, heard through his wife that Hanes was selling pantyhose in drugstores through the L’eggs brand

• Based on this information and a little bit of research, women go to the drugstore once a week, but they go to departments stores once every six weeks Lynch decided to buy

• Company was a “ten bagger”

Peter Lynch on Fundamental Research

• “I remember buying -- I bought 48 different pairs [of No Nonsense, the competitor to L’eggs] at the supermarket, colors, shapes, and sizes…I said, ‘Try this out and come back and see what's the story with No Nonsense.’ And people came back to me in a couple weeks and said, ‘It's not as good.’ That’s what fundamental research is.”

Business Books

Innovator's Dilemma by Clayton Christensen

• Explains why large companies are susceptible to disruptive innovation and often become insignificant

Q: How many McDonalds are there in the US

Let’s use a measuring trick!

• How many McDonalds are in your neighborhood?

• How many people are in your neighborhood?• How many people are in the US?• Micky D’s = ((McDonalds in Neighborhood) ÷

(People in Neighborhood)) * (People are in US)

• Now what is your estimate?

14,157 McDonalds in the US

How to Measure Anything by Douglas Hubbard

• The measuring trick came from this book

• One of the most useful sections deals with 90% confidence interval calibrations

Double Your Profits in Six Months or Less by Bob Fifer

• 3G PE hands out this book to all employees

• Advocates draconian cost cuts to all facets of business

• Merit pay for employees

Our next books tells the story, among others, of why a former stockbroker built a fiber-optic line

from Chicago to New York?

Our next books tells the story, among others, of why a former stockbroker built a fiber-optic line

from Chicago to New York?

Even worse, the line cut right through mountains and towns

when it would have been easier to go around them?

Flash Boys by Michael Lewis

• Read this book and you’ll learn all about that fiber optic wire

• This book talks about high frequency trading and the band of nerds that rallied together to stop high frequency traders

Buy-ology by Martin Lindstrom

• Marketing book that talks about the benefits of using Neuroscience

• He uses brain scans and MRI’s to determine what we like and don’t like

Psychology and other

Think Twice by Michael Mauboussin

• This book also deals with psychological biases but relates them more concretely to investments

What kills more people Homicides or Suicides?

According to the CDC, in 2011, there were 12,996 homicides and…

According to the CDC, in 2011, there were 16,238 homicides and

39,518 deaths by suicide

Availability Bias

• People assume homicides kill more people because it is in the news more often

• However just because we hear about something more often doesn’t make it more likely but our brains think it is more likely

Thinking Fast and Slow by Daniel Kahneman

• If you like learning about the availability bias and other biases that can effect you as an investor or a person read this book

Fooling Some of the People All the Time by David Einhorn

• Fun Fact: David Einhorn is a better writer than you!

• If you think moving money around makes for boring reading you haven’t read this book

The Big Short by Michael Lewis

• A book on the financial crisis

• Talks about the investors who saw it coming

• Michael Lewis is also a better writer than you but you knew that already

The Black Swan by Nassim Taleb

• Written right before the financial crisis

• Talks about the impact of tail events (low probability events)

Fun Fact From the Black Swan

A function with a fat enough tails can have an average that does not

exist

Liar’s Poker by Michael Lewis

• A fun book about the excesses at a financial institution

• You won’t learn much about investing (except something about a few famous finance folks) but you will laugh out loud

But Cameron, you say, I don’t have time to read these books!

Quit your whining! I have a solution.

Listen to books on tape

• You probably spend an hour a day walking, driving, or taking the train to places• Use that time to read• Get books on tape

Audible.com

• If you are okay with paying $15 a month for books get audible

• First month is free

Audible.com Pro-Tip

You can return as many books as you want in a month, so even if

you only have the 1 book a month plan, you can actually listen to as

many books as you want

Mr. Cheapo’s solution

• If $15 is too much to pay I recommend doing this

• Search the web for free pdf versions of the book and download

• Use a text to speech program like Spesoft to turn the pdf into a mp3 file

Potential Problems

• Spesoft reads the natural line breaks in books, like that one, as pauses

• In order to get rid of line breaks, save the file as a plain text file (you may have to get Adobe Acrobat for that) and then copy over to Spesoft

• I can also give you code that I wrote to get rid of line breaks (except for paragraphs), but you will need to install Java