Insights

For those investors following Glencore’s attempted hostile takeover of Teck Resources and who want to learn more about the history of the industry, we highly recommend this book. The authors trace these “swashbucklers of global capitalism” back to the beginning and Marc Rich’s start at Philip Brothers in 1954. Fast forward 40 years and Marc Rich + Co. (for a deeper look at Mr. Rich and how he essentially created the spot market for oil in the 1970s, we also enjoyed The King of Oil) becomes Glencore in 1994 and mints at least seven billionaires through its 2011 IPO (less than half of the 14+ billionaires inside privately held Cargill). It is a fascinating look at this small, secretive group of ambitious traders that seek out inefficiencies in the global commodity markets for profit.

Morgan Housel, the author, is a well-known writer for a reason. He is clear, logical, and easy to read. This book offers up, in the form of many short stories, how behavior and not intellectual capacity is often a better predictor of financial success or failure. He makes the case that finance is too much like physics and not enough like psychology. Warren Buffett’s quote comes to mind, “If you have a 150 IQ, sell 30 points to someone else.” As it relates to an investment process, he emphasizes the importance of commitment and margin of safety. An enjoyable book.

According to the author, only two ‘stock pickers’ had ever made the Forbes 400 list: Warren Buffett and Shelby Davis. The book traces Davis’ unusual career beginning as a freelance writer, then GOP campaign advisor, and then the head of the New York State Insurance Department. Practicing Peter Lynch’s ‘invest in what you know’ style of investing, Davis eventually quit his job to focus exclusively on investing in insurance companies. He bought insurance companies around the world with leverage and passed down his passion for stocks to his son and grandsons. The Davis family went on to manage billions, and Shelby Davis’ grandson Chris still manages the New York Venture Fund today. The book is an enjoyable look at a focused, successful investor’s journey through both good and bad economic environments and markets.

We had heard many positive things about this book (more than 68,000 reviews on Amazon!), so we decided to move it to the top of our always growing ‘to-read’ book pile. Don’t start this book with any looming deadlines; you will likely have a hard time putting it down, and it’s a very thorough book. Although the book is massive in scope, covering early human history through today, with insights ranging from philosophy to capitalism, we found important takeaways for the growth and maintenance of an investment firm. The emergence of language more than 30,000 years ago likely led to the success of the Homo sapien versus the more imposing Neanderthal as it promoted social cooperation in extremely flexible ways. We think the best, at least those with the most promising future, asset management firms are those that can rally around a core set of principles and philosophy during both the good and the inevitable bad times.

Founder of the $55 B, United Kingdom-based global hedge fund partnership, Marshall Wace, the author has written a valuable guidebook to successful investing. The book is small and can be read in one sitting, but impressive in its reach. The author writes in a clear and concise manner and easily transitions between philosophical musings to market inefficiencies and the importance of humility and risk management. We think most investors will enjoy and gain from this book.

This book, which reproduces the manager’s Global Investment Review publications, belongs on every serious value investor’s shelf. The manager, Marathon Asset Management founded in 1986 and based in London, relies on ‘capital cycle’ analysis, which argues that high returns tend to attract capital and low returns repel it. The authors urge investors to closely monitor the amount of capital entering or exiting a particular industry as a guide to future potential returns. They back up their common-sense logic and investment framework with strong academic support and clear examples. We believe value investors, especially those that consider cyclical companies, will benefit from reading this book.

We enjoyed The Great Crash 1929 so much in 2020 that we decided to read Galbraith’s other famous work, The Affluent Society. Professor Galbraith makes the ‘dull science’ anything but with his mastery of history and insightful recommendations. He traces the economics profession back to the ‘founding trinity’ of economics through Adam Smith, David Ricardo, and Thomas Malthus and clearly describes the evolution of social Darwinism on one hand and the more active Keynesian view on the other. He predicts modern monetary theory decades before it emerged in national discussion (our review) and the notion of a basic income to help solve economics’ key issues including production, inequality, and economic security. The book should help any investor think more deeply and clearly as to the role of a productive economy for an affluent society.

A book praised from economic commentators ranging from Paul Krugman to Lacy Hunt is bound to be thought provoking. Written by a Northwestern economics professor, this massive book sometimes reads like an economics textbook, but it is worth the time investment. He zeroes in on the “special century” of 1870 – 1970 as unique to human history, as so many of its achievements could happen only once – from the railroad, steamship, and telegraph to electricity, gas, telephone, water and sewer utilities to x-rays, antibiotics, and cancer treatments. Since 1970, advances have typically centered around entertainment, communication, and information technology, and excluding the period between 1996 and 2004, U.S. productivity has steadily declined. The book concludes that the future growth of the U.S. standard of living is not promising.