Link to the book >>> https://www.amazon.com/Richer-Wiser-Happier-Greatest-Investors/dp/1501164856
If you are an investment nerd, or addicted to finance ‘porn’, this book is definitely for you.
Finance reporter William Green interviews and tries to break down the thoughts and strategies of famous investors like Monish Prabai, Joel Greenblatt, John Templeton, Nick Sleep and Zakaria, Tom Gayner, and of course, the OG - Charlie Munger.
In this book, you will be treated to compounding numbers, profits, and investing anecdotes that will make your brain go…
You will read about
How Monish Prabai cloned Warren Buffet’s investing style, in his refreshingly candid and brusque words
The weird and unique quirks of John Templeton
The difficulties of applying Joel Greenblatt’s magic formula
The law of small compounding applied not just to money but to health and life, with Tom Gayner of Markel
Heck, this book is worth buying just to read the story of Nick Sleep and Zakaria…
Without spoiling it for you, the story has the early frustrations of all the BS in the finance world, the making of a serendipitous partnership, Graham-style cigar butt investing, and finally transitioning to buying at fair prices and holding for the super long term…
Spoiler alert:
The end results 900%+ returns in about 13 years. The good guys win!
Here are some takeaways and quotable quotes for you to print out and paste in your work room:
“Humans have something weird in their DNA which prohibits them from adopting good ideas easily,” says Pabrai. “What I learned a long time back is, keep observing the world inside and outside your industry, and when you see someone doing something smart, force yourself to adopt it.” - Monish Prabai
“Hang out with people who are better than you and you cannot help but improve.” Pabrai acts on this advice to a degree that would horrify many people. “When I meet someone for the first time, I evaluate them afterwards and say, ‘Will it make me better or worse to have a relationship with this person?’” If the answer is worse, he says, “I’ll cut him out.” - Monish Prabai
“Once you have a sense that life is meaningless, what should you do? Not fuck up life for other people. Leave the planet a better place than you found it. Do a good job with your kids. The rest of it is a game. It doesn’t matter.” - Monish Prabai
“Most people get led astray by emotions in investing. They get led astray by being excessively careless and optimistic when they have big profits, and by getting excessively pessimistic and too cautious when they have big losses.” - John Templeton
He noted in one of his earliest memos that the average annual return for stocks from 1926 to 1987 was 9.44 percent, but “if you had gone to cash and missed the best 50 of those 744 months, you have would have missed all of the return. This tells me that attempts at market timing are a source of risk, not protection.” - from John Templeton
“Nomad’s appetite for reasonable businesses selling at unreasonably low prices made sense, given the opportunities available at the time. But this strategy had one drawback. When stocks like these rebounded and were no longer that cheap, they had to sell them and hunt for new bargains. But what if nothing particularly attractive was on sale when they sought to redeploy those winnings? An obvious solution to this reinvestment risk was to buy and hold higher-quality businesses that were more likely to continue compounding for many years.” From the chapter on Nick Sleep and Zakariah
“It’s all about deferred gratification,” says Sleep. “When you look at all the mistakes you make in life, private and professional, it’s almost always because you reached for some short-term fix or some short-term high. . . . And that’s the overwhelming habit of people in the stock market.” - Nick Sleep
What Gayner’s record shows is that you don’t need to be extreme to achieve exceptional long-term results. On the contrary, he says, “People get themselves into trouble with extremes.” - Tom Gayner
That means adopting “a mindset of falsification,” always striving to “disprove” your hypothesis, and seeing “if it stands up to the assault.” One of Shubin Stein’s favorite questions is, “Why might I be wrong?” - Shubin Stein
Asked about China, he marvels at its economic transformation, but laments that too many Chinese “like to gamble, and they actually believe in luck. Now, that is stupid. What you don’t want to believe in is luck. You want to believe in odds.” - Charlie Munger
*There are a lot of other great Charlie Munger quotes as well, but I won’t reveal them in this post.
However, nothing will prepare you for the story of the last investor…
A tale of overcoming all odds, childhood trauma, angst … and finally redemption.
All I can say is the moment I finished the last page, I was so in awe, that when my Kindle prompted me to rate the book…
I gave it 5 stars without hesitation.
Enjoy!