It’s going to be 2020 in a few days, so I hope everyone has their new year resolutions ready.
For me personally, one of my big resolutions in 2020 is to read more books. Remember all those sayings about how CEOs read one book a week and how Warren Buffet reads 500 pages a day? Well, I tried to read more books in 2019, and I must say the effects have been nothing short of amazing.
Basics: Why Read Books?
It’s really hard to describe why reading is so helpful. For me, I find that it helps focus my mind, and exposes me to alternative ideas I wouldn’t otherwise have access to.
It genuinely, genuinely helps, so I recommend those of you who haven’t, to consider reading as one of your top resolutions in 2020.
And to make it even easier for you, I’m going to shortlist 8 must read investment books for Singapore investors in 2020.
In this list, I’ve only recommended books that I’ve read personally, so you can rest assured of their quality.
How to Buy Books?
How to buy investment books? Well there are a whole bunch of illegal ways to get books online these days, but I won’t be sharing them here. The best legitimate way for me is to buy them off Book Depository – (BookDepository.com).
They ship to Singapore for no additional cost (usually 1 week shipping), and the prices are fantastically low (much lower than anything I’ve found in Singapore).
If you only read one book from this list, it should be this.
Ray Dalio’s Template for understanding Big Debt Crises is undisputedly the best economics textbook out there today for any investor. It analyses the past 500 years of history, and picks out notable macroeconomic crises (Great depression, Weimar Republic, Great Financial Crisis – 2008) to learn from this.
Read this, and you won’t regret it. The lessons you learn will stay will you for life, and serve as a framework to understand how global monetary events play out in the longer term.
And best of all, the book is available for download completely free from Ray’s website – https://www.principles.com/big-debt-crises/. Of course if you want a hard copy you can check out book depository.
When I first started investing, I thought that knowing how to read a financial statement was the be all and end all to investing. Oh how wrong I was.
The way I see it these days, knowing accounting and how to read a financial statement is the pre-requisite to investing.
It’s kinda like playing a game of Monopoly. Knowing how to read the financial statement teaches you how to read the score sheet.
Without reading the score sheet, there’s really no way you can play the game.
But does it teach you how to play the game? Not really.
If you’re coming from no accounting/finance background, this book (Stephen H. Penman – Financial Statement Analysis and Security Valuation-McGraw Hill (2013)) works as a good primer.
And once you’re more advanced, there’s no better text than Valuations by McKinsey. It’s a practitioner level book, so it contains everything you need to know about valuations and more. But again, don’t fool yourself into think that valuations is all you need. This is but a pre-requisite.
There’s this quote by Churchill – “Those who ignore the lessons of history, are doomed to repeat it”.
Investing has taught me the importance of history – Human nature is universal. And human nature has not changed much after 5000 years of human history.
Everything that has happened in recent years, and that will happen in future, has played out in some form in the past. Sure, the context may be different, and the technologies may be different, but that’s just the setting. If this were a play, then the setting, the actors, and the story will change. But the way the actors react each time, that’s universal.
Paul Kennedy’s The Rise and Fall of the Great Powers traces the past 500 years of human history, including the rise and fall of the great powers, and sets out one key lesson – the country who has the most economic power, and who can channel that power into military strength, usually almost always comes out on top.
Once you’ve read Paul Kennedy’s The Rise and Fall of the Great Power, don’t miss Graham Allison: Destined for War : can America and China escape Thucydides’ Trap. It talks about the Thucydides trap, the phenomenon of how a rising power challenging the status quo usually results in a hot war. Or as Thucydides himself put it “it was the rise of Athens, and the fear this sparks in Sparta, that made war inevitable.”
Fast forward 2500 years, and we’re seeing the same sequence of events play out with China and the US.
Make no mistake, the rise of China, and its interaction with the global world order, will define the 21st century.
Understanding how this typically plays out historically, gives you a great framework to understanding how the next 50 years will play out.
For a deeper dive in Chinese psychology, do also check out The Columbia guide to modern Chinese history, which is fantastic guide to Chinese modern history (opium war onwards) contained in all of 100 pages.
As Lee Kuan Yew once remarked, “China is not just any great power, it is the greatest power in the history of the world”.
If you’re living on this world in the 21st century, you absolutely need to understand China.
Stephen Schwarzman’s autobiography on how he built Blackstone from a 2 man start-up into the powerhouse it is today might just be the best book of 2019 for me.
Sure there’s a bit of exaggeration here and there, but if you look past that, it’s really a story of incredible vision, flawless execution, and a lot of grit.
Which is something we can all learn from. Oh and he does share some nuggets of investing advice here and there too.
Peter Thiel’s zero to one is a must-read for any technology investor.
Technology investing these days requires a different mindset. You can’t use your traditional P/E P/B metrics on tech companies and expect them to succeed. It requires a more holistic assessment of the company’s competitive advantage and business model, and how that will play out over time. It also requires you to think from the mindset of a founder.
Peter Thiel’s book is a fantastic crash course for this.
Quants, and algorithmic trading is becoming a huge part of the markets today. As an investor in the market these days, you need to understand what motivates your opponents, and how they think.
Unfortunately there’s just not that much information on Quant based trading out there today. The Man who Solved the Market is a rare one. It follows the story of Jim Simons, a distinguished mathematician who quit academia to found Renaissance Technologies. It was hard going in the initial years, but he eventually succeeded in using mathematics to generate fantastic returns.
It’s written slightly in a fiction format, which is not ideal, but there’s really just not that much information on quant out there today, which is why this book makes the list. For me at least, this was an eye-opener.
And finally, the Financial Horse Course. I took everything I knew about investing, and compressed it into a 10-hour course (much more if you read all the extra materials).
If you want to shortcut your investing journey, there’s no better place to start. In fact, I genuinely think it’s the best course available to Singapore investors out there today.
We’re doing a limited Christmas Promotion from now until 31st December with $100 off the course (usual price $349), so don’t forget to sign up if you’re keen.
Only a few more days to end of the Xmas Promo for the FH Course – Complete Guide to Investing for Singapore Investors! $100 off the course price until 31 December!
Satya Nadella’s Hit Refresh is a great take on how he turned Microsoft from backstabbing firm into the tech juggernaut it is today. Satya Nadella was crowned the FT person of the year 2019, and I think he deserves it.
This book explores his journey from an Indian schoolkid in love with cricket into the man he is today. Along the way, it shares some fantastic insights into what a good company should or should not be like. If you apply the lessons here to understanding which other companies are about to go through a Microsoft-like transformation, there’s a lot of money to be made.
Any other great books I missed? Share your comments below!
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