Like many Americans, I’m taking some vacation time this August.
Of course, I’m bringing along some books to read. It’s about a semester’s worth of reading and I’ll never get through all of them, but you have to start somewhere at some time. This got me thinking about books that, while based on the title or the topic, don’t seem to be about investing but really are.
Usually, investors rightly concentrate on books that offer guidance in investment strategy, asset allocation, methods of business analysis or otherwise focus specifically on investing. What those books often leave out is the overall thought process of investing. Successful investing is more than data, ratios and balance sheet analysis. It is a frame of mind, a perspective, a psychology.
Of course, there are investment books that focus on this, usually, in the realm of behavioral economics such as Nobel Prize winner (economic sciences) Daniel Kahneman’s seminal work on this topic, Thinking, Fast and Slow. But there are other books, wholly unrelated or only briefly touching on investing that offer perhaps even more insights than some of the books on investing.
One book is from another Nobel Prize winner (physics) Surely You’re Joking, Mr. Feynman by Richard P. Feynman. It’s a wildly entertaining romp through his seemingly eccentric world, from his penchant for strip clubs, ability to crack seemingly uncrackable safes holding nuclear secrets to his other eclectic adventures. But at the end of it, the book is really about the importance of thinking objectively, independently and critically.
Sheena Iyengar’s The Art of Choosing explores why we make the choices we do. It includes her now famous jam study, outlining why too many choices can overwhelm us, leading us to make no choice at all. Through careful and rigorous analysis, Professor Iyengar details how we can train ourselves to make better choices by understanding the biases, internal and external, that cause us to make the decisions we do. The fact that Professor Iyengar is blind makes gives this an even more interesting take.
In The Checklist Manifesto: How to Get Things Right, bestselling author Dr. Atul Gawande applies his unique ability to be coolly analytical yet warmly human to studying why we make mistakes. His proposed methodology to correct this initially appears ridiculously simple—make a checklist. But exploring the discipline of creating an effective checklist to help us establish successful protocols is more complex, and ultimately more rewarding than we might realize.
In this new world of “big data,” investors spend a lot of time either looking at tables, charts and graphs or creating them. Edward R. Tufte’s The Visual Display of Quantitative Information is an approachable tour through 250 illustrations of a wide variety of graphic displays that guide us to think more thoroughly and critically about how to interpret the data we see. Or think we see. A picture may be worth a thousand words, but that doesn’t necessarily mean it’s telling either the whole or the right story.
If you were a kid like me growing up, you went nowhere in the summer without your baseball glove under your arm or hanging from the handlebars of your bike. There was always a game to be had somewhere and you wanted to be ready. I learned to keep score, mark the plays and track the all-important stats. As I got older, my interests shifted and my glove—which I still have, like many guys do—got moved to the back of the closet. So when Michael Lewis’s Moneyball: The Art of Winning an Unfair Gamecame out, it stirred those happy memories and I read it eagerly. The book is terrific if you like baseball, but it’s equally interesting to read about how Billy Beane, then general manager of the Oakland Athletics, drew from a field seemingly unrelated to sports, statistical analysis, and applied it to a game that heavily relied on gut instinct and tradition. He did it with remarkable success. The parallels to investing, which for all the data and statistics available, still often falls back to instinct and tradition, are clear. Plus the baseball story is a fun bonus.
Mentioning a bonus and a book about as far from business, numbers and investing as you might imagine, I immediately thought of Joseph Campbell’s Hero With A Thousand Faces. The book draws from stories of myths and legends of all cultures and geographies. Yet, consistently, common themes emerge regardless of place, people or time. The need to strike out on one’s own path, go through transformative growth, overcome challenges both internal and external, engage in a cycle of creation, destruction and recreation—you’ll quickly see how the journey of the hero closely parallels the stories of many businesses and business leaders. If you are trying to convey your business’s bigger picture, have a product or service you are selling, or are trying to launch a business, this is a guidebook to telling that story. It is a classic work offering a fresh and refreshing perspective you won’t find in an economics textbook.
So if its the beach or the mountains, bring one or five along. You’ll get to feel productive while relaxing.
Barnet Sherman. Portfolio Manager, Credit Analyst, Published Author, and Speaker has over 30 years of investment experience in the fixed income markets.