Over the course of our investing lifetimes we will be bombarded with huge volumes of material, the majority of which won't be useful or even retained. In fact, despite all the sophisticated material available on security analysis, business, economics and finance etc. knowing it is no guarantee of success. Instead, when it comes to being a good investor I believe that the first and most important thing you have to know is yourself. These books may help you do that.
1) Hermann Hesse – Siddhartha
In this classic 1922 novel Hermann Hesse describes a man’s spiritual journey of self-discovery through ancient Nepal. In his quest to find enlightenment or Nirvana Siddhartha learns that a universal understanding of life cannot be achieved through teachers as it can’t be taught. Instead, by letting go of his external search he becomes more able to focus on his inner self and being at one with the universe. Beautifully written, the book suggests that to achieve our own version of fulfillment we should have faith in what we have within us rather than relying on the voices around us.
“Seeking nothing, emulating nothing, breathing gently, he moved in an atmosphere of imperishable calm, imperishable light, inviolable peace.”
2) Robin Sharma – The Monk Who Sold His Ferrari: A Fable About Fulfilling Your Dreams & Reaching Your Destiny
This inspirational book is structured around the stereotypical story of a high powered executive who has a heart attack which prompts him to re-evaluate his life, sell all his possessions and move to India in search of a more meaningful existence. Although this story is an unrealistic model for most of us, the author smartly provides 7 great virtues that the enlightened executive learns on his journey. These virtues include: 1) mastering your mind 2) following your purpose 3) practicing kaizen (continuous improvement) 4) living with discipline 5) respecting your time 6) selflessly serving others 7) embracing the present. Each of these virtues is well explained and with a little or in some cases a lot of effort, can be implemented in our own busy lives.
“Success on the outside means nothing unless you also have success within.”
3) Albert Camus – The Stranger
Often cited as an example of Albert Camus’s philosophy of the absurd and of existentialist ideas, this novel describes the before and after story of a French Algerian man who for no apparent reason commits murder. By following society’s attempt to rationalize and explain the killing which was simply an irrational event Camus tempts us to reconsider society’s tendency to think that individual lives, human existence and events always have a rational meaning and order. This is captured by the concept of the “absurd” which relates to humanity’s futile attempt to find rational order where none exists. Instead of depressing us, once we realize that some events simply have no rational meaning, we should instead be able to achieve a certain level of intellectual and spiritual liberation.
“Everything is true, and nothing is true!”
4) Robert Green – 48 Laws of Power
If realists had a book or worship, this would be it. Meticulously researched yet controversial, the book traces the lives of many of the world’s most powerful and influential individuals (with power being defined as “the ability to get people to do what you want them to do”) and suggests that their trajectories have been shaped by the observance of 48 universal laws. For example; Law 3: Conceal your intentions, Law 11: Learn to keep people dependent upon you, Law 35: Master the art of timing etc. Although this book attempts to lay waste to the old adage that good things happen to good people, it is worth reading for anyone interested in improving their strategic intuitions.
“Everyone has a weakness, a gap in the castle wall. That weakness is usually an insecurity, an uncontrollable emotion or need; it can be a small secret pleasure. Either way, once found, it is a thumbscrew you can turn to your advantage.”
5) Daniel Kahneman – Thinking Fast and Slow
In this thought-provoking book, Noble Peace Prize winner Daniel Kahneman takes on the still poorly understood topic of the human mind. He asks us to critically examine the way we think and suggests that our minds regularly contradict themselves, distort reality and mislead us. Essentially, our minds apply two very different systems of thought to any question at hand. The first is a simple and reactive system which reads emotion and handles automatic skills. The second is used when the mind must focus on specific details such as numbers and methodical thinking. Of particular interest is the author’s suggestion that our minds naturally seek causes in random events and push us to distort reality by realigning memories to correspond to new information. With this in mind, the economic theory that human action is guided by reason begins to fall apart yet the upside is that Kahneman offers us insight into how we can teach ourselves to effectively avoid such pitfalls and thus “think better”.
“We are confident when the story we tell ourselves comes easily to mind, with no competing scenario. But ease and coherence do not guarantee that a belief held with confidence is true.”
6) Aristotle - The Basic Works of Aristotle (Edited by Richard McKeon)
Although an exceptionally difficult book to get through as the prose is dense and often quite dry, this book is a must read for those intent on getting a taste of some of the ideas that continue to shape Western thought, religion and science. Aristotle’s ideas about “reversion to the mean” are quite useful as they explain that whenever we observe something abnormal or exceptional there will in time be a return to the norm unless conditions change. In fact, his body of knowledge is so impressive that if this great polymath were still alive today, it would not be preposterous to think that perhaps cancer would be cured, global warming was solved and we all could live in peace.
“It is the mark of an educated mind to be able to entertain a thought without accepting it.”
7) Sun Tzu – The Art of War
Although written with armed combat in mind, this realist classic offers many lessons that are applicable to confrontations we face in our daily lives whether with superiors, inferiors, friends or enemies. Its teachings are also useful when a team must be effectively built in order to achieve a desired outcome. In addition, its constant emphasis on the theme of deception is quite relevant as keeping an enemy guessing and uneasy can pay large dividends in a wide variety of non-physical situations. The idea here is to win battles without ever actually having to pull your sword out of its sheath.
“All warfare is based on deception.”
8) Carl Von Clausewitz – On War
Unlike the more tactical account of war by Sun Tzu, Von Clausewitz book takes a more philosophical look at the subject and expands on the “strategic” aspects of war. Of note are his discussions on the nature of a “military genius” (involving certain key character traits beyond intelligence such as decisiveness and courage) and “friction” (the difference between the ideal performance of a fighting force and their actual performance in real world scenarios).
“It is even better to act quickly and err than to hesitate until the time of action is past.”
9) Bertrand Russell – Skeptical Essays
British philosopher Bertrand Russell’s life story alone is worth considering as his life has been dedicated to advancing knowledge and defending noble values such as pacifism and freedom of thought. In these essays his crystal clear writing suggests that we should cultivate a form of measured skepticism that implores us to revise even our most confirmed beliefs irrespective of the authority upon which they rest.
“The opinions that are held with passion are always those for which no good ground exists; indeed the passion is the measure of the holders lack of rational conviction. Opinions in politics and religion are almost always held passionately.”
10) Richard Feynman – “What do you care what other people think?”
To be a great investor, and maybe even a solid person, four simple but not easy virtues are integral: discipline, skepticism, independence and patience. In this book Nobel Prize Winning physicist Richard Feynman illustrates these virtues by describing his career and the position he often occupied outside the “established” way of thinking.
“It is our responsibility as scientists, knowing the great progress which comes from a satisfactory philosophy of ignorance, the great progress which is the fruit of freedom of thought, to proclaim the value of this freedom; to teach how doubt is not to be feared but welcomed and discussed.”
Have you read any of these? What are your favourite non-finance books that have made an impact on you? I’d love to hear your thoughts in the comments or send me an inbox message.
