The 1973 book by Benjamin Graham, The Intelligent Investor, is, probably, the only investing book that is needed to get to the root of the issue at hand. I consider it to hold the "first principles" of investing and have been lugging around the same dog-eared version since college. Like all good books, Graham begins with a definition of the topic at hand.
As I have observed the extreme volume of flows of capital into and out of the stock market over the last few years, I first thought about writing a post about market timing and why dollar cost averaging beats trying to time the market. However, what began as a post about market timing changed to this post on historical asset returns, which I believe more accurately frames the question.
The following text comes from the Appendix to the 1983 Berkshire Hathaway Annual Letter. While I was led to this text in search of a discussion on the difference between economic and accounting Goodwill, I stumbled upon an interesting discussion of, possibly, a different way to think about investing during inflationary times.
Ever since I was young, I've loved to read. My reading has broadened over time, and sometimes I have 3-4 books that I'm working on at the same time. I liken myself to a cow munching on grass all day. There are downsides to this.
I really enjoyed my interview with Trey Lockerbie at The Investor's Podcast Network. We covered the Buffett partnership fee structure and Graham-style net-nets and "deep value" investing. You can check out the interview here:
I really enjoyed my interview with Edwin Dorsey at Sunday's Idea Brunch. We covered my opinion on what matters in deep value investing, what its like being a lawyer and an investor, and what my investing process looks like. You can check out the interview here: https://ideabrunch.substack.com/p/idea-brunch-with-zachary-oliva-of?s=w
I love reading investors' partnership letters. I prefer to read old partnership letters of investors who have lasted a long time in the game - at least 30 years - to watch how their thought process and styles have developed. I think its also a neat history lesson - for example, by reading the partnership letters of Berkshire Hathaway in the years leading up to the tech bubble in 2000 or the recession in 2008. Here are my thoughts on Warren Buffett's letter to his partners in 1957.
Walter Schloss was an amazing investor. He averaged a 16% total return after fees over five decades versus 10% for the S&P500 over the same time period. If you invested $100,000 today, a 16% average annual return would grow to $167 Million over those five decades, while a 10% average annual return would grow to just $11.7 Million during the same time frame. Therein lies the power of compounding and performing just a bit higher than the market average over a long period of time.
Walter ran his business (eventually with his son, Edwin Schloss) with no analysts, no secretary and no technology - just a paper copy of Value Line and a telephone. His annual costs were less than $10,000. A former employee of Benjamin Graham, this was a man who truly loved buying cheap stocks. A link to The Walter Schloss Archive, including his writings and lectures can be found here. The simplicity of his strategy is likely attributable to the market-beating returns that he produced over his lifetime. He left many gifts for investors, including the following list of 16 factors needed to make money in the stock market.
In his book Four Thousand Weeks, Oliver Burkeman, a reformed productivity journalist, dives deep into many of the productivity traps and mindsets of what I'll term as "beginning stage high performers." I've posted some of the best takeaways that I got from the book, but I wanted to write a separate post on the topic of what Burkeman calls "Cosmic Insignificance" both as a reminder to myself and to really drive the point home.
I stumbled across the book Four Thousand Weeks: Time and How to Use It by Oliver Burkeman, a self-proclaimed 'reformed productivity guru' and I'm glad that I did. At first, I was a bit worried that it was yet another book on productivity systems. I've learned that I'm a sequential, systems thinker and so it can frankly be a bit dangerous for me to learn about productivity systems as they tend to hijack my current processes (I think it's called "shiny new thing" syndrome). However, I found this book to be quite enlightening and in line with my thinking on how to dance on the edge of being the "ultimate productive person" vs. "enjoying life." I've come to terms with the fact that on the day that I die, there will be unfinished items on my to-do list and I laugh when I think about a younger me staying up late and working weekends trying to get everything done. Instead, I've shifted my focus to working on the things that matter to me and enjoying the ride.
Zachary Oliva is the: