.06 What I'm Reading
Do you ever have one of those weeks where you feel like your brain is moving through a fog? Or mud? That was me last week. I just felt like I couldn’t get my brain moving, and everyday tasks took me forever to get through (or didn’t happen at all), which is why this post is coming to you on a Tuesday instead of a Friday.
Last week I read The Intelligent Investor by Benjamin Graham and listened to Think and Grow Rich by Napoleon Hill. One of these books I highly recommend. And one was so terrible, I feel like my brain lost a few IQ points from reading it. To find out which is which, keep reading.
Book: The Intelligent Investor: The definitive book on value investing, Benjamin Graham (old-fashion book and digital)
Background
Benjamin Graham (1894 – 1976) was born in London, England. He immigrated to America with his parents when he was just one year old. He attended Columbia University in New York and subsequently began working on Wall Street in 1914.
Graham gained considerable wealth until he lost it all in the 1929 crash. In 1934, Graham, along with David Dodd, published the seminal book Security Analysis, which details Graham’s methods for analyzing and valuing securities.
During and after the Great Depression, Graham worked to improve his investment techniques to minimize risk and maximize profit. Thus the concept of value investing was born.
In 1949, Graham published The Intelligent Investor, which details the concepts of value investing and how to know what kind of investor you are and thus what type of investing you should do based on your personality.
What I like
Okay, first, when Warren Buffet says that there is a book that completely details his investing philosophy, you read that book. For me, this book was not just a lesson in value investing, but a lesson in logic. If the study of logic has taught me anything it is that something can make logical sense, yet be so wrong from a common-sense perspective. (Anyone else study Aristotelian syllogistic in college? Bueller? Bueller?)
The Intelligent Investor also helped me think through the kind of investors that Jon and I are (or want to be). Up until now, we have always used Dave Ramsey’s suggestions for our 401K (we have diversified between growth, international, and index). And to be honest, it has worked well for us. But it has worked well in a market where we bought in really low (2008) and have rolled along into a cushy bull market — so of course, our returns look good. We would be the worst investors ever if our returns didn’t look good in this market.
The question Jon and I have been asking for the last couple of years is, “What will our portfolio look like in a bear market?” Jon and I are, with many thanks to Ramsey, buy and hold types. But I really couldn’t tell you our “why.” The Intelligent Investor explains the why in clear terms that I can actually regurgitate back (not that I didn’t have to take notes excessively to understand what I was reading).
However, this book took me one step further. I not only can regurgitate it back; I now know how to think critically about investments and feel confident that I know which investments I should buy and why.
Final Thoughts
I am pretty passionate about the idea that one should understand money. Money is a powerful resource, and too many of us misuse it through needless spending.
And don’t use the “they should have taught this to me in high school” excuse. They should. But you are a thinking adult with access to a library, Khan Academy, and Google. If you don’t understand your finances or investments (or haven’t started investing), you need to work to understand them now.
In fact, if you are living paycheck to paycheck (8 out of every 10 (78%) Americans are living to paycheck to paycheck, and that doesn’t change much for high-income earners), stop reading this blog (the next book was a bust anyway) and go buy or borrow The Total Money Makeover by Dave Ramsey and The Little Book of Common Sense Investing by John C. Bogle.
I recommend The Little Book of Common Sense Investing because it will set you up right away with something that will give you returns over the long-term with little needed research on your end (but you need to get out of debt first). Once you have read that and are at least investing in index funds, then read The Intelligent Investor to see if value investing is right for you.
You should read this book.
Book: Think and Grow Rich, Napoleon Hill (audio)
Background
Oliver Napoleon Hill (1883 – 1970) was born in a one-room cabin in Wise Country, Virginia. He authored several self-help books, which were all on the principles of success. Interestingly, many claimed that Hill was a fraud who lied about his associations with Andrew Carnegie (this is important because the entire book is based on a secret that Carnegie purportedly told him).
The premise of Think and Grow Rich is that (as Carnegie supposedly shared with Hill) if one wants wealth, they can easily get it, all they have to do is think hard about the wealth they desire and then figure out what they will give the universe in exchange for their wealth.
What I like
This was interesting to read after Breaking the Habit of Being Yourself by Dr. Joe Dispenza. It was fascinating to think about the impact of our thoughts, and there were several of Hill’s theories that would be seemingly be backed up by Dr. Dispenza’s findings.
This book also did inspire me to get back to goal setting. I have always been a very goal-oriented person but decided not to set concrete goals for 2019. My only goal for 2019 was to get mentally well, and now that I feel like I am well again, I feel inspired to get back at goal setting.
Final Thoughts
Overall, I did not like this book. I have a personal rule that I finish every book I start. If I didn’t have that rule, I would have quit listening to this book and would have been none-the-worse-off for it. The premise of the book doesn’t pan out. After all, Hill himself states very clearly one must find work that must be done to give in exchange for the riches they receive. Um, that sounds like you need to find a job to make money. How is that ground-breaking?
I couldn’t explain it at the time, but something about this book gave me the creeps. (This may have had something to do with his nightly “meetings” with Abraham Lincoln in 1937. Yes, Hill admits that he knows Lincoln is dead, but the meetings are so real that sometimes he can’t tell whether they are in his mind or actually happening.)
Then, when researching Hill’s biography for this blog post, I came across accusations that Hill never met Carnegie or any of the other famous people he claims to have influenced (like Presidents FDR and Wilson). I also found that he had associations with the Klan, a cult, and was notoriously unfaithful during each of his five marriages. This guy is a fraud.
In my opinion, skip this book.
Next week I am going to discuss The Little Book of Common Sense Investing, The Craving Mind, and The Language of Baklava.
And finally, don’t forget to tell me what you are reading in the comments!!