Rolling down investor lane.
As I started my journey down ‘investor lane’, I quickly realized that intelligent allocation of capital would be critical to every business decision I make in the future… simultaneously realizing that it’s always been in important skill that I’ve just done by gut, or luck… but in either case I would be far better off if I began to study…
I started with “The Outsiders, Eight Unconventional CEOs” by William Thorndike Jr, showing that there are plenty, if not many, insanely successful CEOs that aren’t covered by the business or tech press, but have achieved phenomenal returns not with tech innovation (ie Elon) or organizational management prowess (ie Welch), but rather the often forgetten art of wise ‘capital allocation’. These are operators, they’ve not recieved that #investor tag (that I’d like avoid honestly), but leaders of companies. And, they are essentially winning by being an investor, who is constantly analyzing opportunties, in OR outside of her company, for the greatest return.
I moved through the Berkshire Hathaway Annual Letters which Warren Buffett penned, starting in 1964 all the way through last year. It was a fantastic business narrative learning about key industries like insurance, retail, and well, insurance. It also serves as a set of lessons to investors and business leaders alike in topics like executive compensation, board room dynamics, setting strategy, managing risk, the list is endless and can be read in a well organized fashion by topic in ‘‘The Essays of Warren Buffett” by Lawrence A Cunningham. But you can also get them free on the God awful website: http://berkshirehathaway.com/
And, in an effort not to bore or turn this into a book report, I then got into:
- Principles, by Ray Dalio
- The Dhando Investor, by Mohnish Prabrai
- The Little Book That Builds Wealth, by Pat Dorsey
- The Most Important Thing, by Howard Marks
They all have gems, and I consider this short list and a few more which I’ve yet to open, a very well curated list of books to aid an intelligent investor to be. As I continue my learnings — forever — I’ll likely update here more on the books I’ve enjoyed and a few lessons that stood out to me.
So, in that vain, I’ll end here with a quick lessoned that will stick with me probably forever from The Dhandho Investor. In very short, Dhandho is the concept that high risk, and high reward do not have a dependent relationship. In fact, low or managed risk, and high or very high reward can absolutely go together. The key is the curation of opportunities you jump on (hint: not many) and the process you use measure those opportunies. I strongly encourage you to read it.
Also, a quick note. I’ve embraced limited to no editing of this post. I believe I’ll get more thoughts shared if I keep the delivery simple. I’ll shoot for about this length, and about this level of editing in the future 😉