Friday, June 20, 2008

Reflections on my book reflections

This year, I’ve read a total of 28 books (excluding those that I didn’t read from cover to cover). After reading so many, I realized that those selections which interest me are getting lesser and lesser. I used to go to any library and grab a book – chances are that it’ll be interesting enough to carry on reading till the end. But as more of such books had been read by me, I have to be a little more selective.

I recently stopped reading two of Ken Fisher’s books that I borrowed - the most recent one being his famous “Three questions that count”. After reading the first chapter, I already felt bored by his philosophy. The singularity point comes when I did one-third of the book and I decided to stop taking the nonsense I’m reading. Don’t get me wrong, it’s not a bad book seriously, I think it’s just not for me. Some deeper level of conflicts between his ideas and mine prevented me from finishing his books. In a way, Ken Fisher already ‘predicted’ that as he mentioned that even if people are to read his books and predictions, they won’t believe in enough to act on it. Oh well.

These days I go by author. I love Pat Dorsey and Nassim Taleb. I’ll gladly devour any books written by them. I was wowed by Nassim Taleb’s Fooled by Randomness – a salad mix of philosophical, logical, mathematical and statistical story telling. I learned from these authors that stories stay when big ideas are forgotten – a very useful thing to remember in my line of work. Never tell facts – tell stories that wove the facts.

I’m already salivating over his new book – The Black Swan – which is sitting right here on my desk.

Another ‘genre’ of books that I like are those very old books with their ancient fonts and archaic sentence structure. The authors are irritatingly polite and have this circular kind of reasoning, which is all-so-common in that era. However, reading such books still give me a rustic kind of charm, which I liked very much. Don’t be mislead by their ancient-ness, the advice espoused are very much applicable in today’s new era. I suppose there are a few truisms when investing and those that can stand the test of time and hold strong in the face of the vicissitudes and whims of Mr.Market truly deserve to be called ‘truism’.

Am I now a more learned person because of the books I’ve read? It’s hard to say. From a personality test that I took in the past, I’m a fact curator – someone who collects facts and recalls them well. This brings me to another important point. Does reading make one stupid because the thinking had been done for you? Am I getting stupider yet thinking I’m smarter because I’m so educated and read so many books? If the latter is true, it’ll be the most ironic thing – to be intellectually trapped by books. I guess the balance point lies in being open minded.

And I’ve just shown myself to be close-minded by rejecting Ken Fisher’s book :)


Anonymous said...

I agree very much with your reflection of are we intellectually trapped by knowledge.

As a financial educator, i've met clients/professionals who recite the investment gospel: Stocks can give great returns in the long run.

My job is to remind them that it is only true if you choose the right companies/funds and at the right price.

I guess knowledge is like a double-edged sword, an incomplete mastery of it and you may hurt yourself. Yet, to boast understanding is close-mindedness, and putting ourselves vulnerable to new and workable investment ideas.

la papillion said...

Hi wisdom wealth,

Thks for visiting :)

There's a lot of truism in investing/trading that one needs to be wary of. Among the most comment one is the notion of high risk high returns and low risk low returns. If the returns are high, where is the risk? If the returns are low, then isn't it riskier? If one didn't think hard enough and believe the sales pitch of getting into a 'low risk' instrument and get conned by the low returns, it'll be disastrous.

What's a financial educator? :)

Anonymous said...

Thanks LP for the reply,

I'm just starting out an educational business which teaches financial literacy based on basic stock investing, unit trust selecton, CPF management and asset allocation.

This is mainly inspired by my mom's losses in the market recently, due to her lack of emotional control and knowledge.

I would disagree a little with your opinion of risk/return. It would be probalistically true that higher returns may translate into lower "risk" if proper research and selection is done.

However, for most starters, the desire for high returns without the requisite temperment and knowledge would lead to higher personal risk, esp if an emergency need kicks in, one needs to sell at a loss.

Anyways, kudos to your blog. I've really learned a lot from your postings, esp your flow of thoughts in company analysis. :)

la papillion said...

Hi wisdom wealth,

Oh, you misunderstood me. I meant that the fallacy of 'high risk high returns, low risk low returns' are quite widespread. To me, risk has nothing to do with the instrument - it has to do with oneself and how much one knows about the risks.

Thks for your kind comments, I'm still learning along the way :)

I'm very interested in what you're doing, perhaps if you're interested, you can drop me an email and perhaps we can work on this together?