I was pleased to see that Morgan Housel of Collaborative Fund included a couple of investing books within his “23 Books That Changed My Life” (May 12, 2017) that I happened to have on my shelf. John Train’s Famous Financial Fiascos is one of them. I serendipitously found several Train books at the Friends of S.F. public library’s massive annual sale years ago as a recent grad going through the obligatory investment learning cycle (e.g. books by the Gardner brothers, founders of The Motley Fool — Housel was previously with MF — progressing to Train and Benjamin Graham — I found Security Analysis and The Intelligent Investor waiting for me at the same book sale, and thankfully had the latter to lean on before taking the plunge on the former). I have written about Train a few times over the years.
In my last post I talked about how I enjoy reading and like to read as much non-finance material as possible. I have since finished the critique of John Muir’s writing that was published by I assume the now late Univ. of Wisconsin professor Herbert Smith (published in 1965). The following passage by Muir (from John of the Mountains; shared by Smith late in his review) may be applicable today as much as it must have been in his time ~100 years ago. Perhaps this is especially important to keep in mind during bull markets:
No sane man in the hands of nature can doubt the doubleness of his life. Soul and body receive separate nourishment and separate exercise, and speedily reach a stage of development wherein each is easily known apart from the other. Living artificially, we seldom see much of our real selves. Our torpid souls are hopelessly entangled with our torpid bodies, and not only is there a confused mingling of our own souls with our own bodies, but we hardly possess a separate existence from our neighbors.
Emphasis added. Muir ends this thought by describing his favored means of independence.
The life of a mountaineer seems to be particularly favorable to the development of soul-life, as well as limb-life, each receiving abundance of exercise and abundance of food.
Previously: John Muir: Speaking of the Herd
Outside of work and preparing for the quarterly Uguisu Value newsletter (among plenty of other things going on!) I spend a fair amount of personal time reading. A number of wonderful books for value investors have been published in recent years — most notably I’m thinking of The Manual of Ideas and The Education of a Value Investor. In addition to reading investing books and annual reports, I like to mix in as much non-investing material as I can.
Recently I began reading a critical review of the famous environmental preservationist John Muir’s (1838-1914) writing. Not long after arriving in California, around the age of 30, Muir worked for a short while as a shepherd. He made the following observation about sheep (quote below). I’m sure there are not a few individual investors that end up in this situation with the vicissitudes of “the market” (or as we value investors prefer, “Mr. Market”). Muir’s depiction also reminds me of some of the institutional and HNWI investors that I pitched regarding a small-cap Japan activist fund. Recapitulating the investment merits of profitable companies trading at substantial discounts to tangible assets, to so-called sophisticated investors … while being grilled about macroeconomic risks and the very company-specific characteristics (smaller capitalization, obscurity, etc.) that make value investing attractive. Go figure.
Even sheep that have strayed from the flock huddle timidly and silently, basely human in their actions. Afraid of their freedom, not knowing what to do with it, and seeming glad to get back into their old familiar bondage.
It is worth mentioning that in fact Muir was fond of wild sheep.
Nostalgic for California this past winter, it was fun to see Muir’s name appear in Hampton Sides’ In the Kingdom of Ice. Put that book on your reading list. A character in Sides’ story is a Melville. The joys of being a value investor and not stuck watching stock quotes.
I followed the herd and read Business Adventures (by the late John Brooks, originally published in 1969) over the summer like many others did after learning the book was Bill Gates’ favorite all-time business book (even better, it came recommended to him from none other than Warren Buffett). I previously posted some of my favorite quotes and notes from the excellent first chapter that covers the May 1962 crash, a flash crash of sorts of the time. Reading that post before or after my summary thoughts about Business Adventures that follow below is worth your time.
In John Train’s The Midas Touch (Amazon; recent post), published in 1987, he describes Warren Buffett as 85% influenced by Benjamin Graham and 15% by Philip Fisher. After re-reading Fisher’s Common Stocks and Uncommon Profits and typing up 15+ pages of notes to substitute for a future re-read, I am convinced that Buffett is much closer to 85%-Fisher and 15%-Graham, and he was arguably already leaning more Fisher-like than Graham when Train began writing about him. Put Common Stocks on your reading list and consider a re-read if it’s already on your shelf. Continue reading