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The primary attraction of investment books isn't beautiful prose or a compelling plot. Our relationship with such titles is more transactional: We spend the time and money in hopes of learning something that will help make us better investors. While the literati hobnob at Politics and Prose bookstore, we pick up our new reads at the airport en route to a client meeting in Minneapolis.
The breathless publicity for David Ribenstein's "How to Invest: Masters on the Craft" promises that the book will "transform the way you approach the investing forever." Yet after reading Mr Ribenstein's interviews with some of the most brilliant and successful investors of our generation, I came away with few practical takeaways.
Mr Rubenstein, co-founder of the Carlyle Group, presses several of his interviewees for advice for individual investors. Venture legend Marc Andreessen tells readers to put their money in the S&P 500, while John Paulson, who made his money in shorting the mortgage market, believes the best investment most people can make is owning a home. Perhaps the most candid is the distinguished trader Stan Druckenmiller, who warns: "You really shouldn't be listening to anything I'd say in terms of short term because my view could change." To be clear, this is all excellent advice [which is a mass or uncountable noun], but none of it is particularly novel.
Ray Dalio's investment strategy involves taking ideas and converting then into "decision Rules," which he programs into a computer, tests and then combines with other ideas. But Mr Dalio, the founder of the hedge fund Bridgewater Associates, doesn't share his decision rules in his interview with Mr Rubenstein. Likewise, Jim Simons, whose quantitative Medallion fund has accrued one of the best track records in the business, doesn't share any of the codes for his magic algorithms. Mr Dalio tells us that independent thinking, humility, working well with others and resilience are the keys to success in hedge funds, Ray Dalio's investment strategy involves taking ideas and converting them into "decision Rules," which he programs into a computer, tests and then combines with other ideas. But Mr Dalio, the founder of the hedge fund Bridgewater Associates, doesn't share his decision rules in his interview with Mr Rubenstein. Likewise, Jim Simons, whose quantitative Medallion fund has accrued one o the vest track records in the business, doesn't share any of the codes for his magic algorisms. Mr Dalio tells us that independent thinking, humility, working well with others and resilience are the keys to success in hedge funds, while Mr Simons says that it's actually mathematics. common sense and good luck.
How do we reconcile the fantastic success that these investors have had with the banality of their advice? The infrastructure investor Adebayo Ogunlesi says the best guidance he ever received was from Henry Kravis: "No matter how smart you are, or how smart you think you are, there is really no substitute for experience in the investment business." If, as Mr Rubenstein suggests, investing is a craft, perhaps we should no more expect to become better investors by reading interviews with successful investors than we'd expect to become better basketball players by reading interviews with NBA stars.
The real-estate investor Sam Zell, in perhaps the most fascinating interview in the book, offers another perspective. Mr Rubenstein asked him how he would counsel someone who wanted to become next Sam Zell. "Sam Zell is a professional opportunist," he responds in the third person. "He's an entrepreneur. As an entrepreneur, he has a lot of self-confidence, justified or not I can't tell you, but he has a lot of self-confidence. Failure is not in his lexicon. Sometimes it doesn't work out, but it never fail."
Mr Rubenstein asks him if it was hard to ask big institutional investors for money, and he responds: "Perhaps it was no more difficult than it was for you * * * Both of us succeed with a combination of ego and humility. We succeed because we're able to adjust that ego and humility backward and forward to achieve our objectives." The great investors Mr Rubenstein interviews are, without exception, also great marketers, deliberatively balancing the need to appear confident in their strategies with the danger of coming across as arrogant.
Readers may come away with less than they'd hoped for in terms of practical advice in investing but with more than they might have expected in terms of biographical interest, and character studies. Some of his interviewees are famously reticent and press-shy, like Seth Klarman, while others, like Orlando Bravo, are stars within their industry but not widely known outside elite circles.
The world of elite investors is full of big personalities with fascinating backstories. Paula Polent, who is perhaps the best endowment manager of the 21st century, attended Yale School of Management after a stint at National Gallery of Art in Washington. At Yale, she met David Swensen, who managed the school's endowment. Mr Swensen became a mentor to her, and she later ended up managing Bowdoin's endowment. The value investor John W Rogers Jr refused to email or use a computer. His phone number is listed as John Rogers on East Delaware Street in Chicago, and he advises anyone who wishes to get in contact with him to call 411. The crypto investor Mike Novogratz says that his two passions outside of work are throwing parties and criminal justice reform.
Several times Mr Rubenstein notes that Carlyle, his own firm, relies on 100- to 200–page memos to justify each individual investment. Michael Moritz, who started his career as a journalist, is disdainful of such verbosity. "People tend to overcomplicate these things," Mr Moritz tell Mr Rubinstein. "We know that any financial prediction is going to be wrong, we just don;t know how wrong. So huge spreadsheets are useless and worthless." Mr Zell,, naturally, agrees. "I for sure didn't call for 100-page memos because, number one, I'd be suspect of anybody who could write a 100-page memo, and two, I'd be suspect of whether I could read it and not fall asleep."
Mr Rubenstein's book offers no trade secrets, no simple recipes for investing success. His interviews provide something else: insights into the biographies of those who have devoted themselves to the craft of investing and their reflections on on their own life experiences. Their descriptions of their investing approaches may be mostly marketing, and their theories on how they became successful mostly platitudes, but there is humor and wisdom in their personal stories and perspectives on their shared field.
Mr Rasmussen is the founding partner of the hedge fund Verdad Advisers.
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发表于 9-8-2022 14:12:21
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