Outside of Twitter and my email list, I rarely discuss other writers’ work on Of Dollars And Data. However, without these individuals I wouldn’t be even half as good of an investment writer as I am today. Reading the work of others is the most helpful way to learn about investing and it can also improve your writing. So, where credit is due, my favorite investment pieces of 2017:
Morgan always writes great stuff, but this post is so good that it completely changed the way I write. I’d actually argue it’s a little too good, because Morgan gave away one of his secrets. I won’t tell you what the secret is, but I will say this: good writers imitate, great writers steal from Morgan Housel.
If you are unconvinced of the value that an active manager can provide, this is the post to read. Corey does an incredible job of explaining the behavioral reasons why certain active strategies can outperform in the long run.
Well researched. Incredible charts. This is primetime Batnick. It is also probably the best summary of the Bessembinder paper, which made a splash in the finance community earlier this year. Looking forward to Michael’s book in 2018.
This guy doesn’t post often, but when he does, I listen. This one completely changed how I view rising equity valuations and future expected returns. Seeing higher P/Es might me justified merely because it is easier and cheaper to invest with less risk (i.e. more diversification) than in previous decades. I can’t say with certainty this is correct, but it makes a lot of sense to me.
They say an image is worth a thousand words, and Ben uses that to his advantage in this post better than anyone. His writing is simple, yet profound. I know few writers that can say so much by saying so little.
Always funny, entertaining, and informative, this piece is no exception. Josh probably knows every trick in the finance industry and he regularly exposes them all. Mad props for leading the way in integrity. Josh sets an example for the rest of us.
Never forget the master. Jason Zweig has been writing about investing longer than anyone on this list and he always delivers. This post is particularly insightful because of the history of the main character (Karl G. Karsten) who called into question forecasting and discovered smart beta before either were a thing.
My Favorite Books I Read in 2017
I read 45 books in 2017 which is 15 books short of what the average CEO reads, so now you know why I’m not a CEO. Either way, here are my 10 favorites (in no particular order):
- Deep Survival: Who Lives, Who Dies, and Why (Laurence Gonzales)
This book inspired one of my most popular posts of 2017 and covers the physical and psychological aspects of survival in a unique way. Gonzales focuses on accidents and how to mentally survive incredibly difficult situations. If you are interested in adventure, perseverance, or psychology, then this book is for you.
- Sapiens: A Brief History of Humankind (Yuval Noah Harari)
Sapiens takes a deep dive into truly understanding humans and how they live and organize themselves. One of his main arguments is how humans use stories to define themselves and the world around them. Harari’s unique perspective on these issues presents insightful research that is also entertaining.
- Dr. Tatiana’s Sex Advice to All Creation: The Definitive Guide to the Evolutionary Biology of Sex (Olivia Judson)
How do animals have sex? It’s not as simple as the birds and the bees. In this book, Olivia Judson digs into the many and varied reproductive strategies that have evolved in species across the globe. From spiders performing bondage to slime molds with over 500 different sexes, this book will open your eyes to the driving force behind life itself. If you need more convincing, Meb Faber said it was one of his favorite books.
Howard Marks, cofounder of Oaktree Capital, is known for his annual letters that educate and inspire. In The Most Important Thing, Marks summarizes the many tenets of his investment philosophy into one simple work. I enjoyed the book because it was so profound and entertaining at the same time. Just consider this story Marks used to explain how worst case scenario projections may not be negative enough:
I tell my father’s story of the gambler who lost regularly. One day he hears about a race with only one horse in it, so he bet the rent money. Halfway around the track, the horse jumped over the fence and ran away.
I still think the jury is out on a lot of nutrition science because the problem is so difficult, but Nina Teicholz does an incredible job showcasing the scientific evidence for including more fat in the diet. In fact, the book is quite boring at times because of how many studies Tiecholz is able to cite in support of her argument. Seriously, Tiechnolz cites study after study after study on saturated fat consumption, and the weight of the evidence (no pun intended) is impressive. So, if you are still convinced that bacon and butter are bad for you, read this book.
- How We Got to Now: Six Innovations That Made the Modern World (Steven Johnson)
Glass, cold, sound, clean, time, and light. Six things that we all take for granted, but all have intriguing histories. Steven Johnson does a wonderful job of telling the narratives behind a handful of the life changing technologies we use on a daily basis. One funny story that stuck with me was how wrong many inventors were about how their inventions would ultimately be used. Ironically, Alexander Graham Bell thought the telephone would be used to listen to music, while Thomas Edison thought the phonograph would be used to communicate via recorded audio.
- Against the Gods: The Remarkable Story of Risk (Peter L. Bernstein)
Peter Bernstein maybe one of the best investment thinkers of all time, and Against the Gods has no shortage of his brilliance. I wrote an entire post based on Bernstein’s work and highly recommend the book if you want a more in-depth view of risk and its history in human society.
- Antifragile: Things That Gain From Disorder (Nassim Nicholas Taleb)
This book changed the way I viewed my future career and other life decisions. Taleb’s premise is that you should follow life strategies that make you antifragile. In other words, find ways to follow strategies with infrequent, large non-linear gains and small linear losses. Careers that include blogging/writing are of this nature as the costs are small, but the upside can be massive. If you want to discover how antifragility might be able to help you, read this book.
I love Jocko Willink’s ability to inspire others to put in the work and get things done. His Twitter/Instagram feed consists of his daily 4:30 AM wakeup and workout routines. This book is on theme and does not disappoint. I still am the top review for this book on Amazon if you want to get my full thoughts. Either way, I will leave you with a quote from the book that I hope speaks to you as it did for me:
We are defeated one tiny, seemingly insignificant surrender at a time that chips away at who we should really be. It isn’t that you wake up one day and decide that’s it: I am going to be weak. No. It is a slow incremental process. It chips away at our will-it chips away at our discipline.
- The Bell Curve: Intelligence and Class Structure in American Life (Charles Murray & Richard J. Hernstein)
Last, but not least, this book brings up a lot of controversial issues on intelligence and its increasing importance in modern society. Many people throw this book out because of its discussion of race. Personally, I don’t find the race and intelligence ideas that interesting. The more important question to me is: as careers evolve to require ever higher amounts of intellectual ability, what will happen to those individuals that don’t have such intellectual gifts? What should we do (if anything) to give those with unequal ability a fair shot in a world where they are genetically disadvantaged? If these questions interest you, then look past the controversy and read this book.
I hope you found something useful in this list. Enjoy the rest of your holidays and I will see you all in 2018! Thank you for reading.
This is post 52. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data
Where to Invest $10,000 Right Now
Investors face a dilemma. The global pandemic has completely disrupted markets. and finding promising investments is harder than ever. Bloomberg asked experts where they’d invest right now and they overwhelmingly recommended alternatives like art.
After all, the ultra-wealthy have placed their bets on art for centuries. From Rockefellers to Bezos and Gates — all actively collect art.
There are a few main reasons why 1.) Contemporary art prices have appreciated 14% annually on average (1995-2020) 2.) The total wealth held in art is projected to increase another 51% by 2026 3.) It has the lowest correlation to public equities of any major asset class, according to Citi.
Thanks to Masterworks you can invest in art (Banksy, Monet, Basquiat) without needing millions. I’ve personally invested in five different pieces on Masterworks, and plan to allocate more. Of Dollars and Data Readers skip their waitlist so you can begin investing in art today.*
(Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers click here.)