With the year coming to a close, it’s time for my annual tradition of gathering my favorite investment writing from the finance community. I read some incredible pieces in 2017, and even more in 2018, with this year being no exception.
While you may consider me a finance writer, I pride myself on being one of the biggest finance readers. I get so much enjoyment from reading other peoples’ work and wishing I had come up with some of these amazing ideas myself. With that being said, I hope you enjoy my favorite investment writing of 2019:
Every year I start with a Morgan Housel post simply because every year he produces work that is so high quality. I particularly liked this piece because of how well it highlights three major trends shaping our world today. What are they? Read the piece and find out for yourself!
This was Ben Carlson’s most popular post on his blog (A Wealth of Common Sense) in all of 2019 and for good reason. When Michael Burry sounded the alarm on index funds, Ben calmly countered this narrative and cooled the hysteria. If you still think passive investing is a bubble, you need to read this.
Sometimes the best investment writing has a great story or underlying point, but, sometimes, it just astounds you. Michael does an incredible job in this short and sweet post where the numbers speak for themselves.
Every year Corey Hoffstein blows my mind with something he writes about, and, for 2019, this is it. In this piece, Corey illustrates that when you rebalance can affect your performance by 1%-4% annually. This means that, unless two funds with a similar style rebalance at the same time, you won’t be able to easily distinguish their alpha from their timing luck.
If you have ever wondered how banks really make money, Ryan hits the nail on the head. This piece is clever, personal, and has all the trappings of a great investment article.
A tour de force from Josh on valuations and what they might mean for the future of markets and equity returns. Josh doesn’t write as much as he did in years prior, but when he does, you should listen. This is one of those pieces.
If you want an example of clear, concise investment writing, this is it. I like this piece because it emphasizes and re-emphasizes a singular point with thorough research and incredible visualizations. Even if you don’t agree with the point (i.e. why to invest in international stocks), everyone can learn from this.
The best piece I have ever read on confirmation bias. Bob dunks on Flat Earthers and it’s just so fun to read.
I love Dan’s writing because of how consistently he challenges mainstream financial beliefs. In this collaboration, Dan and Haonan Li do an extensive review of the data to answer the question: Do MBAs make better CEOs?
- The Earnings Mirage: Why Corporate Profits are Overstated and What it Means for Investors (Jesse Livermore, pseudonym)
This is a long and technical piece, and, to be honest, I did not fully understand everything in it. However, I know of few writers who can dig into the details and mechanics of investing like Jesse does. If you want to learn how to do a deep dive on an investment topic, this is the ultimate example.
It is rare for me to find a new investment blogger that profoundly changes my view on a topic, but Breaking the Market is one such writer. This piece arguing that the momentum factor is just disguised randomness is excellent, and I recommend you read their other work as well.
At first glance, this post might not seem like it is related to investing, but it is. Though Zweig never discusses a single ticker or asset class, his examination of his own behavioral is something investors should take note of. In this piece, Zweig teaches us that one of the best ways to avoid our biases is to admit that we have them in the first place.
Great idea, great execution, and a super unexpected result. I decided to amend my list because it is that good.
My Favorite Books I Read in 2019
Of the 46 books I read this year, here are the six I liked the most:
- Alchemy: The Dark Art and Curious Science of Creating Magic in Brands, Business, and Life (Rory Sutherland)
As someone who makes arguments based on data, Rory Sutherland did an excellent job showing me how data alone can lead us astray. Thoroughly entertaining, thought-provoking, and informative, this was one of the easiest reads I had this year.
- Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street (Sheelah Kolhatkar)
The best finance book I read in 2019, hands down. From the in-depth research to the storyline that read like a thriller, I found myself in awe of just how good this work was. If you ever wanted to know more about insider trading, hedge funds, and Steven Cohen, then this is the book for you.
- The Ends of the World: Volcanic Apocalypses, Lethal Oceans, and Our Quest to Understand Earth’s Past Mass Extinctions (Peter Brannen)
The premier work on the five mass extinctions events in Earth’s history and what our current climate says about a possible 6th extinction event. The science in this book is off the charts while also being incredibly relatable. For example, this quote about the asteroid that killed the dinosaurs says it all:
What they mean is a rock larger than Mount Everest hit planet Earth traveling twenty times faster than a bullet. This is so fast that it would have traversed the distance from cruising altitude of a 747 to the ground in 0.3 seconds. The asteroid itself was so large that, even at the moment of impact, the top of it might have still towered more than a mile above the cruising altitude of a 747. In its nearly instantaneous descent, it compressed the air below it so violently that it briefly became several times hotter than the surface of the sun.
Don’t miss out on this one.
- The Human Network: How Your Social Network Determines Your Power, Beliefs, and Behaviors (Matt Jackson)
As the saying goes, “It’s not what you know, but who you know.” This work explains why by taking a deep dive into the mathematics and logic of networks. For example, it explains why most peoples’ friends have more friends than them on average and why the strength of your network is a better predictor of success than the strength of your talents, in some cases. While the book can be technical at times, I think it is definitely worth the read.
- The Red Queen: Sex and the Evolution of Human Nature (Matt Ridley)
Many people know the theory of natural selection and how animals evolve to fit their environment, but far fewer know the theory of sexual selection and how animals evolve to compete with each other. The Red Queen takes a look at the theory of sexual selection and explains why adapting to face others may have been more important in our evolutionary history than the adaptation against the elements. While this book isn’t about finance, the conclusions are extremely applicable. If you want a more thorough understanding of biology, ecology, and how they apply to non-biological systems, read this.
- Happy Money: The Science of Happier Spending (Elizabeth Dunn & Michael Norton)
Short and sweet, this book probably has the most practical takeaways of any on this list. If you have ever wondered what is the best way to spend money in order to maximize happiness, this is the book for you. While I had heard of some of these tactics before (i.e. buy experiences over things), there were lots of other useful tips that should be known more widely.
I hope you liked my annual review. Enjoy the holidays, travel safe in the coming weeks, and thank you for reading!
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This is post 154. 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.*
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