Learning How to Invest From the Pros
Mr. Green does not choose sides. He merely shares the views of investors who say the secret to success is buying good companies at relatively cheap prices, as well as others who say it’s okay to pay a premium when a company has significant growth prospects.
In business today
April 8, 2021, 11:06 a.m. ET
But he’s hammering home certain lessons he’s heard from the people he’s interviewed:
Don’t get in your way. Don’t be emotional about your investments or chase fads.
If you don’t understand what a company does or an investment opportunity that is being offered to you, stay away.
Have enough cash on hand so you can weather the inevitable downturns without being forced to sell your inventory at a loss. And he writes, “To achieve resilience, it is imperative to reduce or eliminate debt, avoid leverage and avoid excessive spending.”
Throughout the book, he emphasizes the central premise that originality is overrated when investing. You don’t have to come up with your own approach. You can just copy ideas that have worked for others.
“The overall purpose of this book,” Green writes, “is to share what I would call ideas worth cloning.”
Meanwhile, Mr. Green points out lessons that can be applied to your personal life as well.
“Both in the markets and in life the point is not to take risks or avoid them, but rather to carry them intelligently without forgetting the possibility of an unpleasant outcome,” he writes. He later adds: “Nothing is more important than our ability to survive the most difficult times not only financially but also emotionally.”
As much as I like the book, I wish Mr. Green had done a few things differently.
Yes, these are successful men – and almost everyone mentioned in the book is male – but his appreciation for them can be a croak at times. Howard Marks of Oaktree Capital Management is described as the “philosopher-king of finance” and Joel Greenblatt, “a giant of the giants”, has “a beguiling manner and a warm smile”.