Book Review : A Zebra in Lion Country

The Book ‘A Zebra in Lion Country’ is written by Ralph Wanger who used to manage the Acorn Fund.

Ralph used to specialize in small cap investing and the book captures his experience and wisdom in the investing field.

This Book has a cult following amongst investors and its not hard to see why.

The title of the Book’s comes from the author’s comparison of fund managers to zebras. Both move in herds.The Zebra who is outside of the herd gets the freshest grass, but when the lions approach he is likely to be eaten first. The inside zebras may not eat well but they remain alive.

This explains why fund managers prefer playing it safe rather than investing in stocks that give outsized gains but carry risks as well, including career risk.

The author makes a case for investing in small cap stocks-they are easily understandable, the owners are accessible, they can grow more and are under-researched.

He also makes a good case of his investing philosophy -GARP-Growth at a Resonable Price.I believe GARP was a concept introduced by the first time in this Book.

One aspect of his investing style which I found very interesting was his concept of themes.He would identify a theme (or mega trend) that will play out in the coming years and would buy a basket of stocks in that theme.

With hindsight bias,such an approach could have yielded handsome dividends in the  Indian chemicals space when China clamped down on it’s own polluting industries.

Another interesting insight was that instead of investing in technology companies, invest in companies which can benefit from the technology. Our private banks come to mind here.

Another insight was that don’t invest in companies whose competitors are run by geniuses/ferocious folks. 

Written in a breezy humorous style,this book was published in 1997 around 20 years back.But yet, it still feels fresh and insightful

Just goes to show that nothing changes in the markets….the players change, the stocks change but human emotions of greed,fear,despair and hope remain the same.

I would strongly recommend this Book for those interested in the markets especially small cap investing. 

 

Book Review: Kaalkoot

The Book ‘Kaalkoot-The Lost Himalayan Secret’ is written by S Venkatesh and it is his debut novel.

The author is a friend of mine and hence I may be biased while writing this review.

The Book belongs to the genre of fiction books that are popular now – thrillers with a dose of mythology.

The story line has many twists and turns and makes for a light breezy read.

Do Buy this Book if interested in some time-pass reading.

Book Review : Mastering the Market Cycle

The Book ‘Mastering the Market Cycle’ is written by well known market guru Howard Marks

I am a huge fan of Howard Marks and his memos and I enjoyed reading his previous book ‘The Most Important Thing’

In this Book, Howard Marks talks about market cycles and how one should understand/profit from them.

He has coined a phrase to describe the forces at work:

“There are three ingredients for success-aggressiveness,timing and skill-and if you have enough aggressiveness at the right time, you don’t need that much skill”

So successfully positioning of a portfolio depends on what you do (turn aggressive/defensive) and when you do (depending on the stage of the market cycle)

The Book covers the regularity of cycles, the economic cycle, the cycle in profits, the credit cycle, the real estate cycle, investor psychology, the cycle of success etc

In the Indian context, I have found the one big difference between experienced and rookie investors is the ability to understand cycles and therefore to book profits.The rookie investor assumes the good times will last forever and doesn’t exit on time.

The Book mentions that 80% of understanding market cycles comes from 14 words : “What the wise man does at the beginning, the fool does in the end”

Buffett has reduced the essence of market cycles to just 9 words:

“First the innovator, then the imitator, then the idiot”

 I would recommend this Book to those wanting to understand market cycles.

Book Review: Masterclass with Super Investors

The Book ‘Master Class with Super Investors’ is written by Vishal Mittal & Saurabh Basrar  who run an investment firm called Altais Advisors .

Vishal is my friend and junior from IIFT,New Delhi and hence I may be biased in writing this Book Review.

Similiar to Jack Schwager and his legendary Market Wizard series, the authors have interviewed some of the best investors in the country and attempted to find out what made them tick.

The list of investors is found below here :

Each investor explains his investor journey in detail and walks thru his successes and misses.

What I find amazing is the amount of wealth they have been able to build despite humble beginnings.

One thing that struck me was that each investor, to paraphrase Frank Sinatra, “did it my way”

So you have investors who pay lots of attention to meeting managements to those who believe meeting management is waste of time.

Some of the investors are voracious readers-reading 2 books a week !- while some have not read a book in their life !

Some started their journey as stock brokers whereas many others didn’t

I found the anecdotes of the various investors on their big successes -Ramesh Damani on Infosys,CMC etc. Raamdeo Agrawal on Hero Honda, Govind Parikh on South Companies etc super interesting .

The authors do an excellent job on asking the investors their opinions on these  often overlooked aspects of investing:

-On position sizing

-On portfolio construction

-On when to increase/decrease a position

-On selling

-On using leverage

-On using technical indicators even for fundamental investing

-On using F&O

-On asset allocation- many also ploughed profits into real estate

While each investor had different experiences and different styles of investing, there was one common feature amongst all of them- they all are super bullish on India and believe the next 30 years will create more wealth than the last 30.

I would strongly recommend this Book for those interested in the Indian Stock Markets.

Book Review: The Art of Execution

The Book ‘The Art of Execution’ is written by Lee Freeman-Shor who is a Manager running a fund which allocates capital to different investors with instructions to invest only in their best ideas.

As such, the author had the opportunity to examine 1,866 investments made by 45 of the leading investors of UK and the book is the outcome of this study.

Two interesting observations of this study:

1.Only 49% of the very best investment ideas made money

2. Some of these legendary investors were successful only 30% of the time

So how can a top investor make money if he is wrong most of the time?The answer lies in “execution, execution, execution”

As George Soros famously said “It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much money you lose when you’re wrong.”

The key finding of the Book is that making lots of money or not losing pots of money comes down to the actions you take after you have invested in an idea and find yourself winning/losing.

The First Part of the Book deals with losing and the Second Part deals with winning.

One of my biggest grouses about investment literature is that not enough is written on selling. This Book does a great job of filling that gap.

The author does a fantastic job of walking through various thought processes when a stock price is going down and why people get “frozen” into their positions leading to permanent loss of capital.

The are lots of case studies from the UK stock market and that add lots of colour and practicality.

I would strongly recommend this Book to all investors.