Insights

Written by a French priest and author in 1928, this book joined Dale Carnegie’s self-help books on the U.S. bestseller lists in the 1930s. Mr. Dinmet writes beautifully about the inevitable decline into conformity that most of us follow as we leave childhood and higher education. He instructs us to quit “thinking about thinking” and lays out methods to accomplish original and creative thought. With time and dedication, we can all hone the “art of thinking” and work towards becoming a better investor (and, perhaps, a better person).

The team thoroughly enjoyed October’s book, The Deficit Myth, and sought out opposing viewpoints to add context. It seems that Modern Monetary Theory (MMT) advocates are winning debates (bloomberg.com; tiered subscription) and the counter-arguments we’ve found either lack persuasive evidence or debate minor points surrounding MMT doctrine. The most coherent and compelling arguments against MMT stems from the budding crypto-currency asset class and community and, in particular, bitcoin.

Most ‘Bitcoin-ers’ would point to Abba Lerner’s (whose ‘functional finance’ in 1943 preceded MMT) conversation (varoufakis.files.wordpress.com) with John Maynard Keynes at a mid-1940s Fed seminar to illustrate the dangers of MMT…

Lerner: “Mr. Keynes, why don’t we forget all this business of fiscal policy, public debt, and all those things, and have some printing presses?”

Keynes: “It’s the art of statesmanship to tell lies but they must be plausible lies.”

From legendary hedgies like Stan Druckenmiller (forbes.com) and Paul Tudor Jones (lopp.net) to institutional investors like Blackrock (markets.businessinsider.com) and MassMutual (bloomberg.com; tiered subscription), and public corporations like Square (squareup.com) and MicroStrategy (cointelegraph.com), investing in bitcoin is losing its stigma and difficulty (barrons.com) in establishing an investment. The best introductory texts for enterprising bitcoin investors include Inventing Bitcoin and The Bitcoin Standard. We’ve found value in other books on bitcoin (here, here, and here) and a book for those interested in the #2 crypto-currency Ethereum.

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The River Road associates who read this book agree with Bill Gates; this was one of the best books we’ve ever read. We have read enough bull and bear stock arguments to understand that negative, critical bearish views typically sound “smarter.” Most of what we read about our economic outlook, our country, and our world is discouraging and relies on our ‘statistical obtuseness.’ It takes a special talent to present positive, optimistic data in a convincing package that leads to excitement for the future. The author traces the consistent improvements in global health, wealth, inequality, the environment, equal rights, and quality of life to the revolutionary thinkers that defined the Enlightenment in the late 18^th century and led to their most famous product, the Declaration of Independence. The book may be a well-timed read given the vaccine news of last week.

In case you’re looking for a book to follow Munger’s advice, “any year that passes in which you don’t destroy one of your best-loved ideas is a wasted year,” this may be the one for you. Given eight years since the inception of the 2% inflation target and a decade of unprecedented monetary policy, we have been amazed at the United States’ inability to consistently reach this achievable target. The author presents a compelling case that forced us to re-think basic assumptions about monetary sovereignty and the role of government in our financial system. The book explains in plain English how a more active fiscal policy could be helpful and eases our traditional concerns about “spending money we don’t have.” The book is timely as Modern Monetary Theory arguments increasingly seep into the broader economic discussion as the nation seeks policy tools to offset pandemic-induced economic weakness.

This book has the potential to make someone a better investor (and potentially lead a better life). Without a word on P/E ratios or Porter’s five forces, the author instead helps “control the urges that get other people into trouble in investing” (Warren Buffett). The book contains 34 stories that highlight the importance of stillness. From Tiger Woods’ comeback to President Kennedy during the Cuban Missile Crisis or Churchill during World War II, there are remarkable examples of individuals exhibiting calm amid unthinkable stress. It is when an investor can slow down, clear their calendars, and begin to think deeply when insights can emerge.

A fascinating and inspirational story on how two unemployed Rhode Island School of Design grads and their tech buddy transformed the lodging industry. From its beginnings in the depths of the financial crisis, to its seven million active listings today (compared with the 1.38 million rooms at the leading hotel company Marriott International), the author digs deep into how these three men complemented each other and persevered through multiple setbacks. Perhaps most important for investors is CEO Brian Chesky’s “pathological curiosity,” which led him to devour books and seek out role models like Warren Buffett (four-hour lunch in Omaha), Disney’s Bob Iger, and Tesla’s Elon Musk. The future remains bright for Airbnb given millennial values and attitudes towards experiences and accommodations.

If you’ve ever been tempted to buy a Russian stock, please read this book first. What looks to be a mouth-watering “value,” may be cheap for a reason. The author traces his profitable adventures running a hedge fund in the first half of the book and exposing corporate and governmental corruption in Russia. His successes eventually provoke the Russian government to respond, which leads to the author’s inability to enter Russia and, tragically, to an associate’s torture and death. The second half of the book details the author’s fight for justice and the eventual passage of the Magnitsky Act in the U.S., which blocked suspected Russian human rights abusers from entering the United States.  An entertaining read, though most value investors will probably find the author’s bumpy road to hedge fund success more interesting than the remainder of the book which documents his efforts to fight back against the Russians.

A modest and ethical man, T. Rowe Price Jr. would certainly be proud of the company that still bears his name. From coining the term “growth stock” in 1935, to launching his firm in 1937 and reaching the nation’s “best investor” status by the 1960s, the company now manages over $1 trillion and boasts a $27 billion market cap. Mr. Price’s approach seems commonplace today, but that’s because of his common sense approach to investing produced results that attracted followers. Mr. Price believed in doing fundamental research, focusing on companies that could double earnings in a decade, meeting with management, and then holding for 7-10+ years. All investors can benefit from learning Mr. Price’s history and investment philosophy.