Insights

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.

COVID-19: The CIDRAP Viewpoint
by Dr. Michael Osterholm

As the renowned epidemiologist Dr. Michael Osterholm recently noted, COVID-19 is the first pandemic to become the leading cause of death in the U.S. in just six weeks since the historic and horrific 1918 influenza. Our team took some time over the past month to read Dr. Osterholm’s book along with another on the 2014 Ebola outbreak and one more on the 1918 flu. Two of the authors, Dr. Osterholm and John M. Barry, teamed up with others to publish their current thinking regarding COVID-19. We came away with a deeper understanding of viruses in general and a broader appreciation of the range of potential economic outcomes in particular.

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The Great Influenza: The Story of the Deadliest Pandemic in History
by John M. Barry

In this read, the author recounts the deadliest pandemic in history with remarkable thoroughness and readability. This highly entertaining book details the history of American medicine and the tragic consequences of the common refrain… “this was influenza, only influenza.”

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Crisis in the Red Zone: The Story of the Deadliest Ebola Outbreak in History, and of the Outbreaks to Come
by Richard Preston

Picking up on John M. Barry’s “detective novel” non-fiction style, the author of this read expertly narrates the devastating 2014 Ebola outbreak in Western Africa.

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Deadliest Enemy: Our War Against Killer Germs
by Michael T. Osterholm

The author caps off a remarkable career in public health with a book that summarizes the most notable infectious diseases facing the world. This 2017 book reaches its maximum effect as it portrays a hypothetical future pandemic that nearly matches today’s COVID-19 headlines.

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Published first after the 2008 market rout, the book chronicles the diary of a Youngstown, OH middle-class attorney between 1931 and 1941. The leadership at River Road has recommended we keep a diary of events around this volatile time and this book sets a wonderful precedent for us to follow. Benjamin Roth recounts the margin-driven bubble and the Depression consequences from a middle-class professional’s point of view. He outlined the constant searching for signs of economic improvement and fears what the New Deal meant for a balanced budget and future inflation. It was his personal investigation into how to create, keep and grow wealth over a lifetime that was most illuminating. Maybe the original asset allocator, Mr. Roth learned the hazards of common stocks and real estate and the importance of government bonds and cash to maintain liquidity and practice value investing most effectively. This book highlights the value of personal reflection and commitment to continuous learning.

An entertaining introduction to the run-up of the 1920s stock market and the crash/depression that followed. The parallels with today are present, but almost certainly not predictive. The U.S. had enjoyed a 10-year bull market by 1929, a massive rise in leverage and share buybacks, and public support from leading academics (Professor Irving Fisher), industrialists (the first statement by John D. Rockefeller in decades), politicians and bankers. Investors then relied on “organized support” to keep stock prices elevated and their dreams alive, which first included the big operators like Durant, Raskob and Livermore and later the big banks like J.P. Morgan. The American entrepreneur and economist Roger Babson noted a crash was coming in September 1929 (the “Babson Break”), which began the wave of selling and the periodic rallies when investors (according to the New York Times) felt “secure in the knowledge that the most powerful banks in the country stood ready to prevent a recurrence of panic.” Unlike today, politicians, economists and bankers were then committed to a balanced budget, which meant higher taxes, less spending, and the gold standard limited the flexibility of the Federal Reserve’s monetary policy. A quick and easy read, this book may be perfect during this national lockdown.