A book review

This is an updated compendium of investing rules from over 60 mainly UK and US professional investors. With so many contributors, many of the “rules” naturally contradict each other – for example, stockpickers’ recommendations of running concentrated and directly-invested portfolios (to avoid “diworsification”) conflicting with the index trackers counselling the use of ETFs and diversification (John Bogle’s advice here: “Buy the haystack”).

I particularly liked the contributions from Frank Armstrong, a former US fighter pilot “investing from the cockpit”, Anthony Bolton, Robbie (“Naked Trader”) Burns, Tobias Carlisle, Lawrence Cunningham (a pithy two pages on Warren Buffett’s investing rules), Scott Faron’s Stock Picking 101, Tren Griffin on Charlie Munger’s investing rules, Robin Griffiths on technical analysis, the great John Lee and Nick Train. And there are many more besides.

It’s tempting to try to divine some “super rules” from all the advice. For me, these revolve around having a flow of ideas, running winners, cutting losses, avoiding falling knives, using checklists, patience, that quality matters, and that great opportunities are rare, so you need to be prepared to wait for that “fat pitch” and then exploit it aggressively. And (as my own resolution for 2018) writing down why you liked and bought the investment in the first place.

Whilst the book is now overlong, the best of the contributions are thought-provoking and will help the reader reflect on their own investment style. Most contributions are of five to ten pages, so it’s an easy book to dip into.