Book Review

Most private investors have developed their own investment rules or prejudices, often at considerable cost. This book is a collection of rules from 24 professional investors, comprising short chapters from a mix of well and lesser-known fund managers in the UK, the US and Asia. It is a collection of maxims rather than a guide to investing.

Perhaps chiming with my own prejudices, I particularly liked the pieces by Sebastian Lyon and colleagues (?avoid highly geared companies?), William Bernstein (?if you want excitement, take up sky-diving?), John Bogle (?minimise the croupiers? take?), Bill Gross (?where are the customers? Gulfstreams?? i.e. keep costs low), Max King (encouragingly, ?don?t fight your prejudices? i.e. you need to be comfortable with your investments), First State Stewart (?emphasise quality at all times?) and Hugh Young and team (?companies are about [quality] people not assets?). Marc Faber (?invest where you have an edge?) is right to point out that some ?rules? are problematic ? ?buy when there is blood on the street? may prove not be sensible without the benefit of hindsight.

In his recent valedictory article in the weekend FT, John Lee (a successful private investor) advised those searching for a foolproof method of success in the stockmarket that ?it doesn?t exist?, and this is echoed by a number of the fund managers writing here. Despite this negative view, investors do need rules (but you could call them investment processes or disciplines) to navigate the wealth of choices and information they face, and the consistent success of some of the fund managers writing in this book demonstrate their worth. The book is an easy if somewhat eclectic read.