The NAOS team have compiled a list of their best reads this year, with a short review...Enjoy!
Rob Miller, NAOS Portfolio Manager: ' Michael Lewis, the author known for penning The Big Short, Moneyball, Blindside & Liars Poker writes this story as a recount of his time spent with Jim Clark. Jim Clark might be best known in Australia for his Sydney to Hobart maxi yacht Comanche and husband of Australian Kristy Hinze however he was one of the most influential characters behind the birth and growth of the Silicon Valley movement.
During the 1980s and 1990s he founded three separate ‘billion dollar businesses’ and competed with Microsoft at every juncture. First it was Silicon Graphics, a supercomputer maker. Second was Netscape – the original internet browser. Finally it was Healtheon – an internet based health information database.
Clark was anti establishment in his approach. He hated venture capitalists and corporate America. Despite dreaming up ideas which others valued at close to infinity, Clark was more focused on his boat and the power of computers to change the world. The New New Thing provides an interesting view into the birth of internet companies and a lesson learnt in how ‘market hype’ can be contagious and all conquering.'
A Man for all Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market by Edward Thorp
Chadd Knights, NAOS Associate Analyst: "From acdemia to card counter, to being one of the first successful quants with an envious investment track record, Thrope is a remarkable person who has lived a very interesting life. Not many people become experts is various fields but Thorpe has done just that. The book details his earlier life, along with his Las Vegas stint and some more recent thoughts on financial markets, successful investments, ETFs, hedge funds, life and so on. This is a light read but is very enjoyable. It does lack the analytical rgiour some might expect from such a guy but this is not a negative per se."
Rob Miller, NAOS Portfolio Manager: "When I read this book it reminded me of the saying ‘if it’s too good to be true it normally is’. An autobiography about the story of Bill Browder and Hermitage Capital. What starts out as a book about a start-up hedge fund investing in a post-soviet era in Russia twists into Bill Browder becoming Vladimir Putin’s number 1 enemy and ends in a global human rights movement. A story that defies belief."
Chadd Knights, NAOS Associate Analyst: "The book is about understanding human behaviour, it is interesting because given the complex world we live in, with more information than we can ever comprehend, humans use 'shortcuts' to make decisions. The book studies those 'shortcuts' and explains how they work, why it happens and how one can use the information advantageously."
Rob Miller, NAOS Portfolio Manager: "The Everything Store outlines in great detail the early life of Amazon founder Jeff Bezos, the humble formation, trials and tribulations of the goliath that is now Amazon. It is very topical given the amount of headlines Amazon is grabbing here in Australia. It provides valuable lessons on the Amazon culture as well as the strategy, vision and drive of Jeff Bezos. The Everything Store helps to give an understanding of how and why Amazon does what it does. What may seem irrational and unlikely will make sense a whole lot more sense after reading this book."
Rob Miller, NAOS Portfolio Manager: "What started with a small loan from his father to create a distributor of Japanese sneakers out of the back of a car transformed into one of the largest, most recognisable and most liked companies in the world; Nike.
Shoe Dog is the fascinating memoirs of Nike told first hand by the founder, Phil Knight. It runs through how Nike was born out of a Japanese disagreement and a waffle iron, how it was almost called Dimension Six, how it learned to compete with market leader Adidas, how it grew and transformed the lives of so many athletes, staff and customers. It was an unconventional story built from the ground up for running. This book will make you want to rush out and buy a pair of Nikes!"
Chadd Knights, NAOS Associate Analyst: "A classic biography on the founder of Wal-Mart. The book is gripping, detailing the consistent challenges, decisions, and ultimate rise from its humble beginning in Arkansas, to one of America’s largest corporations which now employs over 1.5 million people. The book gives a holistic view of Sam’s mindset and the inspirational story can motivate anyone who is willing to consistently improve on themselves. While the retail landscape has changed since Sam published the book in 1992, the principles expelled in the book remain relevant to this day."
The Outsiders: Eight Unconventional CEOs & Their Radically Rational Blueprint for Success by William Thorndike
Ben Rundle, NAOS Portfolio Manager: “The book analyses the methods of 8 highly successful, but unconventional CEO’s. The key finding is their ability to allocate capital and generate very impressive rates of return. Too often we see CEO’s destroy shareholder wealth by allocating capital poorly. Often the person running the company is an industry expert but has no knowledge of how to spend the firm’s money. It teaches investors to not only focus on the cash flow being generated by the company, but also how that cash is being spent”.
Chadd Knights, NAOS Associate Analyst: "Most fields of work require us to make decisions based on incomplete information. This book provides us with a framework for dealing with uncertainty when making decisions. Heuer summarises various biases that are “inherent” to us that affect our ability to interpret information. One very interesting study in the book showed that people who stressed thorough collection of data as a principal analytical method didn’t lead to better decisions."
Robert Miller, NAOS Portfolio Manager: “A book that strips back the notion of a ‘freak of nature’ by examining the factors that contribute to the high level of success in these people. Gladwell explores a ’10,000 hours’ hypothesis using examples such as Bill Gates and The Beatles. Outliers also explores examples of perceived ‘random events’ that might actually be underpinned by certain traditions or cultures. From plane crashes to maths tests, Gladwell concludes people have a predisposition to think and act in certain ways above all else. Part common sense, part history lesson & part interpreting statistics, Outliers has proven to be a controversial and popular book. Some of the stories will stick in your head long after finishing the book”.
Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street by Sheelah Kolhatkar
Chadd Knights, NAOS Associate Analyst: “The Black Edge is a cunning story about one of Wall Street’s most controversial traders – Steven Cohen, the inside information which led to billions in profits, and how the FBI/SEC spent 10 years trying to build a case against Cohen. There are 3 general ways one can obtain an edge; analytical, informational or having a time-horizon advantage. Initially, it is likely that Cohen and SAC focused on the analytical, but as competition grew and the easy money was made, they needed a new method. But how far were they willing to go”?
Chadd Knights, NAOS Associate Analyst: 'This book is a must read if you've ever heard yourself say “the expert on the television said….” The central idea behind this book is very important. Taleb explains that many “experts” base their decisions on models which don’t account for significant outliers – or Black Swans. The irony is, that while these experts may be trying to help you, it is these Black Swans which by definition are unexpected, that can have life changing impacts on us. Taleb suggests we shouldn’t listen to too many of the financial forecasts we hear on the televisions and read in the newspapers as they are built on false assumptions. Despite the various nuggets of wisdom that permeate throughout the book, I found the book to be inconsistent in some regards and repetitive. I also believe the author complicates certain things more than he should.'
Ben Rundle, NAOS Portfolio Manager: 'Josh Waitzkin became in international Chess master at age 16, before applying his learning skills to become a world champion in Chinese Martial arts. Josh outlines his many principles in the book and how thinking in different ways allows him to achieve such outstanding results. For example, in his Chess playing days his opponents would always study ‘opening’ moves to gain an early advantage. Josh however studied the ‘end game’ with only one or two pieces on the board. If knew that if he could defend and survive an opening attack he could win the game. His teachings can be applied across many fields particularly in the stock market where discipline can be well rewarded.'