Reading books, publications and annual letters written by investment professionals is a great way to get a better grasp of your subject matter of choice. By reading books such as the Intelligent Investor, One Up On Wall Street (A Fireside book) and the Little Book of Value Investing you can greatly cut the time required to master investing. By reading these books, you can see what actually works on wall street and you can use these techniques in order to select your own stocks and have a winning run.
Whilst reading books can give you a great perspective on how to invest your money, there are a number of things that books will never be able to teach you. Some of these are:
- They can’t be there to hold your hand during the next bear market.
- They can’t help you control your emotions when making decisions during stressful situations.
- They can’t force you to make decisions that are in your own self-interest.
- They can’t force you to buy stocks in turbulent times like the ones we are facing today.
- They have no control over your past experience in the markets or how your memories shape your current biases.
- They can’t change your personality or make you more comfortable with a given strategy if it’s not the right fit for you personally.
- They can’t tell you how much of your net worth to put into any investment or how to size your positions perfectly.
- They can’t show you how to understand your own limitations and when to say no to a business opportunity.
- They can’t help you with getting lucky from time-to-time.
- They don’t have an understanding of your unique circumstances so they can’t determine the relative attractiveness or riskiness of a given security or fund.
This post is not written to criticise people who read books – without reading various books on investing, I would have no idea how to select stocks or how to correctly implement asset allocation strategies for instance. Rather this post is written to remind people to figure out how to apply the lessons they read about to their own situation. Learn about your heroes to gain perspective and even motivation. Just don’t take your hero worship too far. You still have to make your own decisions and be the best version of yourself you can be.