Practical analysis for investment professionals
06 June 2014

Weekend Reads for Finance Pros: Hedge Funds, Charlie Munger, and the World Cup

Posted In: Weekend Reads

Not long ago, I heard someone talk about the process of learning and reading as the “daisy chain” effect, which basically refers to a series of interconnected events, experiences, or activities (like a garland of daisies). You know how it goes: a book, or a question, or an article, leads you to the next, and so on and so forth. That happened to me recently when I discovered that not all baking powders are created equal. (Who knew?)

After hours of research, I emerged feeling a bit like Alice in the scene from Alice in Wonderland where she goes down the rabbit hole (this has become a common metaphor in popular culture for delving into something unknown). A similar thing happened this week on the topic of Charlie Munger, Warren Buffett’s business partner, and his lecture on the psychology of human misjudgment. (This is why I have a lot of Munger references in the “investing” section.) 

As Munger reportedly once said: “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none. Zero. You’d be amazed at how much Warren reads — and how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.” And with that wonderful image now in your mind, here are some interesting weekend reads.

Investing

  • For 18 months, Guy Spier — who runs the Aquamarine Fund, which has beaten the S&P 500 by an average of 4.9 percentage points annually, net of fees, since its launch in September 1997 — listened to nothing in his car but Munger’s lecture on human misjudgment. Of the two dozen mental mistakes cited by Munger, “I realized I was guilty of all of them,” Spier says. So what’s an investor to do? Well, as Jason Zweig artfully explains in his column, Spier set about giving himself an investing makeover — something we should all think about doing sometime. (Wall Street Journal)
  • Here is Munger’s lecture, if you’d like to listen to it, and the transcript, if you’d prefer to print it out. (Farnam Street)
  • Staying on this topic: 20 book recommendations from Munger that will make you smarter. (Farnam Street)
  • The surge in investing by conscience: Investment funds incorporating environmental, social and corporate governance criteria in their decisions had net assets of $1 trillion in 2012, up from $202 billion in 2007, according to US SIF. (New York Times)
  • Investors are unequivocally greedy today, and with some perspective it is hard to blame them,” writes Charlie Billelo in “Fearful When Others Are Greedy.” After all, stocks are at all-time highs, risk has become a thing of the past, and volatility is also near record lows. “Why is any of this a problem? Isn’t confidence a good thing which will only lead more and more people to buy in, aka the ‘greater fool’?” What should we make of the current market sentiment? (Pension Partners)
  • As Josh Brown a.k.a. @ReformedBroker put it in this tweet:

Economics

  • “Why is macroeconomics one of the great unsolved problems in the history of human science?” asks Noah Smith (@noahpinion), in “What Happens When the Economy Baffles Economists?” “It isn’t because macroeconomists aren’t smart enough, as anyone who has hung around them knows. It’s also not because they’re too politicized; you can find macroeconomists on every end of the spectrum. Nor is it for lack of resources being thrown at the question. The problem is data.” (BloombergView)

Hedge Funds and Private Equity

Retirement

Behavioral Finance

  • Has push come to shove for a fashionable theory? A rival psychologist has published a book debunking the behavioral economics of Daniel Kahneman and the men behind Nudge, who, along with the authors of Freakonomics, were once the British Prime Minister David Cameron’s pet thinkers. So how do you choose between them? (The Guardian)
  • This cartoon was just too good not to share:

Soccer World Cup

And Now For Something Completely Different


Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/JLGutierrez

About the Author(s)
Lauren Foster

Lauren Foster is a content director on the professional learning team at CFA Institute and host of the Take 15 Podcast. She is the former managing editor of Enterprising Investor and co-lead of CFA Institute’s Women in Investment Management initiative. Lauren spent nearly a decade on staff at the Financial Times as a reporter and editor based in the New York bureau, followed by freelance writing for Barron’s and the FT. Lauren holds a BA in political science from the University of Cape Town, and an MS in journalism from Columbia University.

2 thoughts on “Weekend Reads for Finance Pros: Hedge Funds, Charlie Munger, and the World Cup”

  1. Hanif Mughal says:

    You guys cancelled the CFA exams in Karachi? this is so not fair

  2. Girish says:

    Hanif Mian,
    What is not fair is risking the lives of outside people in Karachi. Just see what is going on in Pakistan and in Karachi. Despite the facts you are not willing to accept the truth.

Leave a Reply

Your email address will not be published. Required fields are marked *



By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close