As we head towards the year’s end, it’s a perfect time to review some lessons from the more popular posts of 2019.
What you’ll find below is a collection of lessons from different posts written year. All the topics are sourced from my reading. What I find the most interesting gets shared here, with some thoughts added for effect. The only thing I don’t know in advance is what will be a hit or miss. It’s a lesson on predicting. I stopped guessing years ago.
The rest comes down to you, the readers, since the “best” is what gets read and shared the most. It’s always surprising and exciting when something takes off. So thank you!
This year’s lessons cover a wide range from common and uncommon sense ideas, mistakes, gambling, and bananas (a personal favorite). Charlie Munger was a favored source, along with a few other recognizable names. One lesson goes back 146 years (a fun one to discover).
Of the 91 posts this year, these stood out the most in 2019:
Howard Marks: The “Negative Art” of Investing – Marks explains an important lesson he learned from Ben Graham about bond investing. It’s the art of avoidance and it’s particularly important in risk management and avoiding losses.
Peter Bernstein: Embracing Mistakes – Nobody bats a thousand in investing. That’s how it works. Bernstein thinks you should embrace the inevitable mistakes you’re bound to face, just like everyone else, knowing it’s a normal part of the investing process.
Write It Down – Gerald Loeb shared some common sense advice in his book The Battle for Investment Survival. Write down your strategy. Write about every investment you make. Write about why you bought it, the risks, and what you expect to make. Take it a step further and write about how you felt when the market was especially chaotic. Now you have a handy reference in case you forget and before you make a mistake.
Finding the Obvious – Obvious Adams teaches the simple lesson of not trying to be too clever. Keep things simple, especially when it comes to investing. Wall Street seems to be the antithesis of this lesson, with its long history of creating complex products that unexpected blow up when they least expect it.
Investing Lessons from the Banana Business – I shared some lessons from one of the best books I read this year: The Fish That Ate the Whale. It’s the story of the Banana King and the history of the business. The lessons translate well to investing.
Defying Reversion to the Mean – Mean reversion is a powerful force. It drives market cycles, stock prices, profit margins, earnings, growth rates…you name it. Here’s why.
Peter Lynch on Portfolio Construction – Lynch’s thought process on portfolio construction for the Magellan Fund involved a three-bucket approach. He explains the role of each bucket and why it’s important.
Charlie Munger’s Tendencies of Human Misjudgment – Munger noticed patterns of irrational behavior that led to repeated mistakes. So he studied them in the hopes of avoiding it himself. He came up with these 25 tendencies we’re all susceptible to falling into.
A Study in the Psychology of Gambling – The long history of gambling offers a perfect example of why human nature and misbehavior in investing will endure. Just look at the stories people invent for why they win or lose at a game of chance from this 1873 article.
Charlie Munger on Concentration – A concentrated portfolio goes against the current accepted practice of following a widely diversified strategy. That’s one reason why Munger probably likes it but he offers a more compelling reason why.
The Rise and Fall and Rise of Ben Graham – How did Graham’s early experience of success and failure reshape his investing philosophy? This is the story behind it.
Revisiting the ’87 Crash – Robert Shiller was in a unique position to study the behavior of investors during the worst single-day loss in stock market history. He presented some interesting results.
Charlie Munger’s Uncommon Sense – Munger has a system that flips things on their head in a way that makes complete sense. He refers to it as inversion, and when combined with avoidance, it works wonders.