The list of skills an investor needs is long – but the knowledge required can sometimes be found in places one does not expect.
The managers of Aegon Asset Management have found nuggets of investing wisdom strewn across a range of books that they say have made them better investors.
This instalment of the Investors’ Bookshelf features readings on public policy, cognitive biases and the rise of the Disney franchise.
We start off with Claire Marwick, co-manager of the Aegon Global Sustainable Equity among other funds, who picked What Works by Iris Bohnet (2016).
The book is about how to establish a fairer and more diverse society, something that’s “incredibly relevant” to investment management.
“It was a real game changer in my view in an area which is incredibly difficult to tackle, as years of good intentions but little progress in diversity in fund management have shown,” Marwick said.
The author is a professor of business and government and the director of the Women and Public Policy Program at the Harvard Kennedy School of Government.
“I was lucky enough to take a course on leadership at the Kennedy School some years ago,” she continued.
“The basic tenet is to try to ‘de-bias’ the organisation, not the person. I find it insightful because it eradicates the undertone of blame that can sometimes accompany, and unseat, diversity initiatives. This book really distinguishes itself by giving tangible recommendations based on research and data, and not on opinions.”
Marwick’s co-manager Malcolm McPartlin recommended Black Box Thinking by Matthew Syed (2015), from which investors can learn what to take away from their failures and draw inspiration for adapting and refining their processes.
“The book encourages people in any part of life, be it industry or sport, to embrace failure as a chance for improvement. The author encourages an open and honest evaluation of your decisions and their outcomes,” McPartlin said.
“This concept urges continuous learning, rooted in deep analysis of why failures occurred. Investors should adapt and refine their process based on these lessons, ultimately reducing cognitive biases and making more informed choices.”
The approach, the manager explained, involves iterative improvement, leading to better decision-making and risk management.
“It has made me a better investor by instilling a mindset of learning from mistakes, continuous improvement, and hopefully reducing the likelihood of repeating errors.”
McPartlin also highlighted The Ride of a Lifetime by Disney CEO Bob Iger (2019), a “fascinating” story of how he grew Disney into what it is today.
“He recounts what he has achieved in terms of convincing some of the biggest personalities/egos in the business to sell their franchises and (in many cases) their legacy to the Disney group, including Steve Jobs’ Pixar studios, George Lucas’s Star Wars franchise, Rupert Murdoch’s Fox studios and Ike Perlmutter’s Avengers franchise,” he said.
“The power of leadership and personality it took to execute this strategy was remarkable.”
Finally, Robin Black, who runs the Aegon AM Japanese portfolios, suggested Behavioural Investing by James Montier (2007), a book he said he keeps going back to.
As the name suggests, it focuses on the psychological aspects of investing – “and indeed life”, added the manager, who also invited would-be readers not to be put off by its sheer size (670 pages), as it’s written as a series of individual essay, which makes it easy to dip in and out of.
“Active investing is done by people, who have biases, and this book explores how they shape our investment decisions and how to overcome them, amongst a host of other topics,” he said.
Like McPartlin, Black also enjoys reading about actual companies, because “every company has a tale worth telling”.
Shoe Dog by Phil Knight (2016) is a “fascinating” description of how Nike came to be, Cold Steel by Byron Ousey and Tim Bouquet (2009) describes the intrigue around the Mittal bid for steel company Arcerlor, and Shredded by Ian Fraser (2014) outlines the rise and fall of the Royal Bank of Scotland.
“All are wonderful stories,” he concluded.