There are experts in every field but when it comes to investing there are few more well-known than Warren Buffett, Peter Lynch and J K Galbraith – all of whom can still teach the younger generation about markets.
In this instalment of the Investors’ Bookshelf, Richard De Lisle, manager of VT De Lisle America, has deliberately chosen titles that are “deceptively simple” and yet the best he’s found at explaining markets by some of the most well-known names in the industry.
Lynch
Any list “must start” with Peter Lynch’s One Up on Wall Street (1989) for “the simple way of pulling out the key message from a balance sheet” and his “outstanding” insights on when to sell, De Lisle said.
Lynch was the manager of the Magellan fund at Fidelity in the 1970s, 80s before stepping back in 1990, during which time he created an enviable track record of beating the S&P 500.
“Even today when Lynch comes on CNBC, everyone drops everything to tune in. In this book, he tells how he did it at a time when he was creating a track record that remains the best that has ever been achieved,” said the manager. “It also negates the old adage that Lynch never met a stock he didn’t like.”
One of the standout points for De Lisle is when Lynch writes that he got more from his philosophy degree at Yale than any other discipline in the market.
Galbraith
The Great Crash by J K Galbraith (1955), is another must-read by an investing legend. The Canadian economist was a prolific author, but it is this one that De Lisle highlighted.
It is the one that Galbraith himself “enjoyed writing, unlike his famous sociological work The Affluent Society” and takes the VT De Lisle America fund manager back to when he taught students about the stock market in the 1990s.
It describes the “bonfire of hubris” of market crashes and revolves around the question: What is it about market tops?
“September 3 1929, August 25 1987 – why do market tops so often come in late summer, when nothing appears to be happening? Galbraith’s description of the languid return home from holidays in hot traffic jams feels so nostalgic, as did the profiteering of the banks, the public companies and the industrialists as they borrowed money at 5% to lend to margin purchasers at 12%,” said De Lisle.
“The joy is the delicate way the inevitable crash is unfolded and the pleasure he is obviously taking in the bonfire of hubris that follows as the market falls 88% by June 1932.
Buffett
There is no learning the market without Warren Buffett, known as the ‘sage of Omaha’. The chief executive of Berkshire Hathaway is “too clever and too important” to be kept off De Lisle’s list.
Jeremy Miller’s Warren Buffett’s Ground Rules (2016) is a collection of 33 of Buffett’s letters to his partners, from which his “humility, emotional intelligence and clear reasoning” shine through.
“He talks about a ‘too hard’ bucket showing that, like Lynch, the greatest investors keep it simple,” said De Lisle.