Hey Karmast, thank you for sharing this. I'm always looking to add to my list of good investment books to read/have read, which I'll share here in case anyone is interested:

Market Wizards - Jack Schwager. It’s about Hedge Fund managers and how they do it. Shows you everyone has their own way. 

The Intelligent Investor – by Benjamin Graham

One Up On Wall Street - Peter Lynch

Technological Revolutions and Financial Capital - Carlota Perez . About tech bubbles

Dick Davis Dividend - Dick Davis. Marcus Padley recommended in a podcast as it 'tells it how it is'.

The Essays of Warren Buffett by Lawrence Cunningham

The Gorilla Game: Revised Edition: Picking Winners in High Technology - recommended by Owen Rask via selfwealth webinar

Millennial Money: How Young Investors can build a fortune - by Patrick O’Shaugnessy

Value Able - Roger Montgomery

"The Art of Execution" by Lee Freeman-Shor

I ordered that book this morning using the Amazon link you supplied @Karmast - thanks for the review - sounds like a good read - interesting that despite free delivery due to me being an Amazon Prime member and living in an Australian capital city, it's still going to be 6 to 8 weeks for delivery - so I assume it's coming from the USA (no stock here in Oz).

Thanks also for your book list @pubenvelope - my favourite read out of that list is probably "One Up On Wall Street" which Peter Lynch wrote decades ago, and about US stocks, but the lessons in it are still very relevant and applicable today. Some of his stories are great. I remember how he always tried to combine family holidays with site visits and market sampling etc., and these days I reckon some fundies do that for tax deductible purposes. I find myself checking out head offices and mine sites or processing sites when I am on the road, especially when I am driving around WA. I love Lynch's idea that some of the best investing ideas are right under your nose, as in stuff that you or a family member buy or use every day - and that regular end-user feedback is often more valuable than a company presentation. That's one of the reasons I originally bought into ARB, that and Roger Montgomery's hyping of the company at the time - I've also read his book, Value-Able - but found it less helpful. Lynch has a better sense of humour and is a good story teller, compared to RM, and I've seen RM pump and dump companies, so I guess I had a negative bias while reading his book. I also have Ben Graham's The Intelligent Investor - but it's heavy going at times.

Another good read IMO is the late Charlie Munger's "Poor Charlie's Almanack" -

https://www.amazon.com.au/Poor-Charlies-Almanack-Expanded-3rd/dp/1578645018

Expensive through Amazon but I bought it direct from here: https://www.poorcharliesalmanack.com/orderform_2019.php

Which I believe is the official publisher's website - I also bought "The Most Important Thing" by Howard Marks at the same time which is another top read. Prices are in US$ and are a LOT cheaper than Amazon, but their freight charges are a LOT higher than Amazon, so it would likely pay to shop around - there are other sites that also sell new or used copies, but please only use reputable (well rated) sites for stuff like this. If it looks too good to be true, it probably is. My order from PCA in the US (link above) took about 2 months to arrive, so I thought I might have been scammed there for a while, but it was legit, and everything I ordered arrived in good condition. Eventually.

In "The Art of Execution" by Lee Freeman-Shor, the five tangible do's and don'ts for successful investing are:

1. **Do Have a Clear Plan**: Define your investment strategy and stick to it. This includes setting clear goals and knowing when to enter and exit investments.

2. **Do Focus on High Conviction Ideas**: Invest heavily in ideas you are most confident about rather than spreading your investments too thinly across many opportunities.

3. **Do Avoid Overtrading**: Resist the urge to trade frequently based on short-term market movements. Instead, focus on the long-term potential of your investments.

4. **Don't Let Emotions Drive Decisions**: Avoid making investment decisions based on fear or greed. Stick to your pre-determined strategy and avoid impulsive actions.

5. **Don't Ignore Risk Management**: Always consider the risks associated with your investments and manage them appropriately. This includes setting stop-losses and diversifying to protect against significant losses.

These guidelines help in maintaining a disciplined and effective approach to investing.

Hi @ciocan76. Thanks for the post - these rules of execution are different from the ones at the end of my edition, which also included 5 don'ts as well. Was this from your version or someone else's summary?

@Bear77 Yes thats a long wait as a Prime member! Poor Charlie's Almanack is a gem and he actually updated it not long before he passed. You can also get the narrated version on Audible now too which is much cheaper than the hard copy!

And if anyone loves The Most Important Thing and all his great memos, he also now does a free podcast whenever each memo comes out, called "The Memo by Howard Marks" of course...

@Bear77 haha i ordered it yesterday and is due to be delivered today. Sydney is favoured over Adelaide--ughh lol

@Karmast will read with interest. on another point that i found interesting, i was listening to John Huber, who i rate as an investor to listen to, and when asked what investing books he has read lately, he answered not many. the reason is that he reads a lot of 10K (annual reports) nowadays and it struck me that evolution takes place as an investor where theory becomes less and the execution becomes much more as we move from theory to practice. i consciously balance theory and practice in my reading.

Anyone interested in Poor Charlie’s Almanack might want to take a look at the 2024 abridged edition. I’m not sure of the differences to the original but the price is significantly cheaper.

https://www.amazon.com.au/Poor-Charlies-Almanack-Essential-Charles/dp/1953953239

Another option is the online version here that is also in audio form. It was made available for free on stripe press. The link may have expired.

https://www.stripe.press/poor-charlies-almanack/chapter-one?progress=0.00%25

Yes really good point @Solvetheriddle Having read 100 or so investing and business books over the past 6 or 7 years, I'm finding a lot less "new" or "groundbreaking" info these days. Ultimately figuring out what kind of investor you really are and how to apply it all practically is super important. Buffett and Munger kept reading, a lot apparently, and from all kinds of sources and they are a LOT smarter than me.

With a smaller number of companies these days in my portfolio, reading their half and annual reports, key announcements and even transcripts of meetings I wasn't at, has become vital reading for me too.

Bought it on my kindle (delivering time 1 second, lol) and am reading it now. It is a bit of a gut-punch as I realise I have "Rabbit-ed" a few of my losers for fear of realising losses (that I will probably never gain back on those stocks anyway). I'm thinking maybe it's time for a clean out of my losers.

Anyway, I found this interview with the Author, which is worth a listen:

https://open.spotify.com/episode/0fH0B5gCyUlpQmPP50paOa?si=4a18296aa18949ed

@ciocan76 Good list, i read the book today after getting it yesterday. I must admit I found it a bit mixed. the points you make above are sensible investing 101, but I found some of his narratives quite unusual and conflicting. for example saying its good to double up on losers while saying its good to cut your losses, depending on what happens. so it comes across as muddled at times, "resulting" --it worked so it must be good. IMO.

in fact, the author comes across as someone who has failed at FM and is having a poke at the industry without having consistency in his argument.

it also amused me that he constantly referred to "managing" his FM's, when he is the client-- like managing your doctor or accountant imo. having come from the industry i realise i have a different take compared to other readers.

he is right in saying having a plan and knowing yourself are critical, i just found his style very unusual.

I finished the book, and have some mixed feelings. However most importantly, I feel it has plugged a hole in my investing methodology.

Key points I'd make about the book - most of which was not new to me, however some I had not considered as important as I should:

• He states a more concentrated portfolio of your highest conviction stocks will tend to out-perform a more diversified portfolio - Mainly because you want large positions in your few big winners as this is where the majority of your gains will come from. However, this assumes you know how to pick good stocks and stock picking is not something he covers in the book (not a criticism, but worth making clear).
• How and when you, buy and sell, (i.e the execution) is at least as important as the stocks you buy - You can balls up a good investment by buying and selling at the wrong times.
• Because it deals with how to buy and sell, and not how to select the stocks, or much to do with their fundamentals, it reads very much as "A Traders Guide to Investing". And given the experiment was run on fund managers who have pressure to meet short term (<12 month) targets, that make sense. However I still found it useful (but I suspect it is more useful for fund managers and/or traders).
• When winning on a stock - don't take quick profits (i.e "let your winners ride"). You can trim a bit if it keeps you in the game, however you need to keep holding to get the benefit of multi-baggers. This is because the bulk of your returns will come from a small portion of your picks (even in a concentrated portfolio) and you need the big gains to offset the losses you'll take. He states to still sell when the thesis breaks even if the stock is still doing well though (which is the most he mentions on the fundamental side of stock picking).
• Note: This was meant more for people (like a lot of managers) with a trading mentality, who tend to sell at a 20% gain (the old "can't go broke taking a profit" adage). Holding onto winners is not really something I would think many of us here on Strawman would have a problem doing.
• When losing, you have 2 options; either sell and cut your losses, or double down and buy more. Don't just freeze and hold (like a Deer/Rabbit in the headlights). This was my biggest takeaway. Note there are some caveats/info here:

1. Stocks have volatility, so your position needs to drop below a certain amount before you deem it losing (he suggests 25-33%).
2. This only really applies once you have built out your position, so by buying in in tranches and averaging your cost you can lesson the chance of this triggering.
3. The point here is when the market goes against you it is best to be active in your decision in order to minimise your losses. Either keep your conviction and choose to buy at a bargain, or accept you've lost conviction and get out. Don't be on the fence.
4. He recommends, when you buy, to make the decision whether you will cut your losses, and if so setting up stop losses to auto-sell to take emotion out of it.
5. Doubling down, he suggests, is more for value/cyclical stocks (rather than growth) and allows you to make a modest gain even if the stock does not get back to the original price.

My biggest issue with the book is how much it focuses on the share price of stocks as a key indicator of what is going on with your investment. And, therefore, how much market timing and price anchoring (to your average purchase price) it requires. Basically, he suggests, if you buy a stock and it immediately drops 25% you should sell straight away. However if you buy it and it goes up 50% and then falls 25% you should continue to hold as you are still in the green.

The reasoning is that, as we know, gaining back on losing positions gets increasing less likely the more it falls (e.g a 33% loss requires a 50% gain to get back to even, a 50% loss requires a 100% gain, etc). So, if a stock has a major drop after you have bought, it is statistically better to assume you were wrong, crystalise a small loss, and put the money to work elsewhere, than to risk losing more by holding on.

Anyway, the outcome for me is that I will be much more critical of any losing positions I get in future. Any position that is 30% or more in the red I will take a close look at, and, either must be something I am actively buying, or, I sell it and cut my losses. Goes back to the basics really; look at it from a blank slate approach. If I have a losing position that I would not otherwise be interested in adding to my portfolio then I sell it.

Thanks @lyndonator for sharing your takeaways from the book and the link to the podcast episode. There are definitely a few lessons there that have been real thought provoking and will definitely will be of use for me going forwards!!!!

I really liked the deer/rabbit analogy and the discussion in the podcast relating to when you double down or take the chips off the table. It really resonated with me as I am currently working through some senior leadership indecision in my 9-5 job, and its really given me a new perspective on things from an investment side. The hardest thing to remember is that indecision is still a decision (a decision not to act), which has consequences of its own.

This episode helped me out IRL with one of my investments that dropped by 15% over the past 2-3 weeks and I was trying to work out to do. Traditionally I would have panic sold out and cut my losses, but this approach helped me to calm down and sift through the fundamentals before making a truly informed decision. I still backed the fundamentals of this business and it appears to have been a small blip which has since partially corrected.

I agree with your views regarding price and looking at each investment as a blank slate, and it reminded me of an audiobook from a few years back from Jim Kramer from the US which I totally had forgotten about until now. Jim would get his team to remove the purchase price from his weekly extracts, so he would focus on the current price and future potential of a stock rather than worry about how far in the red or black he was. Jim said removing the price aspect would help him to focus on the fundamentals of the company to see if it still aligned with the investment strategy, which would sometimes result in him holding onto a position where he was down 20% and trimming a position was up 300% but no longer had the conviction.

Its so hard sometimes to remember this approach in the heat of the moment while you are dealing with the emotions of a significant price drop, or trying to work out whether to retain a position in a stock you have had for a while that has made you good money. It appears that keeping a disciplined approach will help make the best informed decision (i.e. kill it or double down like he suggested) for the betterment of your portfolio.