Arbusers

In 2015, as Swedish physician Hans Rosling participated in a presentation on socio-economic and sustainable development for the World Economic Forum in Davos, it was apparent to him, that something was wrong. He gave the audience 3 multiple choice questions about the state of the world within poverty, population growth and vaccination status. The audience, many of them with access to advisors and the newest data, were quite wrong.

Rosling had an expanded version of the questionnaire of 13 questions. As he was touring, speaking on the true state of the world, he tested the questionnaire on audiences counting thousands of people, among others medical students, bankers, CEOs, researchers, journalists … an astonishing majority was completely wrong. In fact, they were systematically wrong, more wrong than if answers had been guessed by the (often mentioned) monkey throwing darts. There certainly seems to be a collective delusion about the state of the world.

Regretfully, Hans Rosling passed away in 2017. In 2018 Rosling’s children finished and published Factfulness. Factfulness is about the world and how we can become better at understanding it as it really is. I recommend this book as most of us statistically belong to the group that would answer extremely poorly in the questionnaire. I read it 2 years ago. Now the book is 5 years old, but it is still relevant.

As a side note: I have been travelling between Europe and South America, spending much time in both, for more than a decade now. Those two regions are often referred to as belonging to either the first world (Europe) or the third world (South America). I have often thought that Europeans in general suffer too much from superiority syndrome, thinking that their country must be the best (the opposite happens in South America where an inferiority complex is met too often). Rosling certainly documented that first world citizens on average think the world outside is falling apart and he also comes up with some takes on why that is the case.

arbusers wrote: ↑

Fri Mar 06, 2020 10:54 am

Wolfie wrote: This man is Warren Buffett's professor and mentor.
Most successful value investors are his students.

This is correct. It really worths it to search in youtube and find speeches from Buffett and especially from Charlie Munger.

'Poor Charlie's Almanack'

With that nice lay up from The Boss himself I would strongly recommend 'Poor Charlie's Almanack'.

It is a book that manages to compile all of Charlie's wonderful speeches, various writings, remarkable wit and sound wisdom that he has blessed the world with over the years.

One particular speech that in my view is possibly the most useful and important compilations of wisdom that paper has every had the honour of committing to the annals of history is, 'The Psychology of Human Misjudgment'. I have listened to the speech many a time and continue to read it frequently. The power of it engenders a sense of wonder even as i recall it at this very moment. I can hardly express the soundness of this man's thinking. When reading this book you are drinking the extremely concentrated filtrate of many, many decades of practice, reading and observation all done through the lens of pure rationality.

To use a famous Munger quote I would say to you that if you go about life having not read and internalised the teachings of this book then 'you are like the one legged man in an ass kicking contest'.

The return on investment from buying this book will not disappoint.

https://www.google.com/aclk?sa=l&ai=DCh ... EA0&adurl=

In 2015, as Swedish physician Hans Rosling participated in a presentation on socio-economic and sustainable development for the World Economic Forum in Davos, it was apparent to him, that something was wrong. He gave the audience 3 multiple choice questions about the state of the world within poverty, population growth and vaccination status. The audience, many of them with access to advisors and the newest data, were quite wrong.

Rosling had an expanded version of the questionnaire of 13 questions. As he was touring, speaking on the true state of the world, he tested the questionnaire on audiences counting thousands of people, among others medical students, bankers, CEOs, researchers, journalists … an astonishing majority was completely wrong. In fact, they were systematically wrong, more wrong than if answers had been guessed by the (often mentioned) monkey throwing darts. There certainly seems to be a collective delusion about the state of the world.

Very interesting, thanks for mentioning this book (I haven't finished it, but I have already learned a lot - I got only 2 correct answers out of 13, and yes, I was systematically wrong...).

''The The Psychology of Money - Timeless lessons on wealth, greed, and happiness'' by Morgan Housel.

It is a common knowledge that all blockbusters offer limited value, however this is an exception. Morgan Housel puts all thoughts in line and explores how money moves around economy and how personal biases and the emotional factor play an important role in our financial decisions, as well as how to think more rationally and make better decisions when it comes to money. In a nutshell he suggests creating a surplus of money and investing it year in year out without studying the markets having a target to retire peacefully with no financial stress.

You could say it is a blue print, provided that you overcome the emotional factor. As Roosevelt put it
''the only thing we have to fear is fear itself''. This helped the American people regain faith in themselves and brought optimism. But I am afraid I have some serious criticism in this quote when it comes to investing. I believe Housel's way of thinking will be tested and will be proved wrong. Having a look at the SP500 chart, I notice some periods when his strategy is not working. Someone who blindly followed Housel's strategy in 1927 would not gain any profit until the 1950s. If we add the inflation, then we go to the 60s or the 70s. Someone who started investing in 1968 would not become Green until 1982, and again inflation is not added. Life has certain limits. What if something similar happens today? In the end, Housel is a victim of his own recency bias.

Should I read this book? Definitely yes, It clears the fog and it can provide the blueprint. But keep in mind my criticism. This will not make you an alpha investor. It will make a you a beta or a gamma investor, and this is not bad at all because most of the people around you are omegas.

''Skin in the game - Hidden Asymmetries in Daily Life'' by Nassim Nicholas Taleb.

Taleb is well known for his ''Black Swan'' book. However, the Black Swan is not his best book. It became popular because it was written in a way that everyone could understand it. But what about some meanings that not everyone could understand? These meanings will be in his last book Skin in the Game, which is the last book of the Incerto series.

It is sad to see meme investors being the bulk of market participants. They believe that watching various charlatans in Youtube or by following brainless amoebas in Twitter, will allow them to financial freedom. That is why 98% of investors are net losers when investing the bigger monstrous bull market humanity has ever seen. Capos, Gareths, self proclaimed Robin Hoods and Presidents of various unknown and unregistered societies will always be there to fool you.

This book is for those who don't want to be fooled by these people. Namely, the 2 or even less percent of people who will eventually make some money from the markets. If there is one phrase containing the book that would be: ''Don’t tell me what you think, tell me what you have in your portfolio.'' So the next time someone provides a fancy analysis full of graphics and audio effects, ask him if he owns his sh.t.

I recall last time I found my self in Bruges Belgium visiting the Groenige Museum. I was impressed by an artwork from Gerard David called ''The Judgement of Cambyses'' based on the father of history Herodotus Histories. I was not able to understand the meaning of the painting. Years later I read Taleb's book that explained everything.

In order to be able to understand this book in fool length, you need to have a mental capacity and a good background on history, philosophy and theological matters. It is not an advise on how to invest, but it is a bunch of rules for life, a via negativa and a silver rule. If you find it hard reading and understanding it, go back to the charlatans and the amoebas.

Well done Mr. Arbusers!

Prof. Nassim Nicholas Taleb is one of the wisest People in modern civilization.
A beautiful Writer's Mind, every page of his books causes Nitro-powered acceleration of the Reader's Mind.

We are more than blessed to have access to his literature.

''Contrarian Investment Strategies: The Psychological Edge'' by David Dreman.

I was very reluctant to post about this book but finally I decided to let you know. This book is not for everyone. You need to have a certain experience in markets in order to understand the full potential. You need to be capable to get rid of personal bias and you need to stand still on whatever the ''narratives'' dictate. Do you remember Ulysses passing through the sirens?

The book is divided to 2 parts. The first part is about Contrarian Investing. More or less, it says what I always highlight in my posts for Bitcoin and the SP500. It explains why there is 0 value in everything you read or watch on CNBC, YouTube, TikTok and Twitter. Dreman is repeating him self again and again, and there is a possibility you get bored of this repetitiveness.

The 2nd part is a real gem. Dreman explains his strategies for stock picking. These are easy to follow and implement but in some strategies you might need to search by hand in order to find the statistics and the indexes he uses. Also, it explains the pros and cons of investing in well recognised stocks vis a vis stocks that are not popular and known to the broader audiences.

To a large extend, this book reminded me of Taleb's ''Skin in the game''. Dreman, even though very old, is one of the sharpest investors but he chooses not to advertise him self the way others do. For sure he made a legacy with this book. Again, not for everyone, but if you decide to go for it I hope you enjoy it.

Does anyone know a good book about game theory within finance? There are lots, not sure which one explains all the facets of the whole theory.