• Arne

What to read for the serious investor?

There are probably more readings dedicated to financial success available today than taco places in Mexico. Of course, everyone claims to be the best, and some even make unserious promises about how to earn easy money. As an investor you would need to know how to filter.

It does not matter if you are an experienced investor or a freshman, you would want to know how to separate the wheat from the chaff. We are living in a complex world where we are exposed to an information overload. Unfortunately, many people tend to claim themselves experts, only because they have read three books, subscribed to the Financial Times, and were lucky with a few investments.

I believe in the rule that if some issue seems exceptionally important to you, read the relevant scientific literature, i.e., books and articles published by known professors from reputable institutions. Otherwise, how could someone provide you with reliable recommendations about a specific company or industry if he never learned in depth how to read financial statement or to determine the value of a business?

Of course, science has its limitations, especially in the field of finance. That being said, it lays in the nature of a true scientists to question his colleagues statements and sometimes even disagree. Currently, you can observe this phenomena quite well in the discussions about SARS-CoV-2. It feels that almost every virologist has its own opinion. However, disagreeing is not necessarily a bad thing, but it can help to improve. When I say disagreeing, I am not referring to the fools doubting the earth to be a sphere, but rather to raise serious questions on a profound level by providing empirical evidence to support your claim. How could you otherwise even dare to challenge scientific opinions, e.g, that markets are sufficient, without actually knowing nothing about it?

However, as stated, especially in the field of finance theory, there is a lot to question. Nevertheless, the scientific community has been our most reliable source of knowledge to start from. Especially, because - unlike financial institutions - they are not trying to sell a product nor service to you.

After all, you should not forget about the real world. There are great practitioners out there who have proved their business and investment knowledge over and over again. Even though they might not believe in specific aspects of the theory at all, you can still be sure they have studied them quite well.

At Dividendo, I will provide only first-class readings provided by both well-known scientists as well as practitioners - among others Adam Smith, John Maynard Keynes, Warren Buffett, Robert J. Shiller, Eugene F. Fama, Henry Markowitz, Michael E. Porter. I think there are enough would-be experts out there trying to sell you out by making unrealistic promises about return on investments.