Latest Activities And Some Of The Books I Read Lately.

More than anything I have been focusing my energy on building a house. Since I am doing most of it alone, including the bricks, it goes slow. I could hire help, specially here being quite cheap, but the enjoyment would be lost if I did it. That is a probable reason why I have been writing little. Another reason is because lately I prefer reading than writing.

I have also dedicated time to do some other things like follow some of the companies I have. I sold out recently a small investment in Ryan Airlines. Ryanair is an exceptionally well managed company but in a business that the more I learn about the more I get convinced that it’s bad. I am also not too fond on having small investments. I sold out while the profit was decent. I have finished increasing substantial positions on a Spanish train company called CAF. That’s the only investment I’ve done this year if I remember well. There are also a couple of new companies I have been reading about that seem quite interesting. One of them is National Oilwell Varco and the other is a Sweedish company called Sandvik. Sandvik is a supplier of machine tools, services, and construction materials for the mining and several other industries. It is widely diversified internationally in most of the markets I am interested about. It seems to be very well run, conservative, shareholder friendly and with a very sustainable future. National Oilwell Varco is a supplier for the Oil and Gas industry. It has acquired several companies and integrated them quite profitably. It’s market is also quite diversified, although not as much as Sandvik. It is focused on new non traditional drilling activities, which I think have a good future. It’s debt load is also quite reasonable. Both companies seem to be trading at reasonable prices, but of course if they get cheaper I would be even happier about investing in them.

I read some books. A very interesting classic book was “The Crowd – A Study of the Popular”, from Gustave Le Bon. It is a serious study on the behaviour of crowds. The book was referenced by Roger Lowenstein’s “Buffett The Making of an American Capitalist” and has also been more deeply referenced by Ludwig Van Mises. The book makes me further think that the more people that get involved in investing decisions the worse the results are. Not only does a crowd decision lead to mediocre results, I even tend to think more and more that the intelligence of a crowd is often quite worse than the average intelligence of its members and tends to the lowest of them. This helps me understand why sometimes very bright people acting together act worse than each of them separately. It also helps me understand why Warren Buffett, in its early partnership letters, said that the investment results obtained by groups of more than one member are often bad. Note that if you read French I recommend you reading the original, even though the English version seems well written.

Another interesting book, quite recent, was Ronald Chan’s “The Value Investors”. It’s not nearly as deep as the previous one. It’s interest lies in being kind of an interview to several successful investors. The ones that interested me quite much, besides Walter Schloss, who I already knew, were Francisco Parames, from Spain, sometimes referred as the Spanish Warren Buffett and Teng Ngiek Lian from Singapore. It was interesting to note that several of the investors read enormously, specially the centenary Irving Kahn, which by the way gave a very interesting interview. Kahn highlighted that, even though the classical value opportunities have changed, now there are as many opportunities in the investing world as before. There are much more securities and countries where to invest, and the amount of available information is much bigger. Another interesting point that impressed me quite much is that both Jean-Marie Eveillard, a french investor interviewed, and Francisco Parames were followers of the Austrian school of economics. I have noticed that several of the investors I admire follow that school, or think very similar to it, specially Charles Munger and Phil Carret. Carret was also a friend of Buffett and one of it’s relatively early investors. He is actually the one who introduced me to Von Mises and his thoughts.

Speaking of Von Mises, another great book I read was Ludwig Von Mises’ “Theory and History An Interpretation of Social and Economic Evolution”. An incredible underrated book, philosophical, practical and centered on human action. It shows how human acts and ideas shape history and economical evolution. A must read for any serious investor who wants to increase his analytical thinking.

A very interesting book about financial analysis I am currently reading is Martin S. Fridson’s “Financial Statement Analysis: A Practitioner’s Guide”. The book was referenced by one of the investors interviewed by Ronald Chan. It was a surprise to learn about it. It has nicely shaped and cemented some of my views about the nature of financial reporting and what can be extracted from it. It shows why it pays well to be quite skeptic and focus on human motivations when reading financial information.

I had unfortunately never found a woman investor whom I admired until I stumbled upon Hetty Green. I knew about Hetty Green since I was eight, but forgot completely about her for many years. The first time I read about her was in the Guinness Book of World records. Her record was being the greediest person ever. It is interesting to note that she was a Hathaway investor, even before it was merged with Berkshire or that Buffett entered into the scene. She was infamously remembered as the Witch of Wall Street. Besides her terrible reputation she is currently widely unknown and after reading about her I have shaped a completely different opinion than the rest. She seems to me an outstanding investor, better and sounder than many other much more famous. She survived the great depression with almost no scars and multiplied her fortune through a lifetime of very conservative investments. Holding cash and not leveraging was one of her characteristics, as well as never panicking when others did, buying cheap and selling dear. For those interested about her I recommend her biography written by Charles Slack.

Cheers !
jrv

About jrv

I was born in Spain and lived in Belgium, Chile, France, USA, Argentina among other places. Currently I am trying to settle down in a wild place. I am "retired", even though now I dedicate more hours "working" for my investments than I ever worked in the real labor market where I used to work in IT and Banking. I am a family man, I have a lovely wife, several sons and one step daughter. I have humble tastes, I like to stay home and read about companies and investments. I started investing at 25 before the internet bubble exploded. I did not know much about investing and liked technical analysis so my results were pretty bad. Fortunately I did not have much to lose. Some years later in 2006 bored of doing only real state investments and with quite a lot of money saved I opened an account in a cheap and excellent online broker and started again. This time I did not want to commit the same mistake, so I decided to follow a model. I heard that Warren Buffett was the best at making money via stocks so I started by reading a lot about him, all of his shareholders letters and several of the books that he recommended. I learned a lot, started applying his investing principles and reading a lot of 10K's. Digested news from lots of different sources. Basically I started buying very good and cheap companies and holding them for ever if possible and if nothing changed fundamentally. When the housing crisis started I was more than 75% cash. At that time I identified good companies at incredibly cheap prices so I invested most of my savings in stocks. In less than I year I doubled. By the second semester of 2009 I turned my software company into an investment vehicle and dedicated myself full time to it. My wife and I decided to change our lifestyle and moved from Belgium to the beach in a wild country. The goal was to keep fixed costs low in order to be able to live with a minimum 6-8% yearly return but specially to move away from the inhuman life of civilization and to have finally some peace and sunny weather to concentrate better on investing. Now I can think and study about companies 60 hours a week and I am doing great. I can finally do what I want full time and can proudly say that I have never been so happy, specially also with my just born 4th son, my other great kids and my sweet wife who supports me fully while I study most of the day and patiently wait for the opportunity to make a swing ! You can learn a bit more about my portfolio by viewing it at www.kuchita.com/view/sumo.php or you may learn more about me and my family by following the link "Author's site" from the menu above.
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7 Responses to Latest Activities And Some Of The Books I Read Lately.

  1. Tirath says:

    Was wondering why you hadn’t written for a while now… great stuff. Thanks for the book on Hetty – had thought of ordering it earlier and then forgot about it. Also for Mises and The Crowd. Try to get the Wisdom of Psychopaths. Find me on Goodreads. Keep writing and if you ever plan on an investment in India, feel free to reach out. Cheers. Best wishes for the home.

  2. jrv says:

    Thanks Tirath, best wishes too !

  3. Joao Nunes says:

    Hi JRV,

    Glad to hear from you. I’m not (yet) an investor but like to read about Value Investing. I also like to follow your blog as you seem to be serious about investing and post valuable information. Thank you for sharing.

    Joao Nunes, Portugal

  4. nick says:

    treasure trove of information here. I read that book by Ronald Chan as well, and it opened my eyes to value investing practitioners nearer my home. another good takeaway from that book is the success of Cheah Cheng Hye and in his success in investment focus mainly in the chinese market (mainland, Hong Kong and Taiwan).

    soon I’ll have more time for investment — digging deeper in the Austrian School is on top of my list.

    good luck on the house building and the investments.

    Nick
    Manila

  5. jrv says:

    Thanks nick, Cheah Cheng Hye’s life story is very impressive. Staring from extreme poverty to become what he is now. He mainly does it via hard work and is devoted to constant learning. He is the one who talked about Martin Fridson’s Financial analysis book. He now gives it to his analysts to use instead of Graham’s Security Analysis, which he used in the past.

  6. jrv says:

    The Wisdom of Psycopaths looks like a very interesting book ! I was just reading about it. It’s a subject that intrigues me and I agree with the main thesis of the author.

  7. jrv says:

    What I like about Fridson is that he is healthily cynical about financial information, he focuses on how and why information is manipulated. He never forgets that human motivations, mainly from controlling management with their personal agenda, are behind financial statements.

    That is very helpful to keep in mind and is usually only learned via practical experience or hard blows…. I often think that it helps to learn from the mistakes of others, and it’s less expensive than learning from personal mistakes. The book is quite helpful in that sense and many others.

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