Do you want to be Richer, Wiser, Happier? Do you want to know what Successful investors do differently? How do they think and decide? What do they do in other areas of our life? The journalist, William Green, covers principles, experiences, Wisdom, lessons, the journey of the 8 greatest minds in investing, some known such as Mohnish Pabrai, Charlie Munger, Sir John Templeton, and some relatively unknown like Jean-Marie Eveillard, Nicholas Sleep and Qais Zakaria. This book not only teaches how to invest, it teaches how to think not only in investing but also in other areas of life like philanthropy, happiness, etc.
Table of Contents
About the book Richer, Wiser, Happier
Published in Apr 2021, 304 pages
Written by Journalist William Green based on hours of interviews with these investors. William Green has written for leading publications like Forbes, The New Yorker, Time, Fortune, etc. He has also written books like The Great Minds of Investing, The Education of a Value Investor. You can follow him on his website https://www.williamgreenwrites.com and Twitter: @williamgreen72
Why you should you read Richer, Wiser, Happier
It invites us into the lives and minds of fascinating figures such as Charlie Munger, Mohnish Pabrai, Sir John Templeton, Howard Marks, Jean-Marie Eveillard, Joel Greenblatt, Nick Sleep & Qais Zakaria, Tom Gayner, and others to reveal how they think and why they win.
To learn the principles, processes, insights, habits, and personality traits that enable the most successful investors to beat the market in the long run and become spectacularly rich. The successful investors and their uniqueness are shown in the image below
- CHAPTER ONE: The Man Who Cloned Warren Buffett,
- CHAPTER TWO: The Willingness to Be Lonely, Sir John Templeton
- CHAPTER THREE: Everything Changes, Howard Marks
- CHAPTER FOUR: The Resilient Investor, Jean-Marie Eveillard
- CHAPTER FIVE: Simplicity Is the Ultimate Sophistication, Joel Greenblatt
- CHAPTER SIX: Nick & Zak’s Excellent Adventure
- CHAPTER SEVEN: High-Performance Habits, Tom Gayner
- CHAPTER EIGHT: Don’t Be a Fool, Charlie Munger
And how can we profit by studying these financial outliers and reverse engineering their winning ways?
What the book doesn’t have
There is No discussion on specific stocks or sectors or how to analyze a stock, business, or management
CHAPTER ONE: The Man Who Cloned Warren Buffett, Mohnish Pabrai
The book starts with one of my favorite investors, Mohnish Pabrai, and his thirty-year game to turn $1 million into $1 billion by “cloning” Warren Buffett. Mohnish Pabrai has high regard for Warren Buffett and admits that his investment style is copied from Warren Buffett
Mohnish Pabrai is an Indian-American businessman, investor, philanthropist, author of the book The Dhandho Investor. In June 2007 he made headlines by bidding the US $650,100 with Guy Spier for a charity lunch with Warren Buffett
In the book William Green talks about his journey to India with Mohnish Pabrai, the interaction of Mohnish with Dhakshina students, lessons on compounding, his “cloning” process, the 650K USD lunch with Buffett along with Guy Spier, and four filters on investing that he learned from Warren Buffett
Mohnish Pabrai has written The Dhandho Investor: The Low – Risk Value Method to High Returns.
Mosaic: Perspectives on Investing. In this book, Mohnish Pabrai has distilled the Warren Buffett method of investing down to a few points based on series of articles he authored for various newsletters and websites between 2001 and 2003
Mohnish Pabrai’s approach to life is covered extensively in Guy Spier’s book, The Education of a Value Investor, in a chapter titled “Doing Business the Buffett-Pabrai Way
Excerpt from the book Richer, Wiser, Happier from LinkedIn
William Green writes about Mohnish Pabarai, excerpt from Turning $1 million into $1 billion by “cloning” Warren Buffett
By 1994, Mohnish Pabrai had set aside $1 million in savings. For the first time, he had a war chest to invest. That year, while killing time in Heathrow Airport, he began to read about Warren Buffett
As a boy, Pabrai had heard a tale about an Indian who supposedly invented chess
Remembering this story, Pabrai grasped instantly that Buffett had mastered the game of compounding. In 44 years, he’d doubled his money 18 times and was already well on his way to becoming the richest man on earth.
This set Pabrai thinking. What if he could figure out how Buffett picked stocks and could mimic his winning approach? Thus began what Pabrai describes as a “thirty-year game” to turn his $1 million into $1 billion
Pabrai’s approach to the challenge of becoming a billionaire holds important lessons for us all, not just as investors but in every area of life
He didn’t attempt to reinvent the wheel by, say, devising a new algorithm to exploit subtle pricing anomalies in the markets. Instead, he identified the most skillful player of this particular game, analyzed why he was so successful, then copied his approach with scrupulous attention to detail. Pabrai’s term for this process is cloning
By cloning Buffett—and later, his polymathic partner, Charlie Munger—Pabrai has become one of the leading investors of our time.
“I’m a shameless copycat,” he says. “Everything in my life is cloned…. I have no original ideas.”
Pabrai’s commitment to cloning raises an array of provocative questions. Is originality overrated? Instead of struggling to innovate, should most of us focus our energy on replicating what smarter and wiser people have already figured out? If cloning is such a powerful strategy for success, why don’t more people use it? Are there dangers to cloning? And how can we benefit from it while also being true to ourselves?
As Pabrai saw it, Buffett’s approach to stock picking grew out of three core concepts that he’d learned from Benjamin Graham, the patron saint of value investing, who taught Buffett at Columbia and later hired him.
- First, whenever you buy a stock, you’re purchasing a portion of an ongoing business with an underlying value, not just a piece of paper for speculators to trade.
- Second, Graham viewed the market as a “voting machine,” not a “weighing machine,” which means that stock prices frequently fail to reflect the true value of these businesses. As Graham wrote in The Intelligent Investor, it’s useful to think of the market as a manic-depressive who “often lets his enthusiasm or his fears run away with him.”
- Third, you should buy a stock only when it’s selling for much less than your conservative estimate of its worth. The gap between a company’s intrinsic value and its stock price provides what Graham called a “margin of safety.”
- There are no prizes for frenetic activity. Rather, investing is mostly a matter of waiting for these rare moments when the odds of making money vastly outweigh the odds of losing it
Chapter Two: The Willingness to Be Lonely, Sir John Templeton
The second chapter of the book is about Sir John Templeton and his “willingness to be lonely” or “the ability to think and do different from the crowd”
“If you want to have a better performance than the crowd, you must do things differently from the crowd.” John Templeton in an interview with SmartMoney (2004)
Sir John Marks Templeton(29 November 1912 – 8 July 2008) was an American-born British investor, banker, fund manager, and philanthropist. In 1954, he created the Templeton Growth Fund, which averaged growth over 15% per year for 38 years. In Oct 1992, Franklin acquired Templeton, Galbraith & Hansberger Ltd, leading to the name as we know today the Franklin Templeton. He is known as a pioneer of emerging market investing in the 1960s. Money magazine named him “arguably the greatest global stock picker of the century” in 1999
From Templeton’s 60 years of experience, an investor can get Guiding principles.
- FOCUS ON RETURNS AFTER INFLATION
- STOP SPECULATING!
- INVEST WITH AN OPEN MIND
- BUY LOW
- DIVERSIFY
- DO YOUR HOMEWORK
- DO NOT PANIC!
- THERE IS NO SUCH THING AS CERTAINTY
Interview of Sir John Templeton by William Green at the Bahamas in 1999 The Secrets Of Sir John Templeton At 86
Templeton rarely thinks like the rest of us. And that has been one of his greatest strengths. In 1939, he called his broker with a characteristically eccentric order. He wanted to invest $100 in each of 104 U.S. stocks, all trading at less than $1 a share; 37 were in bankruptcy, but he bought them anyway. Hitler had just invaded France. Templeton, then only 27, thought a world war would electrify America’s shattered economy, saving even the feeblest companies. He was so sure of himself that he borrowed $10,000 to make the investment. “Five years later, when I liquidated those holdings, I had a profit on 100 out of 104 of them,” he recalls. “I made roughly five times my money.”
In the 1950s, when Japan’s economy was reeling and many Japanese stocks were trading at a P/E of three, he figured it was the world’s cheapest market. He snapped up unwanted gems like Hitachi and Fuji Film, betting 60% of his fund’s assets in a country ridiculed for producing cheap knockoffs. By 1980, exuberant investors were piling into Japanese stocks, and Templeton, looking for cheaper buys, had almost entirely cashed out. He’d quintupled his money.
In 1968, when the U.S. market was surging to breathtaking heights, he was massively underweighted in U.S. stocks. The bubble burst, and many stocks fell 70% between 1969 and 1974. In those terrifying years, his fund–largely invested in Japan and Canada–boasted a positive return of 50%.
When the U.S. market crashed in 1987, Templeton loaded up on stocks that had been slaughtered. “He doesn’t get carried away by the emotions of Wall Street,” says Jay Bradshaw, who ran Templeton’s trading desk. “He said, ‘Well, if we paid that much for Ford Motor before and it was good value then, it’s even better value now.'” This habit of diving in when stocks are getting crushed requires “tremendous willpower and strength of personality,” says Mobius. “Everybody else is running out of the burning building.”
His secret weapon? His unerring ability to stay calm as an investor is bolstered by his religious faith, which seems to free him from fears and doubts that paralyze others. Convinced he’s a beloved child of God and that “spiritual wealth is vastly more important than monetary wealth,” he’s never been rattled by the market’s plunges. Even when he took a beating, says Templeton, “I never was depressed or despairing.”
CHAPTER THREE: Everything Changes, Howard Marks
The third chapter of the book is about Howard Marks and Cycles and Change is inevitable. Marks views “the world as behaving cyclically and oscillating, rather than going in some straight line.”
“When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something, and that goes double for his book”-Warren Buffett
Howard Stanley Marks is an American investor and writer. He is the co-founder and co-chairman of Oaktree Capital Management, the largest investor in distressed securities worldwide. In 2020, with a net worth of $2.1 billion, Marks was ranked No. 391 on the Forbes 400 rankings of the wealthiest Americans.
Marks is admired in the investment community for his “memos”, which detail his investment strategies and insight into the economy and are posted publicly on the Oaktree website
Howard Marks has published 3 books on investing.
- 2011: The Most Important Thing: Uncommon Sense for the Thoughtful Investor
- 2012: The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor
- 2018: Mastering the Market Cycle: Getting the Odds on Your Side
Excerpt from Howards Mark Memo of 2020
The opening lines of Charles Dickens’s A Tale of Two Cities offer a fitting coda to 2020:
It was the best of times, it was the worst of times . . .
it was the season of Light, it was the season of Darkness,
it was the spring of hope, it was the winter of despair.
This past year challenged many preconceived notions about the economy, markets and policy – and even changed the way we live. But the inescapable truth of investing remains unchanged: there is no magic answer, no solution (other than superior skill) that will enable an investor to earn a high return safely and dependably. And that’s especially true in today’s low-return world.
CHAPTER FOUR: The Resilient Investor, Jean-Marie Eveillard
The fourth chapter of the book is about Jean-Marie Eveillard, and how to be resilient and have faith that Value investing “works over time,”
Jean-Marie Eveillard (born 1940) is a French international investor who led First Eagle Funds. He’s widely recognized as one of the first truly global value investors.
Our cash balance is purely a residual of whether or not we’re finding enough to invest in”.
“If one is wrong in judging a company to have a sustainable competitive advantage, the investment results can be disastrous”.
Excerpt from The World’s Best Investors, by William Green
In the late 1990s, Jean-Marie Eveillard faced the investing equivalent of a near-death experience. Amid the insanity of the dotcom bubble, he refused to buy any of the overvalued tech, telecom, or media stocks that were enriching more carefree investors. His most prominent mutual funds, SoGen International and SoGen Overseas, lagged the market disastrously for three years running. “After one year, your shareholders are upset,” he says. “After two years, they’re furious. After three years, they’re gone.” By early 2000, 70 percent of SoGen International’s shareholders had dumped the fund and SoGen’s overall assets had fallen from more than $6 billion to barely $2 billion.
And then the bubble burst. The Nasdaq index plunged by 78 percent, devastating legions of reckless speculators. Eveillard’s perennially cautious, value-driven approach was vindicated, and Morningstar later gave him its inaugural Fund Manager Lifetime Achievement Award. His renamed firm, First Eagle Funds, rebounded so strongly that its assets have ballooned to almost $100 billion
Despite his achievements, Eveillard admits that he has often found his life “a bit difficult.” He’s hard on himself and unusually honest about his flaws and mistakes. Above all, he regrets that he didn’t do a better job of balancing work and family. Investing was so “absorbing”—and sometimes so “psychologically painful”—that he now realizes he didn’t focus sufficiently on his two daughters while they were growing up
CHAPTER FIVE: Simplicity Is the Ultimate Sophistication, Joel Greenblatt
Joel Greenblatt (born December 13, 1957) is an American academic, hedge fund manager, investor, and writer(The Little Book that Beats the Market ). Since 1996, Joel Greenblatt teaches Value investing classes for MBA students at Columbia University’s Graduate School of Business
His book The Little Book that Beats the Market introduced an investment strategy of “magic formula investing”, for determining which stocks to buy. The chapter covers Magic formula of Greenblatt and 4 simple lessons from investing.
Buying good, profitable companies at cheap prices is not exactly a revolutionary idea; this is what Warren Buffett has successfully done for decades. But Greenblatt has created a systematic way to do it, and most of the heavy lifting of number crunching is done by the screener. A simple and straightforward investing strategy can many times produce superior returns in comparison to a more complex approach.
The Magic Formula ranks stocks by two factors:
- Profitability (based on Greenblatt’s chosen metric, Return on Capital)
Earnings yield (the inverse of the P/E ratio, defined here by Greenblatt as EBIT / Enterprise Value)
Greenblatt recommends buying a portfolio of 20-30 Magic Formula stocks, holding for one year, and then re-running the process annually
CHAPTER SIX: Nick & Zak’s Excellent Adventure
Nick Sleep & Qais Zakaria managed the Nomad Investment Partnership delivering returns of 921% versus 117% for the MSCI World Index from September 2001 to December 2013. Nomad was forced to close its door by regulators who became concerned with its level of concentration. According to a recent video from Mohnish Pabrai (Trades, Portfolio) they had 40% of the firm’s assets invested in Amazon.com Inc. (AMZN, Financial). The remainder was split between Costco Wholesale Corp. (COST, Financial) and Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial).
Nick Sleep kept a low profile but he’s started to gain more recognition following the publication of the Nomad Investment Partnership letters, which are available from the I.G.Y. Foundation homepage, Nick Sleep’s charitable foundation.
You can read more about Nick Sleep in the Master class Learning from Nick Sleep. An excerpt of the book on Nick sleep is given below
When they analyzed companies and interviewed CEOs, Sleep and Zakaria probed for insights with a long shelf life. They sought to answer such questions as
What is the intended destination for this business in ten or twenty years? What must management be doing today to raise the probability of arriving at that destination? And what could prevent this company from reaching such a favorable destination? They referred to this way of thinking as “destination analysis.”
Wall Street tends to fixate on short-term outputs, favoring questions such as What will this company’s profits be over the next three months? and What is our twelve-month price target for this stock? Sleep and Zakaria focused instead on the inputs required for a business to fulfill its potential. For example, they wanted to know, Is this company strengthening its relationship with customers by providing superior products, low prices, and efficient service? Is the CEO allocating capital in a rational way that will enhance the company’s long-term value? Is the company underpaying its employees, mistreating its suppliers, violating its customers’ trust, or engaging in any other shortsighted behavior that could jeopardize its eventual greatness?
It’s worth noting that destination analysis is an equally handy tool in other areas of life.
If, say, your goal is to be healthy in old age, you might ask yourself what inputs (in terms of nutrition, exercise, stress reduction, medical checkups, and the like) are required now to boost your odds of reaching that destination. If you want to be remembered lovingly by your family and friends, you might picture them at your funeral and ask how you need to behave today so they will cherish the memory of you.
CHAPTER SEVEN: High-Performance Habits, Tom Gayner
Tom Gayner is the president and Chief Investment Officer Markel Corp, where he manages the company’s investment portfolio. The asset under management is about $2 billion.
Gayner’s strategy is to be “directionally correct,” not perfect. “In general,” he says, “I’m a satisfier, not an optimizer.”
Excerpt from the book
Resounding victories tend to be the result of small, incremental advances and improvements sustained over long stretches of time. “If you want the secret to great success, it’s just to make each day a little bit better than the day before,” says Gayner. “There are different ways you can go about doing that, but that’s the story…. Just making progress over and over again is the critical part.”
“The Aggregation of Marginal Gains”
Gayner has applied the same philosophy to investing. Many investors lurch erratically from one short-term bet or promising strategy to the next, much like yo-yo dieters who bounce between fad diets without entrenching a sustainable solution. Gayner, the patron saint of steady progress, adheres to a stock-picking strategy built on four principles that haven’t changed in thirty years. They point him in the right direction and help him to avoid “being stupid…. They’re like guardrails.”
First, he seeks “profitable businesses with good returns on capital and not too much leverage.” Second, the management team must have “equal measures of talent and integrity.” Third, the company should have ample opportunity to reinvest its profits at handsome rates of return. Fourth, the stock must be available to him at just the right price.
CHAPTER EIGHT: Don’t Be a Fool, Charlie Munger
Charlie Munger needs no introduction. He is an American billionaire investor, vice chairman of Berkshire Hathaway, the conglomerate owned by Warren Buffett. Warren Buffett has described Munger as his closest partner and right-hand man. In multiple speeches, and in the book Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, “worldly wisdom” consists of a set of mental models framed as a latticework to help solve critical business problems
Excerpt from the book
When I ask Munger how to apply this method of thinking to practical problems such as deciding whether to get married or buy a particular stock, he recommends asking, “‘Is this going to be a disaster?’ instead of asking, ‘Is it going to be wonderful?’
Finding out what’s wrong and trying to avoid it is different from finding out what’s good and trying to get it. You have to do both, of course, in life. But this inversion of looking for the trouble and trying to avoid it keeps you out of a lot of messes. . . . It’s a precaution. It’s like a checklist before you take off in an airplane.”
Similarly, if you’re looking to make a thoughtful investment in a well-managed fund, you might start by asking, “How can I invest blindly in a lousy fund that’s a disaster waiting to happen?” That question would lead you to list all of the pitfalls that investors routinely overlook—for example, outrageous fees, dangerous exposure to the most popular and priciest sectors of the market, and a recent streak of head-spinning returns that will almost surely prove unsustainable.
This, then, is the first mental trick we should learn from Munger as a safeguard against stupidity: imagine a dreadful outcome; work backward by asking yourself what misguided actions might lead you to that sorry fate, and then scrupulously avoid that self-destructive behavior. “Of course,” says Munger, “a lot of people are so interested in reaching for the prize that they don’t even think about the stupidities that might prevent them from getting it.”
Video on Author of Richer, Wiser, Happier
William Green talks about the launch of his new book Richer, Wiser, Happier.
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It is good to know about the lives and minds of great investors such as Charlie Munger, Mohnish Pabrai, Sir John Templeton and not so popular one Jean-Marie Eveillard, Nicholas Sleep and Qais Zakaria. Wish William Green would have added some information about Health then we would be healthier too.
