Transcription
So over the past year, I've read 40 of the bestselling books on Personal Finance, money, and investing because I wanted to really get to the bottom of what it takes to be the best investor, how to make money in the stock market, and make sure I'm making the most of what I actually earn.
I've read everything from very basic books on Personal Finance, beginner's guides to stock market investing, beginner's guides to actually investing in different kinds of companies, importantly, then investing into different kinds of index funds, and then also books on the history of index funds as well. I thought that if I read all of these books and more, which are always arriving in the post, I'll be able to make more money in stocks, become as good as Peter Lynch, Warren Buffett, or Howard Marks, and then just retire in a few years off into the sunset.
But to be honest, I think you're going to be really surprised with what I'm going to say, as what I've learned is far from what I expected when I first got into this. And actually, I've completely changed my mind about a few things. And obviously, I'm not rich yet, but let me explain as we go on.
So let's just start with the most famous ones, because I pretty much ran down the Amazon bestsellers list and then a few recommendations I've seen online. I didn't want to pretend I knew everything, and I wanted to really start from scratch to see what kind of journey you go on as someone who's new to investing and trying to manage money.
All right, so the basics and super popular ones, do they live up to the hype? Rich Dad Poor Dad by Robert Kiyosaki sold around 40 million copies apparently, and it's really a simple story about two different dads, as he puts it, showing how wealthy people act in best ways to actually get rich, and then stay rich too. And I can easily see why the book's done really well, because even though it might seem basic again, none of us get told the key principles when we're young unless we're really, really lucky.
So basic lessons like explaining the difference between assets and liabilities, why some people waste all of their time looking rich by buying fancy cars and getting huge mortgages and big houses that actually end up pretty poor, and those who are actually wealthy spend their money on assets and things that actually produce income, cash flows, and increase in value over time. All of the concepts sound really basic, but they're so important to understand. And I can definitely relate to a lot of the stories. When I was younger, when I would get nice commission paychecks from my job in sales, my first thought was, great, more money to spend. And then I'd spend that money mostly on stuff which just ends up losing money over time, and that stuff would all fall into the liability category, whereas I should have been buying more assets, the stuff that goes up in value over time, and I would have been a lot richer than I was.
Now, I do think that this book deserves its place up there on the best book list. Nice and short, to the point, and some great lessons, and anyone can read this one. I'd highly recommend it.
Here's another one that sold so many copies, Think and Grow Rich by Napoleon Hill. Another one that sold tens of millions, first published back in 1937, so this one's been around for decades. This one starts off interestingly enough, the author says he's interviewed thousands of people about their success, met with the richest man at the time, Andrew Carnegie, and been an advisor to presidents, and he's going to tell you all the secrets of how to be successful too. The idea is great, and you think, right, buckle up, let's go, show me the secrets.
But then, for me, it doesn't deliver at all. The messages are all too wishy-washy. You just think positive thoughts and get rich, or you stay persistent and keep going, and you'll just get everything you want. And while I know how important a lot of those messages are, after working in sales for many years, being persistent, not giving up, and pushing forward, there's a time and a place to try new things and not just beating the same old drum.
I do think the message is valuable though. A positive mindset is really important, and actually, when I go back to some of the business books I've read, like Phil Knight's Shoe Dog, which is the story of founding Nike, or the book about Netflix, you'll always see the same themes that people push through some really hard times to get where they did today, and the success that you actually see now wasn't made overnight. Anyway, some good concepts here, but not a recommended one from me.
I think there's also loads of controversy around whether or not he actually met Andrew Carnegie and did anything he actually says in the book. There's no evidence around that, and I think there's a lesson here that some of the bestselling books stay in the top sellers because they just stay as top sellers. So I hope you understand what I mean, but being a top seller just kind of validates it when in reality, it doesn't mean it's necessarily a good book, it's just sold lots in the past. Still though, mindset is important, so that's a lesson in itself. If you're always going to be negative, then you definitely won't get too far in life.
On some more basic concepts, let me share with you some other books that are all going to be worth a read and are all good with getting those foundations right, because I definitely don't think you need to be jumping right into the complex stuff, and it all gets very, very confusing in the end. The Psychology of Money is a great book, and it's no surprise it's staying in the number one spot at the moment up on the Amazon bestseller list.
So I know we just spoke about how important it is to have the right mindset when it comes to investing, and it's easier said than done. And this book really goes into all the ways that you need to think about money, getting rich, and then most importantly, keeping that money as well. There's a ton of great lessons in here, easy to read too, which always helps, and there's no jargon about the finance industry.
One of my favorite quotes from the book is that controlling your time is the highest dividend money pays, and also, you need a lot of time to make things happen. Now, Morgan talks about Warren Buffett in this book, like we all do, but reminds us that his success and super high net worth came through compounding returns and time, lots of it. Now, patience and controlling your own actions and emotions are some of the most underappreciated skills in my opinion, and even after all of the books I've read on the stock market, how to pick winning stocks, how some of the best investors have got wealthy, I'm now more convinced now more than ever that your own behaviors are so much more important than say, spending more hours looking at company financial statements.
There are some great stories in the book too. I've covered this one before in another video of a regular guy in the US who builds up a massive investment pot, and it's only actually found out when he passes away. And he didn't do a fancy job, he worked as a gas station attendant and then as a janitor, invested small amounts of money, and reinvested dividends into safe companies over many, many decades. Now, none of his family knew what he did until after he passed away, when he had $8 million, which is a huge amount, which he ended up donating to a local hospital and a library, as well as the rest of his family. Now, that is a great story and a reminder about what's possible.
I think this ties back to a lot of the basics from Rich Dad Poor Dad, that a big part of this money and investing business is just saving as much as you can, resisting spending money all at once, and having the discipline to say, I'm not going to buy this nice thing today, instead, I'm going to have a better thing in the future, and I'm going to buy my own freedom too. Investing and looking after your own money is really simple in theory, but you do have to get over the urge to impress other people with all your nice shiny things, and there's plenty of shiny things to buy.
This reminds me of an important lesson from A Simple Path to Wealth, where the main takeaway is, spend less than you make and invest the rest. It sounds easy, but you've just got to do it over many, many years to actually get anywhere. There are so many people who want a shortcut to all of this and to get rich quick, but the more you look into it, the more you realize it's a marathon, not a sprint, and having the basics under control cannot be stressed enough. I've also done my own Guide to Investing For Beginners too, so feel free to go back and watch that one when you're done with this video.
Anyway, as a bit of a bonus, speaking about beginners and getting your foundation solid, here's two UK-specific books I'd recommend. First up, big shout out to fellow YouTuber and professional financial planner, Pete Matthews. Now, he's published The Meaningful Money Handbook, and this is a great overview of everything that you need to know in terms of saving money, budgeting, investing, retirement planning, and even life insurance. And best of all, it's UK-focused, because pretty much everything else out there is US-based, and although most things are universal, there's lots of areas out there that are unique to the UK. So go support your fellow UK folks if you aren't already.
And speaking about another little UK gem, this book called Money: A User's Guide is great. Super small, you can read it in just a few nights if you take your time with it, and it's packed with great info, and it's written from the perspective of someone who's been through the same journey as most of us, where we weren't taught only the basics at school by our parents, we get let loose in the world, we're expected to just find our way. So honestly, nice and easy to read, highly recommend it, and it's £4 on Amazon.
Honestly, I will say that books are criminally undervalued for the money that you pay. I know they aren't the most exciting topic, and lots of people have probably switched off already, but the amount of value you can get is crazy. Now, I tend to do all of my reading just before bed, so if you're quite a busy person, you don't have much time, honestly, rather than doom scrolling on social media, keep a book handy, and even with 30 minutes, an hour each night or something like that, you'll get through loads, and it does help me to get to sleep at least, so worth giving that a try.
Okay, well, how do we get rich then? That's what I actually wanted to know. And now that we've covered off the basics, what are the lessons from the best investors? This is where things get interesting, because as I mentioned earlier, I thought that the more I'd learn, would mean that I'd become a better stock picker, I'll just get better returns, and I'll put myself way ahead of other people. But actually, here's what happened.
You might have seen this graph before, it's called the Dunning-Kruger curve, and it shows how we can overestimate our ability and knowledge about a topic without being a true expert. So you start out here, knowing very little, and then once you learn a bit, you start to gain confidence. So in the investing world, this can happen very fast. Once you understand the basics about index funds, how the market works, and what types of account there are, you can start to feel very knowledgeable. I think some people in 2020 and 2021 got here very quickly, reminding us of the saying that everyone is a genius in a bull market.
Now, the next part is really interesting, and for me, this is when we start to get into the more intermediate books, where we're now talking investing strategies, tips, and picking stocks. Now, I don't mean that they're hard to read, I just mean that you kind of need to be interested in the topic, otherwise it might be a bit boring. Once you start to look into the data of investing and what it takes to be a good stock picker, for me personally, it made me realize how little I know, and actually made me question a lot more about my own strategy and my own level of conviction.
Here's what I mean, I'll show you first. So there's some great books here, and I recommend all of them if you really are into investing. Ben Graham's The Intelligent Investor is certainly a must-read, but it's a bit dry, and it's pretty old, so you're not really going to get the most up-to-date examples, but the principles are really important. And ultimately, if you're a student of Warren Buffett, then you're a student of Ben Graham, as he really is considered the father of value investing. You get all the detail, all the metrics, and what to look out for in the financial statements.
Then, as a great follow-up on, and another legendary investor, Peter Lynch's book, One Up On Wall Street, is a great read, and he's one of the best investors of all time. There's countless lessons in here, and actually, this is the best place to find them because he didn't actually do a huge amount of interviews back in the day. You might find some clips on YouTube, but they're pretty old, still very useful, but the rest of the lessons were all in here. Lots of practical steps from Lynch. He's a real champion for the retail investor, that he reckons you or me can beat the stock market if we just make sure that we lean into our own edge, and also that we know what we own and why we own it.
I always remember how Peter says that when he was at parties or speaking with groups of people that were like doctors or dentists or something, that they'd invest in sectors that had nothing to do with their own industry, whereas he reckons they should have focused on products that they use or own. For example, the stuff they actually used inside their own business. He's got loads of examples like Dunkin' Donuts, Walmart, and Kellogg's. So for example, here's an interesting quote: "Long shots almost never pay off. No matter how bad things get, people still eat corn flakes." Just remember that one the next time you're about to invest in the next hot stock promising to change the world.
One thing I'd say here is that Lynch is a strange example, is that when he left running the Magellan Fund, it had thousands of companies inside it. So it's not like a lot of advice that you get saying that you should concentrate your investments in just a few names, something that Buffett does with Berkshire Hathaway. I'm not sure how many people can really manage that kind of size of portfolio, but maybe that's another video on its own entirely.
I've also read books from Howard Marks and Joel Greenblatt, two other famous names in the investing world, both of whom have amazing track records beating the market for a really long time. Now, Marks is famous for writing his memos that are really, really interesting. You can actually subscribe to it, and he made his money in the distressed debt market, so basically makes money when companies are in trouble and takes on the risk when times are bad for everyone else. Then Greenblatt, another hugely famous investor, talks a lot in his book about companies who split apart, what to look out for in special situations when you're trying to invest.
Now, I've put these two together because before reading these kinds of books, I was expecting there to be more of a concrete formula to invest. You know, you do this, you do that, and then you sit back and you just make money. But virtually all the best investors in the world are effectively outliers. They don't go with the crowd, they operate in an area where they can have an advantage or an edge, and they find opportunities where there's less competition, and they certainly don't just YOLO into the single hot stock that everyone already seems to know about. Hint, hint.
And this makes a lot of sense. So think about it like this: if you want to beat the stock market and get more than you might do by using an index fund, and your portfolio will have to look very different to the market, either very concentrated in a few names, or maybe in some companies that very few people have heard of, because you need to be able to find those winners that everyone hasn't yet found. And remember, this is very competitive too.
So this got me thinking a bit, how much of this is skill, how much of this is luck, and can we replicate it? If Lionel Messi wrote a book on how to be good at football, or Michael Jordan wrote the same on basketball, would reading it help you? I mean, how many kids want to be pro athletes, singers, actors, and all the rest? Obviously, loads of people, but very few will get to the top, and fewer will stay there for a very, very long time. So what makes the people at the top stay so long then? And what part is in our control, and what can be learned?
Now, I honestly don't know the answer, but I will say that these people are the top of the game, and they are massive outliers too. And the reality still shows that most people fail to beat the market. In fact, speaking of this whole topic, you've got another great read by Burton Malkiel, A Random Walk Down Wall Street, and he pretty much goes through the machine of the finance industry, showing us that it's just in there to generate fees, take commissions, and most of the time, retail investors lose money by trying to beat the market, and even the professionals can't do it consistently.
Again, it also comes back to the subject of mindset and how important that is. That time and time again, we end up chasing the hot stock of the day, or fast money, but that doesn't really exist. And where it does, very few people come out on top.
A big shout out as well to this book, I should have really mentioned this one earlier, but John Bogle's Little Red Book here on Common Sense Investing is such a good read. It's great to really get you up to speed on index funds, because if you don't understand what they are and why they're so important to investors, you are missing out.
Anyway, I've missed so much out here, there's loads of other books I've been reading. I'll definitely do some more videos on the topic if you're interested, so please do let me know down below in that comment section. I'd love to hear your recommendations too as to what I should read next.
Let me leave you with this thought then. Going back to that Dunning-Kruger curve, I'm probably somewhere in this deep crevice, not sure what side I'm on yet. But one thing I've realized from all of this reading is that there are no shortcuts to success when it comes to investing or building a business. Good things come to those who wait, and if there was a secret formula, we'd all be doing it, which would then end up defeating the whole thing.
Anyway, as much as I feel much more comfortable looking at financial statements and some of the numbers behind a company, even the best investors still get it wrong a lot of the time, and so much is outside of our control. Investing is an art, not a science, but you can tilt the brush in your favor by stopping yourself interfering too much and taking your emotions out of it, which is always much easier said than done.
Anyway, leave a like on the way out, subscribe for more, as always, happy investing.