Reading List July 2014

A few books for the Summer, to receive these lists every month, sign up here 


Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration by Ed Catmull, Amy Wallace

This book was launched with tons of buzz, and deservedly so. It’s one of the most entertaining and useful business books I’ve ever read. The story behind Pixar is fascinating, but so are the management tactics used to keep the company edgy and creative. I found many ideas applicable to my job and my business. For those that follow asset management companies, there are many similarities between Pixar and Bridgewater. The emphasis on constant candor, honesty, and feedback are essential cultural elements at both firms. I particularly enjoyed the discussion of randomness.

Here are a few teaser quotes:

What is the nature of honesty? If everyone agrees about its importance, why do we find it hard to be frank? How do we think about our own failures and fears?

This principle eludes most people, but it is critical: You are not your idea, and if you identify too closely with your ideas, you will take offense when they are challenged. To set up a healthy feedback system, you must remove power dynamics from the equation—you must enable yourself, in other words, to focus on the problem, not the person.

When I mention authenticity, I am referring to the way that managers level with their people. In many organizations, managers tend to err on the side of secrecy, of keeping things hidden from employees. I believe this is the wrong instinct. A manager’s default mode should not be secrecy. What is needed is a thoughtful consideration of the cost of secrecy weighed against the risks. When you instantly resort to secrecy, you are telling people they can’t be trusted. When you are candid, you are telling people that you trust them and that there is nothing to fear.

Rational Expectations: Asset Allocation for Investing Adults (Investing for Adults Book 4) by William Bernstein

I’ve really enjoyed William Bernstein’s e-book series, especially this latest one. In typical Bernstein fashion, it’s very straightforward and informative. A few choice passages:

Oh, yes, and one more thing. Make sure, absolutely sure, that you have enough riskless assets to tide you over during the bad times, when you are the most likely to see your income fall or even lose your job. Preferably, you should have yet more than this, so as to take advantage of that high exchange rate when it shows up, as it inevitably does. Even more simply: you must have patience, cash, and courage—and in that order. All else, as Hillel said, is commentary.

This is no small point: how much liquidity you have when blood runs in the streets is likely the most important determinant of how successful you’ll be in the long run, since this is the time you’re most likely to lose your job, need cash to purchase stocks on the cheap, or buy the corner lot you covet from your impecunious neighbor.

Beware! Financial systems are not airfoils or electrical circuits that respond identically, each and every time, to given inputs. Stock, bonds, and portfolios are different animals, and can behave unpredictably.

Shadow Divers: The True Adventure of Two Americans Who Risked Everything to Solve One of the Last Mysteries of World War II by Robert Kurson

This book has nothing to do with investing; I include more as a riveting summer read. Two divers discover a U-Boat sunk off of the New Jersey coast which cannot be identified, and then go to amazing lengths to explore and ultimately identify the boat. I could not put this book down.  Kurson is a gifted storyteller.  One good lesson for investors is to never trust official documents or data.  We tend to believe that data is fact, but it is created/reported by fallible people. If a particular datum matters to you, you should always double check for accuracy. Data gets fudged all the time.

As One Is: To Free the Mind from All Condition by Jiddu Krishnamurti

This book is only for those interested in philosophy. Krishnamurti always challenges his listeners to think for themselves, to never be “second hand people.” In keeping with this month’s theme, he also has a lot to say about creativity: “creativity is something that comes into being only when the mind is in a state of no effort.” Here are a few passages:

Self-knowledge is the beginning of wisdom. Self-knowledge is not according to some psychologist, book, or philosopher but it is to know oneself as one is from moment to moment. Do you understand? To know oneself is to observe what one thinks, how one feels, not just superficially, but to be deeply aware of what is without condemnation, without judgment, without evaluation or comparison. Try it and you will see how extraordinarily difficult it is for a mind that has been trained for centuries to compare, to condemn, to judge, to evaluate, to stop that whole process and simply to observe what is; but unless this takes place, not only at the superficial level, but right through the whole content of consciousness, there can be no delving into the profundity of the mind.

[You] must have immense patience to find out what is true. Most of us are impatient to get on, to find a result, to achieve a success, a goal, a certain state of happiness, or to experience something to which the mind can cling. But what is needed, I think, is a patience and a perseverance to seek without an end. Most of us are seeking; that is why we are here, but in our search we want to find something, a result, a goal, a state of being in which we can be happy, peaceful; so our search is already determined, is it not? When we seek, we are seeking something which we want, so our search is already established, predetermined, and therefore it is no longer a search. I think it is very important to understand this. When the mind seeks a particular state, a solution to a problem, when it seeks God, truth, or desires a certain experience, whether mystical or any other kind, it has already conceived what it wants; and because it has already conceived, formulated, what it is seeking, its search is infinitely futile. And it is one of the most difficult things to free the mind from this desire to find a result.

So, can I, who have vast education, knowledge, who have had innumerable experiences, struggles, loves, hates—can that ‘I’ come to an end? The ‘I’ is the recorded memory of all that, and can that ‘I’ come to an end? Without being brought to an end by an accident, by a disease, can you and I while sitting here know that end? Then you will find that you will no longer ask foolish questions about death and continuity—whether there is a world hereafter. Then you will know the answer for yourself because that which is unknowable will have come into being. Then you will put aside the whole rigmarole of reincarnation, and the many fears—the fear of living and the fear of dying, the fear of growing old and inflicting on others the trouble of looking after you, the fear of loneliness and dependency—will all have come to an end. These are not vain words. It is only when the mind ceases to think in terms of its own continuity that the unknowable comes into being.