I actually don’t believe it takes much of a philosopher to be a successful investor. Nor do I think that the principles of good investing are complicated or terribly difficult to understand. They just need to be followed through thick and thin – something that is much easier said than done.
Human beings are by no means as rational as some theories try to make us believe. Instead, they tend to make the same mistakes over and over again, frequently as a consequence of herding behavior or a lack of emotional stability. Therefore, each new generation of investors goes through the painful exercise of relearning the same old lessons. All too often, this is equivalent to unlearning a number of ill-conceived theoretical concepts and bringing oneself to ignore Wall Street propaganda with its never-ending flow of marketing-driven nonsense.
I believe that emphasizing equity investments, staying moderately diversified around the best ideas, maintaining a healthy margin of safety, ignoring market forecasters and taking advantage of the moods of the market as they present themselves will do much more for results than any attempt to „optimize“. Diversification across a number of outstanding managers allows to manage risk more intelligently and deliver superior results more reliably than if all investment decisions were made by one person only.
My interests are closely aligned with my clients’ financial goals. I am under no pressure to buy, sell or keep a certain financial product. As a matter of fact, I am financially completely indifferent as to what I buy or sell. And doing nothing for extended periods of time is fine with me, too.
The following books, in my view, capture well the essence of investing: