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One up on Wall Street by Peter Lynch.

Main lesson of the book: How to invest to beat the market.

This is a really nice book that has a lot of interesting points that will carry through the ages. A great point the book loves to make is that the small investor has a leg up on the “Big Boys” on Wall Street. The reason why this is, is because the small investor can literally invest in what they know. What the small investor knows is what they experience and see happening around them in their everyday life. If you see a business open up a lot of stores around you, or all of a sudden someone in your circle buys something new and they love it. Those are signals that there is something happening in the market you might want to look into. Because the base rules still apply, regardless of whatever might happen. Quality and good business sense will be seen by the market and it will price it correctly. Knowing that the market will price what you have found correctly, it will give you the confidence to keep the stock till the value you assigned it matches with the value assigned by the market. But remember that no matter how much confidence you have or how much research you have put it, the market isn’t something anyone can accurately read all the time. So you will make mistakes. The goal is to be right more than you are wrong. Or be lucky enough to be wrong a lot but be right one big time.

The book divides the market into 6 segments of companies one can invest in. You have the Fast Grower. These companies have grown their earnings by about 25% per year on average. These companies will of course be well known by the market thus their potential growth will be well priced and thus sell at a premium. With these companies you have to make sure you get out once the growth slows down. The opposite of Fast Growers is of course Slow Growers. These are the companies that usually pay dividends to their stock owners. These are good options for those who like stability. The next one are what the book calls Stalwarts. These are the companies that don’t really drop nor grow as much because they tend to sell essentials that aren’t really volatile. These companies are usually recession proof. There are also Cyclical companies that have their profits go up and down in cycles. These companies are usually the ones that get referred to when people say buy low and sell high. Turnarounds are the companies that just went through something or are experiencing difficulties. When investing in these companies you will need to make sure that you are sure they can actually turn it around and won’t go bankrupt. And the last one is Asset Plays. These are companies that are currently underappreciated by the market. Some companies tend to not have an accurate balance sheet showing the true value of their assets. Which these companies you can make a lot of money because the market might not be aware of the mistake.

Peter Lynch also suggested that as a serious investor, you will need to at least put in one hour of research every week to make sure you are at least aware of what’s happening in the market. And no matter what you do, never invest in HOT stocks. Because these stocks are almost always overvalued and the market will correct itself. A smart move you can make is by investing in the category instead of an individual stock so you can see what is going on in the market. And if you are to invest in a company, keep in mind that a company with no debt can not go bankrupt. Which also means that he company might not be expanding as much as it could.

One of the best pieces of advice the book gave was the following. Invest in boring, simple, dull or mundane stocks. Or find stocks that are currently out of favor with the market, and if you can find companies that haven’t been found by Wall Street yet. If the company does something that everyone needs or wants but would rather not talk about, you might have found yourself a great company. The reason why is because people tend to want to only invest in things they don’t understand or things that seem sexy to be a part of. But a company that sells toilet seats might be an amazing investment. Or a funeral home that keeps growing its consumer base. The fact that you own stocks in a funeral home might not be seen as “sexy” but it could be a very valid investment. Another fun point the book made is that you should look for a company with a weird, funny or straight up ridiculous name. The reason for this is that Wall Street will most likely never purchase it sheer for the fact that the big companies won’t want to tell their clients they just bought “Dingy Jingy Jeanie Beanie” for 5 million. But if this company has a solid business model that can be replicated and a strong management team, its intrinsic value will most likely be higher than its value in the current market. So owning it until the market catches up is the smart move. And another great point is that you should look for companies that don’t have or have little institutional ownership. If a company checks all the boxes then you have yourself a good bet, according to Peter Lynch.

When becoming a part of a company you should try to find the story behind the company. This will help you follow it a lot better. And keep in mind that a company that buys back its stocks is a positive. This shows that management understand the value of its company and is looking to the future and not the present. These are all things you should take into consideration. As stated in several books, Peter Lynch always wants to make sure that the reader understands that we are buying a part of a company and not just a piece of paper. Which means that we will have to do a bit or research before we buy. Do as much research as you would when buying a new fridge. And always be patient. Watching your stocks will only drive you crazy.

The book also tries to answer some common mistakes a lot of people make when investing. You will never know what the bottom of a stock is, so don’t make the assumption that just because the stock is down it won’t go down further. The same goes for a stock going up. There is no ceiling on a stock. Don’t ever think that just because you only invested a small amount of money it doesn’t matter. A loss is a loss no matter how much you invested. You can lose it all regardless. And I know that hope is a beautiful thing to most, but some companies will NOT come back. So waiting for something to come back to the price you bought it at, might not be the smartest thing to do. And never compare yourself to others. The mind state of “I could have made so much money if I bought it back then”. Will just lead you to make mistakes in the future.

This was a nice book. It had a lot of nice insights and good points I will take into my own investment strategies.

Good to Great by Jim Collins

Main lesson of the book: How a company can grow into becoming great.

This was a very entertaining and insightful book. It had some key points that enlightened me on how one should go about conducting business and growing it. The book is mainly made for a business that has already reached a certain level but the concepts and theories can still be applied to small companies as well as your personal life. There are basically 6 key points that can help a company grow from Good to Great.

  1. Level 5 leadership.
  2. First “Who” then “What”.
  3. Confront the facts.
  4. Hedgehog concept.
  5. Culture of disciple.
  6. Technology Accelerator.

In no way shape or form does the book state that you can grow into a company that can be considered great. Because a great company is built over years not put together in a few days. And to build a great company you first need a great leader. The best possible leader to have is a level 5 leader which is defined as the following:

“Level 5 leadership is a concept developed in the book Good to Great. Level 5 leaders display a powerful mixture of personal humility and indomitable will. They’re incredibly ambitious, but their ambition is first and foremost for the cause, for the organization and its purpose, not themselves.”

This might sound simple as if it should speak for itself, but many a company will have a leader at the helm who craves praise and acknowledgement for their deeds and successes. Its these kinds of leaders who can possibly bring the company to great heights, but once they leave the company will plummet back down to mediocrity. A level 5 leader will make sure that the company is great with or without them.

The next point is that you will have to make sure the right people are on the bus. After which you will have to ensure that the wrong people are off the bus and then the most important thing is that the right people need to be in the right seat. Some people might be amazing but be in the wrong position to show their full ability. By having the right people on the bus and in the right place, they will motivate themselves. You will no longer have to manage them as you would with the wrong people. You can diminish if not let go of bureaucracy because it is a system that one would use to make sure the wrong people are motivated and make less mistakes. But if you were to over manage the right people, you will only hinder their growth and frustrate their natural curiosity and entrepreneurship.

Confront the facts with honesty and bravery. Don’t try to make the world fit into what you want it to be, but instead look at your position in the market and see how you can grow from there. Don’t think that everything will be ok, just because you want it to be, or because in the past everything always went your way. Change is the name of the game, so be honest with yourself when said change confronts you.

The next point is perhaps my favorite point in the book, which is the Hedgehog concept. A hedgehog knows exactly one great thing and sticks to it. There is no need to have your finger in every pie there is. Instead Good To Great tells you to ask yourself these 3 questions:

  • What can you be the best at?
  • What drives profitability in your business model?
  • What are you passionate about?

Think of these as three circles and at the intersection of all 3 that is where your hedgehog concept lies. By focusing on that and improving it to the best of your capabilities, you will gain insight on how your company can become great. A lot of companies make the mistake of thinking that they can do whatever they want, because they have the money. But you will never see a great company like Coca Cola suddenly start making luxury cars. But a lot of companies love to go into a business that is outside of their hedgehog concept.

A Culture of Discipline will completely take away the need for hierarchy. Which I am personally a huge fan of. It will also make sure that bureaucracy is no longer needed because every will do what needs to be done without being asked or told to do so. This in turn will create an amazing culture of freedom within the allowed framework. And that is the power a company needs to go from good to great.

And last but not least is Technology Accelerators. This is not to be confused with acceleration through technology. The difference lies in the fact that by using technology to grow your company, you can easily get lost in trying to play catchup with the market. But Good to Great shows us that a company should always try to link technology to their hedgehog concept. By doing this, the technology that will spring forth isn’t the latest gadget on the market, but rather a piece of tech that will improve your company’s performance.

Another great concept that is often used throughout the book is the Flywheel Effect. If the first three key points are in effect, they will create momentum similar to pushing a heavy flywheel into rotating. The first push will seem fruitless and it will take a lot of effort to actually make the wheel go around once. But then you do it again, and again. With each turn the wheel starts picking up speed until it reaches a point where it moves on its own. And that’s the point where you company will reach breakthrough and become a great company. Other companies tend to start spinning the wheel but see no direct results and thus give up and move the flywheel in a totally different direction. This is called the doom loop, because it’s a waste of energy every time they turn the wheel.

This is a great book for everyone interested in improving their own business or learning how to become an effective leader.

Warren Buffett’s Ground Rules by Jeremy C Miller.

Main Lesson of the book: How and why Warren Buffer did what he did.

It’s no secret that Warren Buffet was a huge fan of Benjamin Graham who wrote the book The Intelligent Investor. Warren took the lessons that Benjamin taught him to heart and used it as the foundation for his own philosophy on investing. Buffet at one point was close to retiring in his 20’s but his family asked him to help them invest his money. And instead of just taking their money he decided to create a partnership with them. The partnership had certain ground rules that showed how much Buffet respected them. One of the key rules was that Buffet would invest their money the exact same way he invested his own money. He would not only do that, but he promised that outside of the investments he made with the partnership he would make no other deals. A beautiful rule he instated was that his performance should only be taken under review after 3 years at a minimum. Because he felt that this was the earliest one could speak of measuring results. He also made sure that the results wouldn’t just stand by themselves but instead they would be compared to the Dow Jones industrial average. Which means that he had a measuring stick that he didn’t simply use to see how well he was doing in the market as a whole, but instead it was a point he competed with. He tried to beat the Dow every year with at least a 10% advantage over the Dow. And based on what the book states, he never had a down year in all of his investment years with the partnership. Which is downright amazing.

Buffet follows the rules of Graham which are: always have a margin of safety in your investments. Which means that if you think the stock is worth 20 then try to buy it at 10. The next rule is keeping an eye on the market prices. Keep the value you have given the company in mind, and when the market price drops below that point to a very depressing degree, buy it. And if it gets high to an almost euphoric price, sell it. Other than that, the price changes shouldn’t bother you at all. Another key rule Graham taught is that owning a stock is the same as owning a part of a business. It’s not just some piece of paper or some digital symbol on your screen, you actually own a part of the business. And last but not least, forecasting is a past time for fools. No one knows what will happen in the market, so don’t waste your time on trying.

Like I said before, Buffet was able to beat the Dow every single year, but what I failed to mention is that he was able to beat it by 20% at times for several years in a row. The significance of this number becomes so much greater when its compounded. Buffet was understandably so a huge fan of compounding. He understood that the underlying math was the key element in creating wealth. By compounding 20% every year, the math alone allowed his wealth to grow exponentially. Which is a lesson we all have to abide by. Every book I’ve read so far, mentions compounding as the key element in grown wealth. Patience and persistence are key in letting your money grow.

Buffet had a very interesting perspective on investing as he divided his investing method into three categories. Which are:

  • The Generals
  • Workouts
  • Controls

The generals were companies that Buffet found through extensive research. These were the companies that were undervalued according to his research. They could be franchises or business that just got started or were ignored by the general stock market, because of whatever reason. Workouts are companies that are about to be purchased or are to merger with other companies. The moment that is announced, the value of the stock usually goes up to match the company that is buying the company or the bigger company of the two if they were to merger. The strength of workouts is that even if the market is down or flat, you can still make a good amount of profit from this category.

The next category is Controls and this category is one that a lot of us will probably most likely never be able to make use of. Control means literally that you buy enough stock of the company to get a controlling percentage so that you can influence management. This means that you literally bought your seat at the table and now that you are at the table you will have your say in what the company will do and won’t do.

The key rules you need to remember when investing according to Buffet are the following:

  • Invest in generally undervalued stocks.
  • Invest in merger arbitrages. (Invest in both companies that are about to merge.)
  • Invest in the business not in its stock. (If the business grows, so will its stock)
  • Be willing to go against the crowd. (Just because everyone is scared doesn’t meant its justified. Be brave and do your own research.)
  • Tax is important, but don’t let it deter you from buying a stock. (The goal with investing is to make the most amount of money possible and not to pay the least amount of taxes.)
  • Don’t follow trends, follow your research.

Another point you should consider is that its nice to diversify but if you did your research you should instead buy more of the company you believe in. Diversifying for the sake of diversification doesn’t have a lot of value. Instead buy what you know, buy more of what you have researched, because a great idea will be more profitable than a bunch of nice small ideas. Buffet also states himself, albeit in his later years, that buying Index Funds is the smartest thing one can do. Which for a lot of us is the right thing to do. Because I doubt that a lot of us are willing to do the work it requires to actually research a company and management team. So, for those who want to make sure they get the benefit of compounding, without having to spend all their days researching, an Index fund is the way to go. This will also make sure that you don’t lose 40% to 50% of your possible profits to money managers and investment brokers who will never beat the market for you buy get paid either way.

All in all a nice book, but at times it felt more like a book to praise Buffet than teaching me about investing.

The Only Three Questions That Still Count by Ken Fisher.

Main Lesson of the Book: Before investing ask yourself three questions to verify if it’s a good idea.

This was a very interesting book in that it forcefully looks at the myths surrounding investing. Ken Fisher wants you as the reader to not just accept the things you hear as fact, but rather wants you to probe and test the limits of what you would deem investing reality. To do so he suggests you ask yourself the following three question:

  1. What do you believe that is actually false?
  2. What can you fathom that others find unfathomable?
  3. What is your brain doing to blindside you?

The only three questions that still count are tools you can use to make sure you look for possible wins in the world of investing. The first question really tackles the myths that are prevalent in the securities world. The world of stocks is based on supply and demand and thus it is based on people. Because it’s based on people the market tends to create its own stories on why things happen. But the problem with people is that they tend to look for patterns where there are none. These patterns that don’t really exist tend to then become myths. Question one asks you to challenge these myths. One of the myths this book tries to debunk is the concept of oil prices having a meaningful impact on the economy and thus the stock market. Ken Fisher forces us to look behind the social agreement of this statement and actually look at history if this is correct. The book clearly states through statistical information mining, that this myth is one that you should use as a basis for making investment decisions.

Question two is a rather hard one, because it requires you to think outside the box. And the box is there for a reason, it was made from your experiences and your life. To step out of the box means you will have to actually try and not think how you usually think. This is extremely hard because humans love to think as the group thinks, act as the group acts. But in the stock market this can actually kill your portfolio really quick. One key point that you should always take into consideration is that once something is in the news it is no longer a valid source of information that will help you answer question two. The stock market or as The Only Three Questions That Still Count calls it: The great humiliator is really quick with implementing the information known to the prices of the stocks. So once something is common knowledge, it very quickly be taken into account and no longer impact the stock. That’s why insider trading is illegal, because that will allow only a select few to benefit from the movement of the stock price.

The last question is without a doubt my favorite question. Ken Fisher uses the caveman theory to describe humanities illogical fear of the unknown and failing. So our brains are hot wired to seek stimuli and reject regret. This is what is called Loss Aversion. People would rather make sure they don’t lose then actually making sure they win. Because if you were to make 50% profit on one stock and the next day lose 30% of it, you would still be up 20% but your brain would focus more on the loss than on the end gain. Your brain knows this, so it will try to make you look at the world in a way that will minimize loss in every aspect. You have to break free from that way of thinking. The Only Three Questions That Still Count actually offers a possible solution to this way of thinking: Accumulate Regret Shun Pride. I personally love this concept because it forces us to accept our mistakes and not only that, learn from them. By learning from our mistakes, we can prevent making them again, and by understanding them we can look at the process on how we got there. A lot of people tend not to do that and simply believe that the mistake wasn’t their fault. Pride doesn’t allow them to admit that they were wrong, because if they were wrong, it’s 100% their own fault they lost money. And no one wants to be the reason they lost money.

Ken Fisher wants the reader to really understand that they will be wrong, they will make mistakes. No one can read the future, so it is impossible to be right all the time. The best way to learn this is by humbling yourself, and aim for being right MOST of the time instead of ALL of the time. This can be done by accumulating regret and shunning pride. By forcefully making your mind accept your own flaws and mistakes, you are constantly challenging yourself to be better, come up with new concepts and ideas, which in the long run will be nothing but beneficial.

Biases are another key element in tricking your brain into thinking it’s doing the right thing. Hindsight bias is a real problem because when looking back its super easy to find the mistake and it always looks obvious that things would have gone the way they did. Because when you look at the picture once it’s done, its easy to see the strokes that made it. But when you’re in the middle of the picture being made, you can’t see what is being painted just yet. So the book suggests one amazing thing and that is scaling. By scaling, you don’t look at the picture itself but instead look at the frame. By scaling you will start to see that things are a part of a whole and that whole is more important than the individual parts. Think globally. Some people tend to come up with these amazing concepts on why stocks move the way they do, but they tend to base it solely on the current market they are in. The beauty of this day and age is that information is available from all the world about anything and everything you want. If you come up with a theory on why money moves the way it moves, check your theory against other countries markets. If your theory is true, it should work in every part of the world and not just in your own country.

This was a very educational book. Some of the concept mentioned didn’t really apply to me personally because of the scale he was talking about. He actually says in the book that if you have less than $200k invested than most of this book wouldn’t apply to you. Ken also suggests using an index as your bench mark and then trying to beat it, or get similar results. If you lose against your benchmark, it means you’re betting the wrong way. The 3 questions can be applied to other aspects of life as well, and that is why I like them. I can without a doubt recommend this book.

How to win friends and influence people by Dale Carnegie.

Main Lesson of the book: Appreciate and show appreciation to the people around you.

Dale Carnegie set out to create a book about human relations and how one could go about maximizing their relationships. The book sets out several great principles that we should all follow. If followed correctly these principles will change our lives. These are the core principles of each chapter:

  1. Don’t criticize, condemn or complain.
  2. Give honest, sincere appreciation.
  3. Arouse in the other person an eager want.
  4. Become genuinely interested in other people.
  5. Smile.
  6. Remember that a person’s name is to that person the most important sound in any language.
  7. Be a good listener. Encourage others to talk about themselves.
  8. Talk in terms of the other person’s interest.
  9. Make the other person feel important – and do so sincerely.

10 The only way to get the best of an argument is to

avoid it.

  1. Show respect for the other person’s opinions. Never say, “You’re wrong.”
  2. If you are wrong, admit it quickly and emphatically.
  3. Begin in a friendly way.
  4. Get the other person saying, “Yes, yes” immediately.
  5. Let the other person do a great deal of the talking.
  6. Let the other person feel that the idea is his or hers.
  7. Try honestly to see things from the other person’s point of view.
  8. Be sympathetic with the other person’s ideas and desires.
  9. Appeal to the nobler motives.
  10. Dramatize your ideas.
  11. Throw down a challenge.
  12. Begin with praise and honest appreciation.
  13. Call attention to people’s mistakes indirectly.
  14. Talk about your own mistakes before criticizing the other person.
  15. Ask questions instead of giving direct orders.
  16. Let the other person save face.
  17. Praise the slightest and every improvement. Be “lavish in your praise.”
  18. Give the other person a fine reputation to live up to.
  19. Use encouragement. Make the fault seem easy to correct.
  20. Make the other person happy about doing the thing you suggest.

The book gives these eloquent and beautiful examples taken from real life that illustrate the effectiveness of the principles. Some of these principles require a dramatic change for some people. Because these principles require a huge amount of effort if you aren’t wired that way.

Ok. This is an amazing book and it is beautiful in both its execution as well as its intent. It is based on the understanding that humans are mainly motivated by the craving of wanting to be important. This statement means that everything everyone does comes from a need of wanting to feel or be important. With this knowledge in hand and the principles given you can start to see how this book can be effective. Because the book teaches you that by showing the other side that you understand them, feel for them and truly want to achieve what they want to achieve, that you can get them to your point of view.

To me, personally, this book is all about power. I know that Dale Carnegie probably didn’t write this book to teach us about the laws of power but he did. I couldn’t help but read these principles and think back to The 48 Rules of Power book. The similarities in these books were interesting and frightening at the same time. How to win friends and influence people is a book that truly believes that people are good and their intentions are noble. So if you were to honestly and sincerely appreciate people for who they are and what they want, or what they have they will in return love you for it. And because they like you, they will shower you with gifts or give you the thing you wanted without you even asking for it. The thing is, the 48 Laws of Power states the exact same thing, but instead of being honest and sincere, it tells you to do it consciously. Both books state that you should never react out of emotion, never argue because it never has any benefits. This was a great book, that showed me where the 48 Laws of Power found most of its inspiration, next to Machiavelli of course. Most definitely a book worth reading.

The Book on Rental Property Investing by Brandon Turner

Main lesson of the book: A comprehensive look at rental property management.

The Book on Rental property is what you could call a guidebook on what to do and what not to do when it comes to investing in real estate. The book focuses on the entire concept of investing in real estate from the mindset to the problems you might face. One of the key elements he points out is that by owning rental property you can start building your path to financial freedom. There are no shortcuts, and Brandon Turner made sure to make this clear by stating that investing 20.000 dollars to only get 200 dollars a month back is a good investment. This sounds extremely counter intuitive for most but its essential to building wealth. Because the goal is financial freedom and that comes from consistent effort and building enough assets that will give a solid cashflow.

The Book on Rental Property states there are 4 generators of wealth. Appreciation is the first step of gaining wealth through rental properties. Appreciation can happen naturally through economic growth and time or it can be forced by cleaning up the place. The second generator is Cash Flow. And cash flow is the money you receive after all expenses have been paid. The goal is to create cash flow from the very beginning after you purchase the property. The definition of good or excellent cashflow depends on your own perception but as long as its positive, it is a valid investment. Tax Savings are the next generator because if  you don’t manage and understand taxes they can easily destroy any hope you might have of ever becoming financially independent. The more books I read, the more I come to understand that taxes are a true destroyer or usurper of wealth. The last wealth generator is Loan Paydown. One of the best ways to buy a property is by using leverage. Leverage means that you will buy a property with a loan from a bank or other institution. This loan will need to be paid off and interest will also need to be paid. But the beauty of this is that every time you make a payment, the interest will slowly decrease. In the beginning, the amount you pay will mostly be the interest, but in time you will start paying the actual amount you borrowed. And that is a great way to build wealth. Leverage is a key element in increasing your wealth and allowing you to purchase more properties than your actual pocket would allow. If you have 20.000 but the property you want to buy costs 100.000 then you would need to borrow 80.000 to buy it. And that 80.000 is leverage and it allows you to buy the property even though you don’t have all the money.

The Book on Rental Property made sure to list all the benefits and cons of investing in real estate. The key point being that this is just like any other form of investing and it carries with it certain risks. You can lose your entire investment, either by being unlucky or managing your property as if it was a toy instead of a business. Managing your properties should always be seen as a business. And because it is a business it should be seen and handles as such. Which means that there should be protocols and business systems in place that will allow the business to run smooth and reduce the amount of stress it can inflict on the owner. Owning rental properties means that you are dealing with people. And people will always have a story to tell you on why they can or can’t do certain things. These stories are usually always made to play on your emotions and get you to either “do them a favor” or forgive them for their mistakes. But by doing so, you are no longer running your rental properties as a business but are running them as a hobby. Don’t make this mistake. You are not in the business of being a friend, you are in the business of providing a service and maintaining a property. Of course you could also outsource the entire process to a property management company, but that will take a bite out of your cashflow. Plus a property management company will never “love” your property as much as you would. Because for them the property is just another building they have to manage and thus they will be somewhat lackluster in the execution of their responsibilities. And not as motivated as you, to make sure you get the best deals, the best people to fix problems and the best possible solutions to unique problems that might arise. So the question is, if you want the headache of dealing with people and all their stories, or if you want lower your cashflow and have someone else do it. Keep in mind though, that even if you hire a property management company, it does NOT mean that you are relinquished from all responsibility, because you will have to check up on the company to make sure they are doing their job.

Brandon Turner gave a lot of possible strategies in this book that will help the reader understand how to analyze a property. Or how you can go about starting your landlord journey. And with a huge selection of properties available and a wide range of analysis methods present, the smart thing to do would be to create a quick method to see if a property is worth your time and effort. The quick analyses tool I personally will use is the 2% rule. The 2% rule states that a property is a good investment if the monthly income is equal to or higher than 2% of what you will pay for the property. For example, if a property is worth 100.000 than the monthly rent should be 2.000 to pass the rule. Some would lower this percentage to lower or higher, but for me 2% seems like a valid rule of thumb to follow as I will quickly analyze properties.

And the main method I will use for my own investment method is the BRRRR Strategy. The BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It’s a simple but very effective strategy. And just to clarify what refinance means: Getting a new mortgage to replace the original. This book goes into extreme depth about several more points that goes beyond the scope of what I wish to include in this chapter. But if you are interested in starting a career in real estate, this is without a doubt a book worth reading. The only problem I had with this book is the constant reminder to go to BiggerPockets.com every other page. At times it felt as if the book was nothing more than a marketing tool for the website.

This book like many of the other books I have read is focusing on middle class America with a lot of extra income. It tends to exclude those who don’t fit into that category pretty severely. I would love to read a book that teaches those below middle class on how they can start gaining wealth in this world.

The Prince by Niccolo Machiavelli

Main lesson of the book: How to govern and deal with people.

In a world where power is the magical unseen chord that binds most of us, it would be wise to try and improve your understanding of how power works. Machiavelli in his effort to gain better standing in the world of politics and power wrote this book to illustrate his understanding on the topic. He wrote it in the hopes that he could help whomever reads it gain knowledge on how the world works. The Prince is filled with an extreme amount of amazing quotes and lines that would baffle even the most seasoned veteran in the game of power. Of course his point of view regarding power is based on the viewpoint of a prince and how a prince should behave. Or as he would state it “just as those who draw landscapes place themselves below in the plain to contemplate the nature of the mountains and of lofty places, and in order to contemplate the plains place themselves upon high mountains, even so to understand the nature of the people it needs to be a prince, and to understand that if princes it needs to be of the people.”

This book covers a lot of great points but I will discuss but the few that really struck a chord with me. The first one is the concept of how others view their input in your success. The Prince clearly states that people are driven by several needs and wants. And it is up to the reader or in this case the Prince to discern how to use this to their advantage. But also keep in mind that it isn’t possible to please everyone. Instead of focusing on making sure everyone is happy, instead focus on whose happiness will benefit you the most. If you were to take over a company or country there are a lot of elements that need to be kept in check for you to keep your new asset. The people who helped you get a hold of the new asset will expect benefits in return but what they expect and what they actually gain is often mismatched as reality tends to do. It is at this point that resentment is born. The book clearly states that even good deeds can lead to hatred. “it should be noted that hatred is acquired as much by good works as by bad ones.” This is because people tend to resent power if it doesn’t give them what they crave. So make sure you understand who you’re dealing with and how you can keep their loyalty in check.

A point the books makes is that if you don’t have any enemies you should make one. Because your value or reputation is only as great as the obstacles you overcome. So by creating your own obstacles and toppling them you can further enhance your position in the peoples mind. Another use of enemies is by using the fear said opponents can instill in the hearts of your subjects. By making sure your subjects understand how scary the possible invaders can be you can show them your valor and grace by showing them or promising them that you will protect them. If you instill enough fear, you will be able to make the people think they need the state for their own security and thus they will never hate you. What is beautiful about the Prince is that it clearly states that a Prince should be for the people. But not because it’s a good thing, but because the people are often the more powerful force when it comes to ruling. Even more so than an army.

My favorite chapter in the book is the part about lady Fortune. “She is, therefore, always, woman-like, a lover of young men, because they are less cautious, more violent, and with more audacity command her.” Luck favors the bold seems to be born from this very statement. It is very true that those who act are more likely to gain the favorable touch of lady luck because they pursue her with more passion than others. However, Machiavelli made it very clear that he believes that luck is a very big component in the fate of men. And that situation intertwined with ability and opportunity can give birth to legends. But only if fortune would allow it. And the best way to tame fortune or luck is by making sure you move with the times. Being aggressive works only if the world allows you to do so. Forcing a situation in a time where everyone wants peace will only work against you as they will all fight to stop you. “ I believe also that he will be successful who directs his actions according to the spirit of the times, and that he whose actions do not accord with the times will not be successful.” Reading the world and finding the flaws in it is a part of wisdom that few try to fully grasp.

Machiavelli truly understands that perception and reality do not or rather should not align if one is to play the game of power correctly. “men judge generally more by the eye than by the hand, because it belongs to everybody to see you, to few to come in touch with you. Every one sees what you appear to be, few really know what you are.” And in that lies what I believe to be the true essence of power. Understanding how peoples perception of you and their own surroundings can be used to your advantage is what power is all about. If people love you for your generosity, but what you bestow upon is loot your pillaged, then for some you are magnanimous while to others you are vile. And as long as those who find you vile are scattered and poor, they will never pose a threat to you. Keep your image as effective as possible for the goal you have in mind. Men will follow you or hate you regardless of what you do, so make sure your goal is set and let your image follow that goal.

If you ever do find yourself in a new position where power was given to you rather than obtained, you have to make sure you lay down a solid foundation of power. So that if those who gave it to you perish or betray you. Your new found power won’t easily be taken away from you. ”Nothing can be so uncertain or unstable as fame or power not founded on its own strength.” This by itself should explain of the value being able to achieve your goals through your own power. Because something gained through effort and knowledge can only be achieved through hard work, but keeping it will be relatively easy. Whereas something given can be taken away with ease and lost forever.

This was a great book to read. I feel like this was the inspiration to the book 48 laws of power. And I am not sure which one is more powerful, but this book in combination with The Art or War by Sun Tsu and the 48 laws of power will help anyone willing to try, understand the concept of power and how to govern. Being a boss is more about how people feel about you then most would give it credit for. Loyalty is a reflection of your actions and how they are perceived, so try to control them and understand why you should and shouldn’t do certain things. Great book.

The Personal MBA by Josh Kaufman

Main Lesson of the book: A broad overview of business-related topics.

This book covers an extremely wide array of topics relating to business. What is very interesting is that I started this journey to improve my knowledge of financial matters and he started his journey to improve his knowledge of business matters. Yet for some interesting reason we ended up reading many of the same books. But lets get into it and let me explain what I learned. I learned that if 2 writers read the same book, the chance that they will reach the same conclusion is pretty high. I went through this book reading a lot about books I have read. Its like someone telling you about a movie you’ve already watched and not giving you any new insights. What was beautiful is that he did what I am doing right now, which is read a lot of books and share the information gained in the hopes that it will help people.

This book is based on the concept that it will enlighten everyone, from the person who has no idea what a business entails to the CEO of a major company. It covers basics like Value, Sales and Finance to just name a few. What is interesting however is that also goes into depth about the human mind and its interpersonal capabilities as well as societal issues. I believe he did this with the mindset that becoming successful is as much a state of mind as it is achieving things. The book didn’t really teach me anything I didn’t already know or already read in my previous books, but it did drop a few gems here and there. One of those gems is the concept of Caveman Syndrome.

The way the Personal MBA describes the Caveman Syndrome is that our current mind and body aren’t made for this current day and age. This concept was first given to me by Nassim Taleb who stated that our mind simply cant keep up with the speed at which information is given and shared today. But Josh Kaufman took it a step further and made the point that our very instincts are based on 1000’s of years of evolution. And because our instincts are based on a time where a mistake could literally kill you, or the dark could hide a predator that could devour you, they get in the way of our current life style. Most of the situations we find ourselves in, don’t carry mortal danger, but our mind or rather our instincts react to it as if it could. I have often thought about that concept. Because the speed at which technology is moving is all nice and dandy but humanity likes comfort, humanity adores new stimuli but it often forgets that these carry with them new consequences and new problems. Our minds and bodies have yet to catch up to this new world and what it demands from us or rather what it doesn’t demand from us. Our body loves moving, it evolved to chase prey, it needs to keep moving to stay healthy and yet we created jobs that require us to sit all day. We invented things to keep us in static positions for long periods of time. Our body still has to get used to the fact that it is now OK to be lazy. If you felt I just went on a tangent … this was covered in the Personal MBA in a bit more depth.

A very beautiful quote that summarizes a lot of what is wrong with our world while highlighting the beauty of understanding that what you have right now is perfect is in this book. The quote is the following: “An American businessman standing on a pier in southern Mexico watched as a small boat with one young Mexican fisherman pulled into the dock. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish.

“How long did it take you to catch them?” the American casually asked.

“Oh, a few hours,” the Mexican fisherman replied.

“Why don’t you stay out longer and catch more fish?” the American businessman then asked.

The Mexican warmly replied, “With this I have more than enough to meet my family’s needs.”

The businessman then became serious, “But what do you do with the rest of your time?”

The Mexican fisherman answered, “I sleep late, play with my children, watch ball games, and take siesta with my wife. Sometimes in the evenings I take a stroll into the village to see my friends, play the guitar, sing a few songs…”

The American interrupted him, “Look, I have an MBA from Harvard, and I can help you to be more profitable. You can start by fishing several hours longer every day. You can then sell the extra fish you catch. With the extra money, you can buy a bigger boat. With the additional income that larger boat will bring, before long you can buy a second boat, then a third one, and so on, until you have an entire fleet of fishing boats. Then, instead of selling your catch to a middleman you’ll be able to sell your fish directly to the processor, or even open your own cannery. Eventually, you could control the product, processing and distribution. You could leave this tiny coastal village and move to Mexico City, or possibly even Los Angeles or New York City, where you could even further expand your enterprise.”

The Mexican fisherman a bit confused asked, “How long will all this take?”

The Harvard MBA pronounced, “Probably about 15-20 years, maybe less if you work really hard.”

“And then what, señor?” asked the fisherman.

“Why, that’s the best part!” answered the businessman with a laugh. “When the time is right, you would sell your company stock to the public and become very rich. You would make millions.”

“Millions? Really? What would I do with it all?” asked the young fisherman in disbelief.

The businessman boasted, “Then you could happily retire with all the money you’ve made. You could move to a quaint coastal fishing village where you could sleep late, play with your grandchildren, watch ball games, and take siesta with your wife. You could stroll to the village in the evenings where you could play the guitar and sing with your friends all you want.””

I later found this text on several websites. But its validity still stands.

The Millionaire Next Door By Thomas J. Stanley.

Main lesson of the book: Wealth is built at a slow but constant pace

This was a very enjoyable read. This book doesn’t profess to have some kind of magical method to gain wealth. Nor does it claim to know the exact steps one needs to follow to become rich. All this book states is its research that comes with the perspective of the writers included. They went out of their way to conduct interviews and meet with millionaires. During their research they found several similarities that most if not all of the millionaire’s share. They have found 7 factors that are extremely beneficial to accumulating wealth.

Factor 1 – This might come as a surprise to you, but they also advocate frugality. You will have to spend less than you earn and build up your wealth over time. A very common theme in most books about finance.

Factor 2 – Spending time on your finances is the key to increasing your wealth. Which means that you will have to budget. You will have to know what you’re spending your money on, on a weekly, monthly and yes yearly basis. By controlling your spending and minimizing useless purchases you can increase what you save and use that to invest. Using your time to actually think about how you use and spend your money is a big step in accumulating wealth.

Factor 3 – The wealthy have this understanding that having money doesn’t equal displaying you have money. Displaying you have money or creating the illusion of it, requires a lot of time and well, MONEY. Which means that instead of building money to actually be rich, most people are spending it to look rich. Which is a very twisted way of doing things, but in this world it’s the common path most people tend to take. That is why this factor is about the importance of financial independence and how it is more important than showing those around you how well off you are.

Factor 4 – Most millionaires or at least self-made millionaires are extremely independent. Which means they never received their parents help financially. The book calls this parental financial help “Economic Outpatient Care”. Which is a very fitting term. The book also makes sure that the reader understands the consequences of said Economic Outpatient Care. But most millionaires never received any help from their parents.

Factor 5 – Not wanting help doesn’t always equal not needing help. By making sure that they are self sufficient financially, they have a higher chance of building their fortune. The reason for this is that money made is a lot more valuable than money given. Using your own money and living off of your own money will instill a sense of responsibility for your own actions and life.

Factor 6 – The wealthy are very capable of finding  good market opportunities. This of course is coupled with their time and effort spent on making proper budgeting choices and researching the best possible investments.

Factor 7 – They are doing a job they love.

This book states a lot of great things about the value of money and how people tend to use or abuse it. The Millionaire Next Door divides people into 3 categories. PAW – Prodigious Accumulator of Wealth. AAW – Average Accumulator of Wealth and UAW – Under Accumulator of Wealth. The book of course focuses on the PAW and UAW group to show the biggest differences. PAW’s are always frugal in their spending. They don’t spend more than 500 USD on a suit or anything else they might wear for that matter. A very interesting point the book makes is that most millionaires are self-made within one generation. Which means they got their wealth within their own lifetime. But that is not the interesting point in itself, the book states that all their wealth will be gone by the next generation or the one after that. The reason for that is because most PAW’s are wealthy because they are PAW’s. But they forget to instill this quality in their children. Because the rich will often want to give their children all the beautiful things they didn’t have when growing up. So their children will grow up accustomed to a certain lifestyle. They are used to getting everything they want and of course what they want is of the highest quality with the matching price tag.

Consumption of high-quality luxury goods is the biggest destroyer of wealth for most people. This habit is often formed at childhood because of the environment they reside in. Another great point the book makes is that where you live and your occupation have a huge impact on your accumulation of wealth. Some profession requires you to look the part. And the part is never cheap. And if you live in a rich neighborhood you will need to drive what your neighbors drive, wear what your neighbors wear and go where your neighbors go. That is why most millionaires live in a middle-class neighborhood where they can control the cost of living either consciously or subconsciously.

Since a lot of people tend to live paycheck to paycheck they aren’t able to save. What is eye opening is that this goes for those who earn a lot of money as much as it does for those who don’t earn a lot. If you want to know where you stand on the wealth scale according to this book you can use the following calculation:

“Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.”

So for example, if you are 35 and you make $100.000 a year you do: 100.000 x 35 = 3.500.000. And then 3.500.000 / 10 = 350.000 and that should be your net worth. If you have double this you are a PAW if you have this, you are a AAW and if you are below this number, you my dear friend are a UAW. I can promise you right here and now that most of us are UAW’s. The reason I started this whole journey of reading all these books is to get out of the UAW category. This was a really nice book to read and it really tackles the concept of looking rich versus being rich. The impact parents have on their children’s financial future can not be overstated enough. Just keep in mind that becoming wealthy isn’t about how much you make, its all about how much you keep. Playing defense when it comes to your money might just be more important than playing offense.

The Intelligent Investor by Benjamin Graham

Main lesson of the book: There is a difference between an investor and a speculator

This was the first if not one of the first books ever of its kind. It was one of the originators of the current market system of the finance world. It helped structure a lot of financial business models and inspired more than a few investors on how to improve their wealth. This praise is of course based on the feedback gained from Warren Buffett. This book is without a doubt one of the core books on investing you should have in your personal library.

The intelligent investor covers a wide range of concepts related to investing and how the intelligent investor should maneuver through these dangers’ woods. The biggest point this book supposes is the difference between a Speculator and an Investor. In simple terms an Investor buys stocks, or securities for the long run. Whereas a Speculator buys securities to sell them within a short period of time. A speculator thus invests in stocks with the priority to make a quick buck and grow his assets in the short terms. To do this efficiently the speculator would have to make sure he buys a stock he knows will go up in value. He can either do this by “timing the market” or buy buying stocks when they first start out in the hopes the company will become popular and thus increase in value. Both of these options are based on the premise that the specular can read far enough into the future to ensure his financial gain. And right there starts the issue with speculating. Its based on a concept that the speculator knows whats going to happen in the near future.

Where an investor buys stocks in companies he knows will be around for a long time and have a solid foundation as its management or business model. And that brings us to the point the book is extremely focused on, if you are to be an investor, you should be an intelligent investor. And as an intelligent investor you should make your stock choices while keeping these points in mind:

  • When you buy a stock in a company, you’re not buying a piece of paper or a digital piece of information. You are buying ownership of a company and the true worth of that company isn’t always reflected in its market price.
  • If the market were a person it would be without a doubt a certifiable lunatic. Whose mood swings would vary between extremely positive and extremely negative. The intelligent investor has to make sure he knows the difference between these moods and buys and sells his stock according to the mood of the market. Never buy when the market is too positive which means it will overvalue its stocks. Instead buy them when the market is negative and is almost giving its stocks away as it is undervaluing its stocks.
  • You don’t make money when you sell, you make money when you buy. So, buying a stock at a really high price means you’re not making any money.
  • No matter how much you prepare or research, you will make a mistake with your investments. It’s a 100% mathematical certainty that you will fail with some of your investments. So the rule behind all your investments should then be that you always have a “margin of safety” included in your purchases.
  • Investing in stocks in itself isn’t risky. The risk exists within yourself. An intelligent investor needs to control himself. The market is a psychopath who will always try to take you with him on his wild chases for big money. The moment you let the momentum of the market take you with it on a wild goose chase, you are certain to lose most if not all of your money. And that is the key difference between an investor and a speculator. Control of one self.

The beauty of this book is that it actually gives you a set of rules to follow to make sure you buy stocks that offer a safety margin. These rules were made decades ago, but they still ring true to this day.

  • Adequate size. Only buy stocks from companies that have a market value of no less than 2 billion. Which will immediately cancel out a LOT of companies.
  • Strong financial condition. This means that the company has at least twice as many assets as its debt. This will make sure the company has a strong staying power.
  • Earnings stability. You would make the assumption that a stock that passed the restrictions so far would of course be stable, but you still need to check. A lot of companies have fancy accountants that can make things look better than they are.
  • Earnings growth. A company should at least be able to grow its business by 3% every year. Check its past records to verify this.

There are of course more points but these are the core ones in my eyes. The Intelligent Investor isn’t a book for the casual investor who just wants to be a part of the stock market. This book was meant for people who seriously want to play this game and make money at it. The fact that you are buying a part of a company comes with responsibilities. You will need to do due diligence on the company you’re buying into. That means that you will have to read their financial statements and their proxy statements. By reading these, you will see the actual worth and value of the business. By reading and understanding these statements, you can find a lot of red flags that will immediately show you if the company is a good or bad investment. Companies will often hide their dirty laundry in these statements because they know that most people won’t read them. The intelligent investor is that because he does the homework and does the research. Only after being sufficiently informed will the intelligent investor purchase a stock. And the investors portfolio should be properly diversified. The portfolio should consist of a minimum of 25% stocks with a maximum of 75% stocks and the remaining ratio should consist of bonds.

This book has a lot of great examples of the past and how companies failed their shareholders and the public in several ways. It has some amazing advice on how I should conduct myself in the stock market. The psychological part of the market is something that should be feared and not tried to be understood. A must read for anyone who wishes to seriously engage in the stock market. I had but one problem with this book and that is that I have read several books which seemed to base their entire premise on the information in this book. Which made it feel like I was reading stuff I already heard. But still a great book.

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