Learning from the Mistakes of Others
Michael Batnick, the research director
at Ritholtz Wealth Management, is teaching us that it is important to learn
from the mistakes from some of the most successful investors of all-time. This
is not an original concept, but nonetheless it as an important one.
Nevertheless my problem with his book is not with Batnick, but with his editors
or his lack of editors. There are typos, math errors and outright mistakes
(e.g. calling “Supermoney” author Jerry Goodman, Jerry Goodwyn.) Further it
would have been very helpful to have stock charts where they would have been
relevant.
That said he points out the most common
of errors all of us have, even the great ones, in that we are victims of
hubris/overconfidence, we get sucked in by the allure of leverage and out of
frustration we invest outside of our circle of competence. His many examples
include, Jack Bogle, Michael Steinhardt, Stanley Druckenmiller, John Paulson, the
Sequoia Fund, Long Term Capital Management, Bill Ackman and yes, Warren
Buffett. In Buffett’s case Batnick believes Buffett became overconfident based
on his prior experience in investing in the shoe business with his purchase of
Dexter Shoe in the early 1990s. He compounded his mistake by paying in stock
that would become more valuable over time only to see the business ravaged by
foreign competition.
In cases of Paulson, Druckenmiller and
Steinhardt we see them investing beyond their core competencies and the case of
Bill Ackman we his very big ego get in the way with his giant short position in
Herbalife. Of course leverage and hubris brings down Long Term Capital Management.
These are all wonderful vignettes and there is much to learn, but I wish
Batnick had a sharp penciled editor.
The full amazon URL appears at: https://www.amazon.com/review/RK8WMG81SKIWB/ref=pe_1098610_137716200_cm_rv_eml_rv0_rv
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