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Three Books for an Investor's Night Table

Vern Hayden

It seems there is always too much to read. I spend hours reading on the Internet and all the other stuff like magazines and newsletters just seems to pile up. Then there are the books -- so many of them. In the last weeks, I got a little carried away on Mount Everest books (six in all), war books on Korea (three) and of course, Flags of Our Fathers, the unbelievable account of the Iwo Jima battles and the six flag raisers. You just can't feel the same about life after reading this kind of spirited stuff.

Mixed in with these books are three great ones on investing. Since many of you asked me for advice about which investing books to read, I thought a brief review of these would help.

First, all the books told me something about the steps it takes to be a successful investor. The process is about the same for anything we try to accomplish, including mountain climbing, being a war-time soldier or managing money.

Here are some of the common characteristics I found among people who excelled in all of these things:

• They did their homework.
  
• They trained -- for years.
  
• They planned -- for far ahead.
  
• They had an overwhelming obsession to reach their goal.
  
• They were disciplined.
  
• They had patience and could postpone immediate gratification.
  
• They had wisdom, not just knowledge.
  
• They had good judgment that led to good decisions.
  
• They understood a lot about human behavior.
  
• They had a good degree of intuition -- a "feel" for what they were doing.

Now for a brief overview of the three books. The first is The Terrible Truth about Investing: How To Be a Savvy Investor by Bruce J. Temkin.

Temkin is a great communicator. He not only covers the broad spectrum of principles required for good decision making but, in his words, "We will make observations about what may be the most overlooked factor in being a savvy investor: the powerful role that human nature and real-life experiences play in investing."

For instance, he explores why investors only had a 4.3% return vs. the S& P 500 index's 14% return, from 1984 through 1993. Dalbar Financial Services, which came up with that data concluded, "Investment return is far more dependent on investor behavior than on fund performance." Temkin expands on this and on many other issues and themes in understandable language. For $30, you get a lot of truth.

In Wizards of Wall Street: Market-Beating Insights and Strategies from the World's Top-Performing Mutual Fund Managers, author Kirk Kazanjian writes, "It's true that of the 13,000-plus mutual funds available today, most are dogs. I would guess that some 12,800 aren't worth buying. But there are a handful of brilliant fund managers who outperform their peers ... and yes, even the S&P 500 on a consistent basis."

Of the 18 managers he profiles, I have tracked 16 on a weekly basis for the past nine years (sometimes less, if they haven't managed a fund over the entire period). I use 11 of these managers on an ongoing basis. Here are his 18: David Alger, Bruce Behrens, Glen Bickerstaff, James Callinan, Ronald Canakaris, Christopher Davis, Amy Domini, Warren Lammert, Kevin Landis, Richard Lawson, Neal Miller, William Miller, William A. Oates Jr., James Oelschlager, Frederick Reynolds, Spiros Segalas, Robert Torray and Howard Ward.

A chapter is devoted to each manager. After a brief profile of the manager, Kazanjian does extensive individual Q&As. I have a lot of opinions when it comes to mutual funds, because most of my time is spent managing fund portfolios. One manager I would add to the list of 18 wizards is Bill Freis at Thornburg Management in Santa Fe, N.M. He would stand tall in the group and continues to be one of my core managers.

The third book is Lessons From the Legends of Wall Street: How Warren Buffet, Benjamin Graham, Phil Fisher, T. Rowe Price and John Templeton Can Help You Grow Rich by Nikki Ross. Full disclosure: I am quoted on the back cover recommending this book, but I have no financial interest in it.

Another quote, from Don Phillips, CEO of Morningstar, says it all: "If you want to understand literature, you study the great authors; music, the great composers. Why, then, do investment courses ignore the great investors and instead preach the efficient market theory, which tells us no one can beat the market and ignores those who do? Thankfully, Nikki Ross' [book] helps right score. You'll find more practical advice in this one book than in any dozen investment texts."

All three of these books could easily put you ahead of the crowd, but more importantly, help you reach your investment objectives.