Its been almost 2 months since my last post. During this time I went on vacation with my family. I will list those exploits in a separate post.
Before I left for my vacation, I was writing a series of posts on the books that have influenced me. Hope after reading the blog posts you got a chance to read those books. I would love to hear your comments on how you found the books.
For the moment this will be my last post on the books I have read till I get to my next lot.
The first book this time is the STAR Principle by Richard Koch. I have been a fan of Richard Koch for a long time and try to read through all his books. In the STAR principle Richard talks about identifying companies which have higher than 10% growth rates and how they can end up creating almost monopolistic situations. For developed economies like the US and UK I think this logic of identifying at 10% growth rates is a good number because the overall economy is growing at just about 2% average.
However if we were to look at it from the Indian context where India is growing at about 13-14% (6-7% growth + 7% inflation) then the number in his logic dosen’t hold. However rest of the logic that he espouses in the book should hold. I have myself not been able to identify an Indian company which is growing at 5 times the overall economy( 10% when economy is growing at 2%) on a consistent basis in the public domain.
The next book I read and would recommend Finding the Next Starbucks by Michael Moe. Like the above book by Richard Koch, this one is also more focused on identifying high growth companies before the world comes to know about them. Again since I don’t have knowledge of the private investment space in India, I have not been able to verify the logic and rules that the author gives. However its a good read and a different way of identifying high growth companies.
I have been a big fan of the Little Book series. In one of my earlier posts I wrote about the The Little Book That Beats the market by Joel Greenblatt. There are a whole lot of other Little Books by different authors which explain difficult concepts of the financial markets in easy to read language.
One book which is worth a mention once again is Common Stocks Uncommon Profits by Phil Fisher. This is a little serious read but is a timeless classic on equity investing. Even Warren Buffet recommends Phil Fisher.
While exploring investing, I did a lot of research on people who do trading – stocks, commodities etc. One author who I found has done a lot of work on understanding traders and writing about them is Micheal Covel. I was introduced to him via the Little Book on Trading. I then went on to read a couple of other books Trend Following and Turtle Traders.
If you have seen the movie Trading Places then you will find the Turtle Trader especially fascinating. I did use the rules of the turtle traders for a short while and found them very valid for the Indian market as well.
However I left the trading space because I realised I did not have the speed with which to give directions to my broker to release positions when the trend reverses. There are a lot of platforms available which allow you to set the rules for trading where based on your rules the platform can sell your holding. Since I was only experimenting, I did not subscribe to any of these platforms.
In my next post I will share with you some other classic interviews and reports which explain the concepts of investing and financial planning.
Till then ….let me know your comments