Read and Think
Reading is gathering, thinking is using what you gathered to create
And write. And on rare occasions try to transfer the sum of my reading, thinking, and writing into investment decisions. But very rarely. That’s it.
Read - think - write is, in my opinion, the most accessible cycle for learning (obviously there’s doing). To be a great investor, one needs to be a learning machine.
To kick off this essay, let’s have the wisdom of the investor legend Charlie Munger get us off the blocks.
"I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up”
"In my whole life, I have known no wise people (over a broad subject matter area) who didn't read all the time -- none, zero.”
Pair this with the schedule of his investment companion, Warren Buffet, and you get the sense of what it takes to excel in the investing world:
“I just sit in my office and read all day.”
When I first noticed the common thread among, not just these two, but every single successful investor, and saw the sheer amount of reading and thinking they put into their job, I was like; this can’t be it. It sounded too simple and too accessible. And to be frank, it is.
“Investing is simple, but not easy” - also from Charlie.
But not easy - I’ll bookmark that sentence for later.
Reading great books is like entering into someone else's universe, like an invitation to mentally experience parts of someone else’s lives. It's truly amazing how accessible this gift is to us. We can embark on a treasure hunt every day. When you approach reading with an open mind and a mindset geared towards discovering valuable insights, it's remarkable how many pearls of wisdom you can unveil with each turn of the page.
And the more you read, the more significant the knowledge becomes.
The value of knowledge can be amplified when it’s integrated with previously acquired layers of information. As these layers of knowledge accumulate, the information you consume takes on greater significance. This process can be likened to having a vast array of synapses in your neural network, primed to make connections with new neurons. It echoes the principle of compounding interest (I’ll get back to this in coming essays - over and over again), which is a fundamental tenet of investment.
But it's not easy.
Here’s where we enter the next part: thinking.
The famous philosopher John Locke said: "Reading furnishes the mind only with materials of knowledge; it is thinking that makes what we read ours."
Made ours - the creation of ideas and insight.
It’s the thinking part that really separates us from the rest. It’s about our ability to contemplate and meditate on different ideas and concepts and have them build up in our minds like puzzle pieces. And the more we think, the more we should be able to apply the pieces with some corresponding interlocking edges. The pieces are coming together in ways we didn’t know of before.
Click, click, click. That’s the sound we’re aiming for.
Seneca, the ancient Roman philosopher, believed that spending time alone with one's own thoughts was essential. He wrote again and again about the benefits of solitude and the importance of introspection. “Retire into yourself as much as possible.” He believed that by spending time alone with one's thoughts, individuals could cultivate a deeper understanding of themselves and the world around them. I believe this understanding can be supercharged with the materials of reading.
Reading is like gathering resources while thinking is the tool that we apply to the resources when building something new. Just as a carpenter gathers resources to build a table, a reader can gather knowledge to build new ideas.
I’m going to have Charlie take us over the finish line:
"Spend a lot of time thinking. That is an investment that will pay off in surprising ways.”