The Well-Read Investor

Episode 13: Well-Read Investor Market Insights Cross-Over

Host, Mike Hanson and Sr. VP at Fisher Investments Naj Srinivas on being Well-Read Investor

For this very special year end episode, we flipped the script. Mike sits down with Naj Srinivas, host of the Fisher Investments Market Insights podcast to talk about how the Well Read Investor works, and the literary life in general. I’ve known Naj for many years (you might recognize him from one of Fisher Investments’ frequently aired national TV ads), and we have a blast talking about strategies for more effective reading, how to select books, and a handful of other crazy topics including why you should learn about heroic mythology and why you shouldn’t worry about “remembering” everything you read (which is a waste of time). We’re throwing the kitchen sink at you’re here with bonus content from that discussion that gets even further into the wonky world of literary life. If you want to read more, and more effectively, listen up! Enjoy!

Michael Hanson (00:08):

Hello and welcome to the latest edition of the Well-Read Investor, the podcast that profits your mind and your money. I’m your host Mike Hanson.

This very special episode finishes out the Well-Read Investor’s first year! We’ll be back in January with a new year and stacks of new books to discuss. I just want to say thank you to everyone involved in making the show what it is. This went from literally zero just 12 months ago to a show we’re all quite proud of today. Specifically, our amazing producer Hayley Thornton  and our media guru Catie Becker, who both have an uncanny ability to make me seem professional. And just as big a thank you to our listeners: investing is a constant intellectual challenge, and to be able to share these ideas with you is a joy.

Now, on to our very special year end episode. I sat down with Naj Srinivas, host of the Fisher Investments Market Insights podcast to talk about how the Well Read Investor works, and the literary life in general. I’ve known Naj for many years (you might recognize him from one of Fisher Investments’ frequently aired national TV ads), and we have a blast talking about strategies for more effective reading, how to select books, and a handful of other crazy topics including why you should learn about heroic mythology and why you shouldn’t worry about “remembering” everything you read (which is a waste of time). We’re throwing the kitchen sink at you’re here with bonus content from that discussion that gets even further into the wonky world of literary life. If you want to read more, and more effectively, listen up! Enjoy!

Naj Srinivas (01:52):

So, we're here today to talk about The Well-Read Investor podcast of which you are the host. Let's talk about it a little bit. What was the impetus for this? What led you to creating this podcast?

Mike Hanson (02:03):

Well,  I've been a bibliophile for about as long as I can remember. Actually, that's not quite true. I didn't really become a bibliophile until about my teen years. I actually didn't really like reading very much until it opened itself up to me. And I find that if you love reading, you find a particular time in your life that you like it and you need to be ready for it. And oftentimes with education, we try to stuff certain types of material with kids that aren't ready for it, you read Shakespeare when you're 12, it doesn't make any sense and people are off of it. So when I got into my teens, I matured just enough to start enjoying those things. And ever since then, I've just loved books in almost all formats.

Mike Hanson (02:42):

But here at Fisher investments, we try strange things and we try new ideas. And knowing that I had this interest and knowing that, there's a real appetite for people to know about the books that are out there, the ideas that are out there, but it's just too time and effort to try to read every single book. Only crazy people like me try to do that. And so we thought there was a real service we could provide to expose people to new and different ideas and see how they connect to real investing. And so far it's been really a lot of fun to do.

Naj Srinivas (03:10):

Well, you've been my personal book concierge for the better part of my career here, 15 years. And so, just for behind-the-scenes here, Mike's the guy I go-to, to ask, Hey, what are you reading lately that's really interesting or really good, and my sense is that this podcast is a little bit of a way to take that and deliver those insights to the masses.

Mike Hanson (03:31):

Yeah, very much.  I'm personally of the opinion that our industry is too dominated by mathematics and data. And it's not that those things are bad things. They're wonderful and great things that open up new vistas of understanding and ways of seeing the world. But language is also one of the great mechanisms, not just of communication, but of thought. Language is an open system. Whereas mathematics tends to be a little bit more on the closed side. And so there's so much to be had and known through literature. And for me, I tend to specialize a little more on sentiment and psychology analysis for our firm and understanding the basic human condition and the different types of human experiences is a place where that happens, in literature. And in fact, if you can express some of that or even just get to know some different types of points of view, you can really change your investing experience and come up with better insights.

Naj Srinivas (04:20):

The other thing that strikes me about focusing on books—the long form written material—is that it provides you depth of knowledge. Today, information is available ad nauseum. I mean, we're bombarded by it constantly, but it's all very shallow. You get nuggets of information about a certain thing. You don't really get deep understanding to it unless you actually read a book and you take the time and energy and effort to do that. And that's something that as time has gone on, it's becoming a harder and harder thing for people to do. People are just busy,  sitting down with the book today,  takes you carving out time. Mike, for our listeners, consumes three to four books a week and I'm not talking about hundred-page, small books. I'm talking about deep thick, the 300 page ones that have some heft to them.

Michael Hanson (05:09):

Well, let’s be clear, I still read a lot of Batman comic books.

Naj Srinivas (05:14):

But, how do you actually carve out the time yourself to read so many books and how do you advise people, likewise, to do the same?

Mike Hanson (05:25):

The printed word in long form writing is actually a fairly new technology in terms of world history. And it's not a skill set that we're necessarily predisposed to. One of the reasons I would still advise for people to sit down and read, when they're able to, is because it really is a form of meditation. And when people ask me, how do you read more? How do you prioritize and get it into your life? Well, that's really what it is. You have to make it a priority. You have to think about it as a skill set that you're really trying to build.  Reading is just like playing the guitar or learning a sport or any other skillset. You actually have to do it a lot to get good at it. And once you get good at it, you'll realize you have all sorts of ways you can approach books, or ways you can get a little bit of reading in here and there,  or digest information even more efficiently.

Mike Hanson (06:11):

But, beyond those, most nonfiction books are not very information rich. And so you want to be selective and the work you do just before actually engaging with the book matters a lot, most nonfiction books have probably 85 or 90% of relevant information in the first couple of chapters. That's not always true, but you can check and see. And so when I say I read three or four books a week, sometimes that means I pour over every word. It depends on the type of book. For example, if I'm reading,  Russian literature and I'm getting involved with Dostoevsky, that's going to be a pretty hard slog. And you go page by page, maybe a page a minute. But a lot of non-fiction books really you can move through fairly quickly because the simple truth is that non-fiction books often function sort of like a PhD dissertation, that they have an idea that they're trying to prove. And then they spend a lot of the book trying to demonstrate that to you. And what you can make a decision on is how much of that demonstration you want and how much of the idea you want to absorb.

Mike Hanson (07:08):

But  I do a little bit of work beforehand before I even opened the book. Who is the author? Why am I reading this book in the first place? And what do I plan to get out of it? And knowing the author's background and perhaps some of their approach gives you a of information about what the book might unfold to be, and maybe what some of your expectations are about it. And so for me, a book is a very active process. When you're reading it, you're actually moving through it in such a way that I usually have a computer or like an iPad handy so that I can look things up.  If I want to make notes for later, it probably reminds me of some other book I want to look at. I always have highlighters and pencils with me. I spent a lot of time writing in my books. It should be an active process because I think high-quality reading has volition. It has purpose.

Mike Hanson (07:52):

You're trying to do something. And in my estimation, a lifetime of reading, what it ends up doing is creating your specific viewpoint, your own subjectivity. You're not necessarily trying to be someone else or be something else. You're trying to absorb many different viewpoints so that your own unique view of life can be enriched. And I think when you approach it that way, you can know in a sense, what you're really trying to get out of a book. And when you discover something new that you never thought of before, it's even more enriching because it changes your path a little bit forces you to rethink things, but having purpose in mind when you're trying to seek any type of knowledge is often really one of the most efficient ways to move through this information deluge, because the choice of what you read is really the most important thing anymore.

Naj Srinivas (08:39):

So let's take a step back and talk a little bit about how you actually choose the topics you're interested in, not necessarily the books, but where are your areas of focus? What topics are you interested in? Do those change over time? Do you think about them ahead of time? So, when you start out a calendar year, so 2021 ones coming up here soon, are you saying, well, 2021, I want to focus on these different topics have already gone through these other things. These seem like the natural extension of it. How do you approach that?

Mike Hanson (09:06):

Well, this is where things get a little funny because being planful in that way is very difficult. And in fact, I read what I have energy for. I read what is interesting to me. And, and I know that might sound a little paradoxical relative to what I just said, but both things can be true that you're planful and you go towards where the energy is. And I just don't believe you can get through a whole book unless you're genuinely interested in it. And if you lose the energy for it, if your intuition is telling you, look, it's just not happening.

Mike Hanson (09:33):

I just find that if you buy a bad book and it's not good, ditch it. What is a hard cover book? These days cost you 25, 30 bucks. If you buy it on Amazon, it's probably a little cheaper, but 30 bucks is about what it cost to go to the movies and buy a popcorn and get your parking and so forth. So if you're willing to pay 30 or 40 bucks for a couple hours’ worth of entertainment, realize that if you've put a couple hours into a book, you don't like, that's plenty. Move on. Your time is almost always more valuable than your money.. And you need to go to where the energy is. If you don't. I just feel that you have a hard time trying to really slog through everything.

Naj Srinivas (10:09):

Do fiction books play a role in what you read and do you get anything from reading fiction other than entertainment?

Mike Hanson (10:17):

Oh, without a doubt. This is an area where you have to find out what you like and what resonates with you. But I taught a class on finance at Cal Berkeley for years. And in fact, the first thing I had them do was read The Merchant of Venice by Shakespeare. Because if you want to understand what interest is, then ask for your “pound of flesh.” And I really mean that. And this is not for everyone, but for me in another life, I would have been a professor of Russian literature. And to read Dostoevsky today in today's climate in today's world is just an amazing experience. Some of his books, like Demons –  also called The Possessed, Crime and Punishment without a question of a doubt, and to see the psychology and anxiety that he understood going back now, well, more than a hundred years, but it's so parallel to today is just remarkable. I mean, the human lessons there is, are amazing, and you can get that sort of Avenue with all sorts of fiction.

Mike Hanson(11:10):

I'm also partial to the existentialists, although that gets a little harrowing these days, if you read Albert Camus and things like The Plague or The Fall, that's almost touching a little too close to home these days, but it's all out there. And again, you find what resonates with you and if it resonates with you, the lessons will be there for you.

Naj Srinivas (11:27):

Mike, what's your take on audio books?

Mike Hanson (11:29):

I like them a lot. I think they're a very useful tool for those who want to read more. With life being so busy for one thing, it's just a good way to get some information while you're doing your chores or whatever else. But I actually find the mechanisms on a lot of audio books to be things like you can control the speed at which narration happens. Most audio books now come with the table of contents where you can skip around. And there really is quite a lot of evidence that humans will absorb information by sound just as well or better than by reading words. And in fact, we probably were evolved to do more of the former than the latter. And so I'm a big proponent of audio books and I think that performances and audio books just continue to get better, which is part of what makes that experience very good.

Naj Srinivas (12:13):

One of the questions about audio books, at least to me, is retention. With an audio book I find it to be more challenging, maybe because I am multitasking. How do you tackle that problem?

Mike Hanson (12:23):

I just let it go. There’s no such thing as optimality with these things, life gets very messy. So, you get in what you can and if it wasn’t the perfect experience, who cares, you move on. And you actually don’t know what you’re going to remember. You have so much more in your unconscious memory than you realize. Even if you can’t bring all that up into your consciousness instantaneously, it doesn’t mean a lot of things aren’t there. It’s not really about whether you have road memorization of every single part. Keep moving through the material often and you’ll find you remember more than you thought.

Naj Srinivas (12:53):

Let's talk about how you structure the podcast.

Mike Hanson: (12:56):

I think that the authors themselves matter. When you read a book, it's kind of an intimate process and in some sense, you're having a dialogue with the person writing. And so to have an opportunity to speak with the author and get a sense of their personality, as well as the book, I think really enriches the ideas there. In most cases with many books, there are a few key prevalent ideas that we want to highlight and make sure those are there, and explore. But otherwise, what we really aim to do with the podcast is just give an exposure to people of things that are different than you would otherwise read about in the investing world,  and yet really do have an application to the investing world in one way or another. By getting to actually speak with the authors, I think we get a taste of that.

Mike Hanson (13:37):

We really want to serve as an information source for investors that, if you listen to us and you read some of what we put out as well, in terms of book reviews and so forth, which we're going to start doing shortly, you get a taste for what it is and if it peaks your interest, you go further or perhaps just that 20 or 30 minute dose was all you needed for great context. And then you move on to the next thing. And as we were saying before, I mean with so many books out there and so many options we just really view it as a service to say, Hey, look, here are the things that we have seen and that we think are worthy of your attention.

Naj Srinivas (14:13):

For the listener who is just getting started in investing or just getting started with investing, or is just getting started with investing literature and is interested in it. What are the books that you think need to be on their bookshelf?

Mike Hanson (14:30):

Well it depends on how “weird” you want to get.  I think if you want to stay within the confines of real investing and economics, Thinking Fast and Slow by Daniel Kahneman, a Nobel prize winner. Daniel Kahneman is such a great introduction to basic psychology. It actually has nothing to do with investing per se, but if you can understand basic behavioral sciences, particularly his mode of explaining those things, it'll tell you so much about market behavior. But I think more strictly Harry Hazlitt’s Economics in One Lesson, which is a very easy book to read. And it tells you some of the core lessons about economics outside of all the equations and verbose explanations about how economics really works in the real world and how you can navigate it yourself. The Theory of Moral Sentiments by Adam Smith, I think is a better read than The Wealth of Nations, and it skews a little bit more towards psychology than it does strict economics. But few people know that Smith was really more about understanding sentiment, or just as much about understanding human psychology and sentiment as he was real economics. And his insights going back now several hundred years are still very relevant and great for investors. It's a very under-utilized book.

Mike Hanson (15:41):

I'd of course be remiss if I didn't mention my boss, Ken Fisher's books in general, some of which I played a small hand in and editing and doing some of the work with. But Ken's books are so good and I really recommend The Only Three Questions That Still Count mostly because Ken is one of the only people I've ever met who's been able to really marry some of the abstract ideas of how markets work with real world outcomes. And to read Ken's book, you get a real sense of how market pricing works as a mechanism and what it really takes to be a good investor. And if I've learned anything from Ken, and I've learned so much from him over the years, it's that you really want to stay in the middle of things. You want to stay in the tension of things. You want to consider both sides of an argument and be fact focused, empirically focused and not let one type of narrative or another really sway you from a discipline you have, and doing that in the context of knowing what the market is already priced in. Ken's books – they’re really second to none in doing that.

Mike Hanson (16:43):

If you want to get weirder, I just recommend for general reading Zen and the Art of Motorcycle Maintenance by Robert Pirsig, which is a book well over 40 years old. But well-worth, I believe the time, because what that book is really about is the synthesis of machines and things that are mechanical with things that are, let's just say abstract or almost metaphysical. Qualities of things, and what the real book comes to is that what real quality is in life is the marriage between things like being fact-driven, but also understanding the context of the situation, how humans really behave, how their emotions are. And what you have to do is put those things together to have a complete view of the world. It's not just one or the other.

Mike Hanson (17:26):

And of course my favorite book ever. And I believe the best book of the 20th century is a book called The Hero with a Thousand Faces by Joseph Campbell, who is a man that I've studied every part of his life I can possibly study through the years. His basic idea was that the human condition is pretty darn near universal, that we all have subjective experiences, that we all have different experiences, but when you get right down to it, humanity is amazingly universal. His project was effectively to do comparative religion. And he compared the heroic myths of the world, whether it be today because George Lucas used Campbell's views to create Star Wars all the way back to ancient, Mesopotamian myths, and so forth. And he demonstrated just how common, regardless of culture or time, or type of person that the human experience is. That's a bedrock thing for me. I find that to be so important to remember when you look at global capital markets, that it doesn't matter where you are, the human reaction of greed and fear, the basic cyclical features of economics and markets. Those things are universal. They don't sunset and Campbell did that as well as anyone in demonstrating that.

Naj Srinivas (18:34):

So, Mike, if you could leave our listeners with one last thought, one last piece of advice on how they themselves become well-read investors, what would it be?

Mike Hanson (18:46):

Cultivate your own specific point of view, learn from what others have done. If you endeavor to do this business, and you really want to be a well-read investor, the only way to come to any sort of mastery, and you may end up with the universal ideas that others have, but you must come to it in your own way. You must come your own version of understanding. If you can't do that, all you're doing is mimicking someone else. And as you go on the journey of reading what other people think, what you're really trying to do is hone your own specific and valuable worldview. I'm just such a believer. I mean, I've watched markets all my adult career and markets are strong when there's heterogeneity of ideas, markets are very weak when everyone thinks the same thing. What is so valuable is for people to bring to the table, their own unique human experience. I think that's true for everything, not just markets and what you're really endeavoring to do is to dive in and you don't have to have the greatest books of all time, just engage with things. And as you do, you'll continue to develop yourself and you find that in the effort,  things really develop yourself and it can very often be worth the while.

OUTRO:

Mike Hanson (20:04):

There it is, 2020 is in the *books* for the Well-Read Investor! Thanks again to Naj for the great discussion. We’ve got a huge 2021 planned with more guests, more ideas, and more book reviews.

In the meantime, follow us on twitter @wellreadpod and Instagram at @wellreadinvestorpod for all the latest. In fact, you can even see what I’m reading each week, and post your own book suggestions too.

Until then, here’s hoping your holiday season continues on with peace, health, and an optimistic heart. And may all your reading profit your mind and your money. Happy New Year! And take care.

Disclosure (20:42):

Investing in securities involves the risk of loss, past performance is no guarantee of future returns. The content of this podcast represents the opinions and viewpoints of Fisher Investments, and should not be regarded and personal investment advice. No assurances are made we will continue to hold these views, which may change at any time, based on new information, analysis or reconsideration. Copyright Fisher Investments, 2020.

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations.

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