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Perusing the
shelves of a typical bookstore, you can almost hear the teeming
rows of finance and investment books screaming at you, promising
easy riches with all the subtlety of late night cable TV infomercials.
Get Rich Quick! Become a Millionaire! Ten Steps to Easy Wealth!
On the other hand, Latticework:
The New Investing by Robert Hagstrom offers a refreshingly calm
and thoughtful alternative to the typical investing book.
Hagstrom,
a successful mutual fund manager, based his book on the ideas of
two star investors: Charlie Munger of Berkshire Hathaway (Warren
Buffet’s chief deputy) and Bill Miller of Legg Mason. Make no mistake,
though, the book is neither a how-to investment manual nor a story
of how Munger and Miller invest. Instead, it’s an introduction to
a new way of thinking that has served these investors well in their
portfolios and, Hagstrom proposes, in life. It is also a wonderful
proponent of Liberal Arts education and the benefits of lifelong
learning.
The central idea is that learning as much as possible about
multiple fields and widely divergent disciplines creates an overarching
latticework of connected ideas that Munger calls worldly wisdom.
That latticework, informed by myriad ideas and concepts, enhances
decision-making and the thinking process, and leads to new insights.
Applied to the market, this learning can lead to better decisions
and uncover patterns lost to most people. Munger and Miller espouse
an investing theory that reaches well beyond the typical principles
of finance that most MBAs and CFPs follow, and far surpasses the
topics covered in business rulebooks like Fortune, Forbes,
and the Wall Street Journal. Studying and understanding
areas as diverse as physics, literature, biology, psychology, sociology,
etc. creates that latticework of mental models, and shows where
and how the various fields overlap, where and how different ideas
relate back to each other, and uncovers insights into patterns that
transverse all the disciplines. Studying multiple and diverse fields
and then applying those insights in the market have helped Munger
and Miller buck trends and conventional wisdom to create very successful
portfolios with many unconventional assets.
The book is really an eclectic collection of introductions
and summaries of Big Ideas. Hagstrom packs a head-spinning amount
into slightly more than 200 pages, including introductions to, among
others fields, biology, philosophy, physics, psychology, literature,
and the ideas of such renowned thinkers as Benjamin Franklin, Charles
Darwin, Isaac Newton, William James, Mortimer Adler, Doyne Farmer,
and many others. He takes us from Benjamin Franklin’s theory of
education to the St. John’s University Great Books program, and
on to the cutting edge work of the Santa Fe Institute. While breadth
is its greatest attribute, breadth is also the book’s greatest fault.
The sheer amount of content can overwhelm. However, to be fair,
Hagstrom states very clearly that the book is designed merely as
an embarkation point from which readers can begin building their
own latticeworks. He introduces the ideas and suggests resources
where one can learn more.
This is a challenging theory in a business environment that
places a very high premium on specialization and deep focus. After
all, Liberal Arts graduates fresh off the learning farm typically
don’t earn salaries that approach those of finance majors who can
add the magic letters MBA after their names. However, two factors
bolster the book’s credibility to those who might doubt it. First,
the fact that such well-known and successful investors as Munger
and Miller have achieved bottom-line success based on these theories
is all the proof that many will need. Second, growing acceptance
and evidence suggests that markets are not the efficient, Newtonian
systems that operate in equilibrium as had been widely thought for
many years. The multi-disciplinary work of the Santa Fe Institute,
among others, is demonstrating that markets are dynamic, evolving
entities, like biological systems. The more we understand about
the behavior of other systems, the more we understand about the
evolution of markets.
I loved this book, and my Liberal Arts-educated heart sings
at the thought that lifelong learning can lead not only to better
understanding of the world around us but also to fatter wallets.
In a world focused on the proverbial bottom line, this is a great
message. In fact, if I had to retitle the book to compete with its
infomercial neighbors on the finance and investing bookshelves,
I would call it Get Filthy, Dirty, Stinking Rich through Liberal
Arts and Lifelong Learning!
| Beth
Garlington Scofield is Managing Editor of LiNE Zine. Share your
favorite books with her at beth@linezine.com. |
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