KNOWLEDGE TEST

Read For Life

Reading obsession

Investing legend Jim Rogers has said the best investing advice he ever got came when he was in his 20s, flying to Chicago. He sat next to someone more experienced who said to read “everything” he could.

“If you read an annual report, you’ve done more than 98% of the people on Wall Street,” Rogers recalled. “And if you read the footnotes of an annual report, you will have done more than 100% of people on Wall Street.”

Then he read more and more. He read annual reports. He read competitors’ annual reports. He read trade journals, books, and magazines. He read everything he could get his hands on.

Said Rogers: “I realized that most people don’t bother even doing the basic homework. And if I did even more, I’d be so far ahead that I’d probably be able to find successful investments.”

The simple advice transformed his life.

Read all day

Warren Buffett and Charlie Munger have repeatedly said a key to their success is lifelong learning. Specifically, reading.

Studies have shown reading strengthens your brain, increases your ability to empathize, builds vocabulary and creativity, and prevents age-related cognitive decline. Reading keeps you sharp.

And reading can give you lessons and ideas you wouldn’t otherwise have through life experience.

“I read and read and read,” Buffett has said. “I probably read 5 to 6 hours per day. I read five daily newspapers, I read a fair number of magazines, I read 10k’s, I read annual reports, and I read a lot of other things too. I’ve always enjoyed reading. I love reading biographies for example.”

The Oracle added: “I just sit in my office and read all day.”

Buffett estimates that he spends 80% of his working day reading and thinking.

“You could hardly find a partnership in which two people settle on reading more hours of the day than in ours,” Munger has said.

When asked how to get smarter, Buffett once held up stacks of paper and said, “Read 500 pages like this every week. That’s how knowledge builds up, like compound interest.”

Buried in annual reports

Other voracious readers include Elon Musk, who read nearly all day as a child, according to Ashlee Vance’s bestseller. Many of his lifelong interests and skills were built by his reading habit as a young boy.

Ben Franklin. Thomas Jefferson. Abraham Lincoln. Albert Einstein. They all read throughout their days, even as they grew old and wise.

Investor Irving Kahn is a passionate reader, which is “why being an investor is the perfect job for me.”

Today, it’s easy to read texts, emails, news, and tweets, which might count. But most investors point to more timeless reading as critical to their success, including classic books, biographies, research papers, and long-form writing.

In Alice Schroeder’s The Snowball, she captures the essence of Buffett’s lifelong journey and passion for accumulating knowledge and, in turn, money.

“That passion had led him to study a universe of thousands of stocks. It made him burrow into libraries and basements for records nobody else troubled to get. He sat up nights studying hundreds of thousands of numbers that would glaze anyone else’s eyes. He read every word of several newspapers each morning … Since childhood, he had read every biography he could find of people he admired, looking for the lessons he could learn from their lives.”

Schroeder continued: “When he was not traveling, he could be found wandering through the house, nose buried in an annual report.”

An ideas business

Perhaps so many investors love reading because it immerses them in a flow state, teaches them about success and mistakes, and gives them a flow of information that results in ideas.

Investing, in this way, is really a game about ideas.

“You get to wisdom which is different from just being smart,” said investor Mohnish Pabrai. “You can build up an advantage over your peers.”

In a world distracted by smartphones, push notifications, and constant news, reading stories, books, and research can give investors even more of an edge in the modern era.

“Neither Warren nor I is smart enough to make the decisions with no time to think,” Munger once said. “We make actual decisions very rapidly, but that’s because we’ve spent so much time preparing ourselves by quietly sitting and reading and thinking.”

Dive deeper

We could recommend countless classics. Some of our favorites include: Morgan Housel’s The Psychology of Money, The Snowball, and Good to Great.

Happy reading!