One of the things that struck me from my podcast with Sir Clive Woodward was his commitment to continuous learning.
In case you didn’t know, Woodward took the England rugby team from #6 to #1 in the world and left no stone unturned in his pursuit of excellence and a winning edge. During the podcast, Clive talked about how he wanted a team of sponges (people willing to learn), not rocks (people set in their ways).
He recalls being pilloried by the UK tabloids when he issued laptops to every squad member and insisted they learn to use them. One tabloid suggested he should give the team red meat instead. But his strategy worked and he continues to promote the idea of continuous learning. He talks about teachability:
“Teachability is a common trait that I’ve seen across all Champion performers in sport or business. [It’s] essentially your ability to learn and your ability to take onboard new knowledge and have a passion for what you do.”
Check out the podcast.
As you may have gathered, I’m not an international rugby player. But, like you, I am an investor. And the idea of continuous learning is just as important for us. For example, I recently went on Russell Napier’s course, A Practical History of Financial Markets. It’s not the cheapest course (it’s over £2,000, with the proceeds going to a charity). But with high quality lecturers including Russell, Edward Chancellor and Peter Warburton, I thought I would get two important benefits:
- I run investing courses, so I thought observing practitioner-teachers in action would improve my training skills.
- I would learn from the lessons of history and benefit both in my personal investments and in my writing.
Both turned out to be true. It was a full-on course – starting at 8am and finishing at 8pm for two days, then a half day to finish. So what did I learn?
A central tenet of the course is mean reversion in valuation. We looked at valuation over nearly a century and a half, and it was certainly a recurring theme. The issue with looking at data over such a long time span is that the world is obviously very different today. For example, the move from tangible assets to intangible assets, which has been pronounced over the last quarter of a century, must affect the use of measures like Tobin’s “Q”.
Tobin’s Q is the ratio of market capitalisation to the replacement cost of a company’s assets.
I enjoyed the section on monetarism and how money is created through the commercial banking system, and learned a lot. Even though I had to leave for a part of that session, I came away with a much clearer picture. The section on economics wasn’t new to me, but again I was able to observe the different cycles in history and put today’s inflation into context.
The final part of the course was the most interesting as Russell explained bear and bull market cycles and a hosted a good discussion on what might come next. I enjoyed Edward Chancellor talking about the capital cycle, a subject I am very familiar with from my friends at Marathon and Hosking & Partners. There was also an excellent, lighter look at demographics and similar non-financial trends with Jon Compton.
But was all this worth over £2k? Would I be able to get a stock idea out of it, for example? Well, there was no short term money to be made in the market as a result of my doing the course. But it was absolutely worth doing, if for no other reason than it made me stop and think. There is huge value in education like this. Improving your knowledge and understanding is always worthwhile, even if the topic is not directly relevant to your immediate work needs.
When I do a Zoom call with an institutional client to introduce my Forensic Accounting Course, I tell them that even if I am useless, their team will benefit because they will think in a different way. They will be more aware of the risks in the stock market and if that helps them avoid a single blow-up, it will more than pay for itself. I’ve been told that my course is actually very good, but it doesn’t need to be. Half of the gain is from recognising that there is scope for improvement.
Ironically, as stock markets and economies get choppier, the need for more intensive training increases, particularly awareness of forensic accounting. But as AUM comes under pressure, so do institutional revenues, and training is often a discretionary item. I am not expecting to have a busy year in 2023 as budgets will be constrained. Yet looking at what my clients actually need, I ought to be flat out.
How this applies to private investors
The concept of continuous learning obviously doesn’t end with institutions. As a private investor, it is also essential. And as I see it, there are seven main ways to improve your investing technique:
- Lose money
- Learn from books
- Learn from podcasts
- Learn from videos
- Learn from blogs/newsletters/magazines
- Learn from online courses
- Learn from in person courses
If you want to learn how to invest, losing money is the best way to do it. Why? Because you don’t forget the lessons and it will limit your future losses. I can’t say you won’t make the same mistake again. I often do. But it’s the most reliable method.
The problem is that it’s also the most expensive. You need to lose meaningful amounts to feel the pain needed to discourage repetition of the mistake. You cannot avoid losing money, but you can mitigate some of the more stupid losses by other, cheaper modes of learning.
Learn from books
Books are a good way to learn and there are a huge number of great investment books to choose from. I picked a selection of 20 books that are worth starting with and posted that in the Investing Resources section of my website, under Top 20 Books. Of course, I would like everyone to buy my book, The Smart Money Method, but there are lots of great books to choose from.
But simply reading the book is not enough – you need to take notes in order to learn. I may return to this subject as it surprises me how many people expect to read a book and retain the information. I don’t think passive reading is enough, and I have a system to collate my impressions. This gives me material to reference later, as well as boosting the amount of information I retain.
Learn from podcasts
This is in some respects a more difficult method of learning because you often listen to podcasts while you are doing something else – I listen on my walk to work for example and it’s quite easy to get distracted. I used to have an app which allowed me to save an audio clip on the go. I could then have it transcribed, but the app sadly disappeared – if anyone knows of an alternative, please reply to this email! I now simply jot down important takeaways in the notes app on my phone. But it’s a more laborious process and not always possible – for example, in the car.
My favourite podcasts are listed on my website with a top 20 and next 30. See the Top 20 Podcasts page. I value both the interviewer and interviewee. I have just listened to two “top” podcasts interview the same guest and there was a world of difference. It could have been a different guest.
If you are subscribed to my newsletter, you might want to check out my podcast if you haven’t already. But don’t forget: Some of your biggest lightbulb moments will come from non-investing podcasts – for example, I think Shane Parrish of the Knowledge Project is particularly good.
Learn from videos
YouTube is an amazing resource. So much so that the sheer volume of content is the biggest problem you have to deal with. I have a spreadsheet of over 100 YouTube videos, some of which we recommend as additional “homework” in the relevant sections of our online courses. We also intend to produce a list of the top 20 and next 30-ish investing video channels. But this takes time and it’s still on the to do list, as you can see from our website:
Learn from blogs/newsletters/magazines
I include here Substack posts and newspapers as well as magazines. The Financial Times and the Wall Street Journal are my two go-to newspapers and the opinion columns are really helpful in understanding issues. Similarly, the Economist magazine is fantastic and in the UK, investor focused magazines like Investors Chronicle and Moneyweek are helpful (I write for both). In the US, I like Value Investor Insight. Bloomberg Business Week is also great, but I cancelled my subscription as the print delivery was random – and I like to read the print editions. I would love to hear other magazine suggestions from readers, particularly in other regions. Please just reply to this mail.
My younger students are often puzzled by my preference for the printed word. I spend enough time on-screen and my retention is better if I consume content in printed form. I am also better able to understand the significance of an article from its position in the print edition (notably the FT). I would encourage readers to try the print editions – it really works.
The number of Substack newsletters just keeps growing. Our Top 20 list has a total of over 100 newsletters listed and we have another 20-30 in progress. The list changes so fast that it’s hard to keep pace. I built the page as I thought investors needed a discovery engine. Please take a look and let me know what you think.
The issue here is again one of volume vs quality – it’s really hard to pick out which are the good letters from an ocean of content. Then you have the question of which ones are worth paying for and how much.
The problem in learning this way is that it will take you a huge amount of time to work out what is worth reading, and I am not sure if it’s worth the effort. Interestingly, it’s a problem which will be resolved as demand is growing, albeit not nearly at the rate of supply. I had lunch with a friend who has a start-up fund and whose commission budget is 1% of his former $10m+ pa. So he was asking which newsletters to consider. This need will grow and a better intermediary than our limited efforts will emerge. I would like to build a newsletter discovery website but I don’t have the time; if a graduate reading this wants to have a go, please get in touch.
Learn from online courses
I built my online investing school as I realised that a book can only take you so far. There is no way to question the author and very few books include exercises, which are the most effective way of learning a complex topic like investing.
My Analyst Academy course was designed in conjunction with some highly experienced fund managers and analysts. In the three years (and hundreds of students) since, we have fine-tuned the content repeatedly.
Despite this, there is a big problem with online courses – and it isn’t the quality of the content. The issue, of course, is finding the motivation to complete them. Especially a course as intensive as the Analyst Academy. My plan at first was to allocate people to a cohort, getting them to start together and move at the same pace. That proved quite difficult as each student naturally moved through the syllabus at their own pace.
I am not sure there is a real solution to the completion issue. At the moment, I ask students to make a written commitment at the start. This has worked pretty well for us, but our completion rate is not 100% and I sometimes worry about taking people’s money without them reaping the full benefit. Perhaps I am too idealistic.
Our content is really practical and high quality, but it also benefits from:
- The facility to ask questions in a community. Students are encouraged to ask questions whether directly course related, indirectly or more general. And students are encouraged to offer responses because the best way to test your understanding of a concept is to attempt to explain it. The answers are of course checked for accuracy and I always add an explanation.
- A regular webinar programme where students can interact with me and each other over Zoom. In the first part of the webinar I explain concepts. In the second part, there is time for Q&A. This allows students to ask more detailed or broader questions where some discussion is needed. It also lets me answer questions that might be difficult or take too long to answer in written form.
All the content is presented in a variety of formats. The main medium is video, be it through the core video lectures or the webinars, which are recorded to allow a second pass at more difficult concepts. Then you have the printed word with lots of PDFS to download and further written notes on the course pages, as well as spreadsheets (especially for exercises), audio content and third party video content.
I accept there is a motivational issue – you must want to complete the course – but we have had great success with both private and professional investors. One multi trillion firm is trialing it as an alternative to the CFA (spoiler, it’s much better at preparing you for an analyst’s role). Plus we’ve had several funds taking it as their main method of training staff. For example, we recently had both a large UK pension fund and the #1 asset manager in a European country sign up their entire research departments.
Competitors’ online courses tend to look fancier but provide more academic solutions which are of limited help in the real world. But in saying that, they also tend to be cheaper and may well be worth considering.
Learn from in person courses
Personally, I think this is the best solution. Courses like Russell’s are invaluable, not only because of the learning they provide and the ability to ask questions as you go, but also in the ability to interact with other students. This even works over Zoom – I have several Zoom friends I have met on courses and some of these are even translating into real life friendships. I have met two people in real life from this source in the last few months.
I used to run physical courses in my office in the City of London for smaller funds and serious private investors. I stopped during Covid but have launched some Zoom based courses since. Email me at firstname.lastname@example.org if you would like to be put on the mailing list for our Forensic Analysis Bootcamp. I can recommend Russell’s course, but I haven’t been on any others so it’s difficult to suggest others.
Learning is a useful and enjoyable endeavour. It’s also one that is essential for investors, but they don’t pay enough attention to it. In my view, training in most institutional environments is often limited. There is the CFA of course, but it has serious shortcomings. Besides that, training is often associated with the annual Money Laundering Course and similar boring compliance routines rather than a desire to improve performance. This is shocking when the benefits are so obvious – learning can be enormous fun and gives individuals the opportunity to grow. It should surely be a priority for most investing institutions, but in my experience, it is given too low a priority.
For the retail investor, a learning programme is essential. You will improve your skills so much more quickly if you study what works and what investing style suits your temperament. A programme dedicated to building your understanding is an essential step towards beating the market. And it’s great fun.