Hello from Jupiter, FL where I am meeting my east coast family for an overdue reunion. As I mentioned, letters will be shorter as I’l be more offline during this summer’s adventures.
I did publish a single post this week. It starts…
Collecting options is freedom. Freedom is the most revered American ideal. In an orgasm of deductive logic, flowing straight from that idea is most Americans’ prized ambition — “financial freedom”. Sparkling with alliteration, the phrase has led countless dreamers to spend weekends at conferences learning the latest fashion for deriving “passive income”. I’m not judging this goal. To some extent, we all have it in some form. But be honest. When someone uses this phrase earnestly, you kind of want to die of boredom.
…continue reading The Options Cage (12 min read)
The Money Angle
A friend asked for some recommendations.
My nephew is 16 and wants to “get rich in the stock market”. He knows nothing. Is decent at school/math. I want to send him five books. He probably won’t have the patience for stuff that is too dry or dense.
I think it’s helpful to get a glossary understanding of concepts in the first place. Khan Academy is great for that. Of course that it just to explain terms but my book recs would have more to do with think of the markets as competitive games with prices as point spreads.
To that end my recs for core reading:
- The Most Important Thing by Howard Marks
- Fooled By Randomness by Nassim Taleb
- The Psychology of Money by Morgan Housel
- 4 Pillars of Investing by William Bernstein
- We both agreed Moneyball by Michael Lewis fits beautifully in this context so that would round out the list.
For a bit more advanced I’d recommend:
- The Little Book That Beats The Market by Joel Greenblatt
The reason this book is great besides being short is that it a hands-on demonstration of how to have a process and marries understanding core business math with an investing process (sorting, filtering, measuring and normalizing). There’s many implementations of the strategy floating around the web with modifications so if he wants to dig there’s plenty of fertile soil. While the vanilla strategy is mined into oblivion at this point, the real objective is to understand the process because that’s universal and applies to trading as well as investing. It’s a mental template.
- The Accounting Game: Basic Accounting Fresh from the Lemonade Stand by Darrell Mullis and Judith Orloff
I read this a few years ago and it’s a hand-on, easy way to learn the basics of accounting. It explains how balance sheets, income statements, and cash flow statements interconnect. It describes how you book items and the tradeoffs involved. It helped me appreciate how much judgement is actually included in accounting as well as how you can tell different stories with the way you choose to do accounting. Accounting feels like a subject I’d enjoy which is a sentence I never thought I’d say. I took my own notes here.
For my other collections see:
- For Investing Beginners
- Hands On Resources To Teach Kids About Business
- The Investing Pro’s Library
- Moontower Money Wiki
- There Is Beauty In Fundamentals (Link)
Different minds approach math differently. Find out what kind of mind you have and why math education should look less like a ladder and more like a “radiating umbrella”. I think my brain is closer to Lilly’s type except you can probably fit all of my folds in just one of hers.
- The 10 Essential Strategies for Deeper Learning (Link)
Scott H. Young
In case you want to get back to learning these are outstanding recommendations. Knowing how to study is a skill. Scott’s blog is a treasure for learning about learning (I often share links from it in Moontower).
#10 was always my issue with school. If interested check out my own musing We Don’t Need No Education.