You Can Be a Stock Market Genius has handsomely exceeded my expectations, not because of how short the book is (yes, it is a quick read) but because of how good its messages are. Joel Greenblatt compounded his fund at 50% a year for about ten years before returning all external capital in 1995. Surely, there is something to be learned from Joel’s book. Here we go.

Understand people’s motives

The word “motive” / “motivation” appeared at least 10 times throughout the book, while accounting-oriented fundamental analysis did not make an appearance until the second last chapter. It is not that proper accounting computations are unimportant but that for successful investing, a human understanding of the other humans in the same market is terribly important as well. That, I think, was a key message that Joel was communicating. In analyzing spinoff situations, Joel wrote, “analyzing the actions and motives of insiders … is of particular benefit.”

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Disclaimer: given the uniquely notorious reputation surrounding the book and the author, I want to make it clear that, in this article, I am not commenting on the morality of the book nor the author — I have zero intention in writing or implying anything in that regard.

Recently, I got a chance to read The Prince — the remarkable yet controversial book by Niccolò Machiavelli. Many people hold extremely negative views about the book and its author. Others see the book as one of the most influential works for modern political philosophy. I didn’t expect much prior to reading it.

Post the read, to my surprise, I realized the author Machiavelli might possess some of the qualities that are needed for successful investing.

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I recently read The Code Breaker: Jennifer Doudna, Gene Editing, and the Future of the Human Race by Walter Isaacson, the bestselling author of Steve Jobs. The book started at the story of Jennifer Doudna and expanded onto the potential applications of gene editing and what that technology could potentially mean for the human race. I highly recommend the book.

My key take-aways are as follows:

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Curiosity-driven motives lead to unusual discoveries

The word “curiosity” appeared more than 30 times in the book. It reminds me of the principle that I always think about, “If you don’t have passion, you cannot win.”

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I re-read the copy of the book that I bought four years ago, when I was learning about investing at the Yale Endowment. My new takeaways are as follows.

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Dare to be great

Human beings are a social species. To survive, we are inclined to huddle together and to imitate each other. For most investors, they care so much about how other people see them that they dare not say anything different or do anything new. If they do, they risk their job security, professional status, and social networks. Those behavioral inclinations are simply a natural part of us, and they are difficult to overcome – just like a software cannot debug itself. Most investors are conventional and do not have the ability to be different. Successful investors are unconventional, and so they are rare.

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“Culture eats strategy for lunch”

2020 laid bare the truth in that saying. To manage a pandemic, it is not about whether a country has the strategy, the money, or the technology to handle the virus; it is about the culture of its people.

My wife and I were in Beijing during the outbreak. The news broke out during dinner time on January 20, 2020. Within an hour or two of that news, as we left restaurant that night, some people were already wearing masks. By the second day, some 20% to 50% people we saw in Beijing and Shanghai were wearing masks. Mask wearing — it was a culture.

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I am always intrigued by the question of “what are your interests?” I ask myself this question often. I also throw this question to others. One business school student answered: “my interest is to find an investment banking job.” Well, he was not really answering my question.

Many people see their short-term goals as their interests. This is a mistake and I believe this is why many high-achieving people don’t feel happy (even after they have attained their goals). By not seeking to know their own interests, people end up spending their entire life doing things they don’t like and they don’t care.

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As I wrote in December 2019, “Think Scientifically” was one of my five key takeaways from 2019. Of late, it has become increasingly obvious to me that there is great value in scientific thinking — and, not doing so is unusually dangerous.

To think scientifically, I believe, is to think independently, to be grounded in facts and free of preconceived notions. Scientific thinking seeks truth, not opinions. It welcomes different ideas, new ideas. It also encompasses the willingness to acknowledge that “I can be wrong.”

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