Investing Against the Tide: Lessons From a Life Running Money
By Anthony Bolton
FT Press/ Prentice Hall, 2009
Author Anthony Bolton has spent almost 40 years in the city of London mastering the art of investing; this book is a testament to his experience and strives to offer a structured and complete, yet simple, investment manual.
Not an easy task, especially in these days of confusion over the expectations investors should have when engaging in equity speculation. Nevertheless, Bolton succeeds in creating a clear set of rules and parameters that can be followed by most investors. What I found most interesting was his emphasis on a few notable ideas:
- The need to integrate the historical pattern of bull and bear markets, sentiment indicators, and long-term valuation metrics into the analytical process;
- Common sense as one of the most important qualities in an investor (as obvious as this may sound, I believe it is THE most underappreciated and often overlooked element of the investment process);
- Asymmetrical pay-offs or those investments where the remaining risk is minimal and/or controlled, but the potential gain can be explosive;
- The importance of healthy balance sheets (Z-score or H-score analysis); and
- Having an investment thesis; if the thesis is broken, sell the investment and move on.
While Bolton’s manual is an excellent guide for equity investors of different experience levels, it tends to concentrate on stock picking and, therefore, it may not be the best tool for those oriented more toward general asset allocation. As with any investment book, in the end, the real value comes from the reader’s ability to “click” with the information and have the discipline to build and follow a personal investment framework.
