Weekly Bookmarks –
176th Edition – June 15, 2025
Effective money managers do not go with the flow. They are loners, by and large. They’re not joiners; they’re skeptics, cynics even. Whatever label you give them, the trait they all share is that they don’t automatically trust that what the majority of people–especially the experts–are doing is ncessarily correct or wise. If anything, they move in the opposite direction of the majority, or they at least seek out their own course.
Dead Companies Walking by Scott Fearon, Page 110
1. Financial Statement Analysis for Value Investing
I generally refrain from mentioning books in the newsletter unless I’ve read the text from cover to cover. That’s not the case for Penman and Pope’s new book, who state that attention to financial statements is the key to valuation in any business.
The book is a technical one; you won’t breeze through it. They state in the preface that the book is intended for the active value investor willing to make an effort to gain an edge.
I’ve already started this book, which was released this April. My suggestion is to read one chapter each day, but don’t forget to review what you have just learned and work on the exercises in the book, using a spreadsheet to reinforce new concepts.
This guide to investing, through the analysis of financial statements, presents both underlying principles and practical examples. It examines how an accounting book is structured, the methods for reading one to extract information about value, and why accounting techniques help investors avoid common pitfalls. Through cases that depict finance, investing, and accounting principles in action, readers learn crucial lessons for challenging the market’s pricing.
2. A Long List of Retail Bankruptcies
Retail Dive maintains a regularly updated list of retail bankruptcies on its website. You will need to scroll for a long time to reach the bottom of the list, where you can read about The Limited’s Chapter 11 filing in January 2017.
This list reminds me of the six reasons why businesses go under, according to hedge fund investor Scott Fearon:
- They learned from only the recent past.
- They relied too heavily on a formula for success.
- They misread or alienated their customers.
- They fell victim to a mania.
- They failed to adapt to tectonic shifts in their industries.
- They were physically or emotionally removed from their companies’ operations.
To learn more about Scott’s list, check out his immensely readable and entertaining book, Dead Companies Walking (I’ve already read it twice, and it won’t be the last time I pick it up).
3. Let’s Reframe the Problem
I’m a fan of Matthew May’s first two books. The discussion on bankruptcy above reminds me of a section in May’s second book, Winning the Brain Game, where he quotes a line from Sherlock Holmes:
It is a capital mistake to theorize before one has facts. Insensibly one begins to twist facts to suit theories instead of theories to suit facts.”
Winning the Brain Game, Matthew May
He goes on to write, “Leaping to solutions in a sort of mental knee-jerk almost never leads to an elegant solution to an unfamiliar, complex problem, because not enough time is devoted to framing the issue properly.”
Instead, he recommends a mental brain game called Framestorming. Instead of coming up with answers, start with questions.
“Framing a problem properly has everything to do with whether it gets solved elegantly,” according to the author.
Perhaps Scott Fearon should give this book to companies he’s about to short. But he’d probably say they wouldn’t heed this excellent advice.
In Winning the Brain Game, author and creative strategist Matthew May explains the fatal flaws of thinking, catalogued over the course of ten years and hundreds of interactive creative sessions in which he gave more than 100,000 professionals a thought challenge based on a real case far less complex than their everyday problems.
4. Better Health Through Diet, Working Out, and Sleep
I believe two of the best books on the quality of life, specifically how we take care of our bodies, are Outlive: The Science and Art of Longevity and Matthew Walker’s Why We Sleep.
Diet and working out have generally not been a problem for me compared to getting the right amount of sleep. While I like and respect Walker’s book, sometimes I need to hear the ‘sleep’ message from someone who is ultra busy. If you know anything about professional football, you may know that many of them work crazy hours, sometimes never going home and sleeping at the office.
Jason Garrett is the former NFL coach of the Dallas Cowboys and is now an NBC football analyst. I enjoyed his brief comments on sleep on PFT Life. Here are some takeaways:
- In coaching, you are either a night guy or a morning guy. You can’t be both.
- He tried never to sleep in the office.
- Don’t be he guy who does everything; empower others.
- Even though fellow coach John Gruden was known for getting up at 3:30 a.m., he left early.
- The coach doesn’t have to be the first person in the office.
- The recovery pyramid starts with sleep.
5. The Financial Mindset of Ralph Moody
One of my summer goals was to reread the Ralph Moody series that my boys read when they were in junior high. The autobiographer wrote eight books, starting with Little Britches: Father and I Were Ranchers. Ralph and his family move to Colorado from the East Coast, seeking a better life on the farm, but hardship follows them continually.
Ralph was eight years old in the first book, and by the final book, he was in his twenties and had ultimately found a wife.
The books are entertaining, informative, and hard to put down, as I became attached to the author and his unique perspective. Ralph was industrious, and we see clever financial thinking with many of his schemes to generate money and wealth.
While I listened to each book in order, the following three are easily my favorite:
- Book 2 – Man of the Family
- Book 4 – Mary Emma & Company
- Book 6 – Shaking the Nickel Bush
The Wisdom of Finance is one of my favorite finance books over the past decade. The author uses classic literature and film to teach fundamental and foundational finance topics that are often abstract and challenging to apply in practice. If you liked ‘The Wisdom of Finance,’ I think you’ll appreciate many of the underlying financial themes that appear periodically in the Ralph Moody books.
Fortified with Yankee ingenuity and western can-do energy, the Moody family, transplanted from New England, builds a new life on a Colorado ranch early in the twentieth century. Father has died, and Little Britches shoulders the responsibilities of a man at age eleven.
Recent Bookmarks: 175 | 174 | 173
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Take care, and have a great week. Always be learning.
