10 business and investing related books & podcasts for the holidays – 2024 edition

At NAOS Asset Management we find books, audiobooks & podcasts to be great learning tools across a wide array of topics, issues, and opinions.

With information everywhere, we thought we'd put together a short list of some of the most interesting business, investing related books & podcasts from throughout 2024. If you’re looking to keep learning whilst you relax with a book over the holiday period or listen to an interview or two with some extraordinary people, there should be something below for you to enjoy!

“Wisdom is not a product of schooling but of the lifelong attempt to acquire it.” Albert Einstein

1. ‍‍Book Review | The 38 Letters from J.D. Rockefeller to his son: Perspectives, Ideology, and Wisdom by G. Ng

John D. Rockefeller's "38 Letters to His Son" offers a profound glimpse into the mind of one of history's most influential figures. Through a collection of heartfelt letters, Rockefeller imparts timeless wisdom and values to his son, revealing not only the industrial magnate's business acumen but also his commitment to family and moral principles.

The letters showcase Rockefeller's emphasis on hard work, perseverance, and integrity, providing a roadmap for success that extends beyond mere financial achievement. His insights on philanthropy and the responsibility of wealth offer a refreshing perspective. Rockefeller's dedication to leaving a positive legacy, shines through, as he encourages his son to be a steward of both fortune and goodwill but also provides insight into how ruthless and competitive Rockefeller once was.

Three of our favourite quotes from his letters:

1. “We need to harness our knowledge and use it to make a difference in the world! So, let’s go out there and make things happen, because we have the power to create our own destinies!”

2. “It is important to remember that the true reward for our hard work is not the tangible benefits we received, but rather the personal growth we experience along the way.”

3. “Failure is the beginning of the journey to a higher position. I can say that what I have achieved today was from climbing the spiral ladder of failure and then rose from there. I am a clever "loser". I know to learn from failures, draw success factors from my experience through failure, and use innovative methods that I have never thought of before to start a new career. So, I want to say is that failure is a good thing as long as it does not become a habit.”

Link to Book

2. Podcast Review | Tom Gayner on The Knowledge Project

Tom Gayner and Markel are often spoken about in the same context of Warren Buffett and Berkshire Hathway, and Shane Parrish from The Knowledge Project does an excellent job of unpacking why.

Gayner is not only humble but a deep thinker. While he talks through his journey to becoming CEO of Markel Corporation and some of his lucky breaks, he provides some valuable insights into some of the major economic events over the last two decades. Throughout the podcast he also covers a wide range of topics from making mistakes and the difference between commission and omission, to his debt curfew theory and the impact of leverage. You will get a true sense of how Gayner thinks long term and as he puts it is “always there to answer the bell for the next round of the fight”.

‍Link to Podcast

3. ‍Book Review | 7 Powers: The Foundations of Business Strategy by Hamilton Helmer

References to the ‘7 Powers framework’ is something we have heard more and more over the years, whether this is from astute investors we follow or blogs/podcasts we listen to. This book has become somewhat of a staple for investors to read in order to gain insights into a solid framework for attempting to understand the competitive moat a company may have.

The author, Hamilton Helmer is a Stanford University teacher and has had a long career in business strategy. He is well credentialed discuss key principles which will differ from company to company. So, what are the 7 Powers he identifies?

1. Network effects

2. Scale economies

3. Switching costs

4. Counter positioning

5. Cornered resource

6. Branding

7. Process Power

It is unlikely any company would fit into all 7 of the above, rather may be very strong in 1-2, which is what underpins their value. This simple framework to analyse a company can act to rationalise you’re thinking but also act as a ‘sense check’ for what your thinking is. In the world of equity investing, we don’t have to invest in everything, rather only a few good businesses that have expanded and are expected to continue to expand their competitive moats over time. The 7 Powers framework won’t detract from the continual search to find and identify these good companies.

‍Link to Book

4. ‍‍Podcast Review | Jeff Bezos: Amazon and Blue Origin by Lex Fridman Podcast

“If you want to really boil down what I am - I am an inventor”

Jeff Bezos sits down and does a podcast interview with Lex Fridman. This long and detailed conversation is the first of such a thing he has done. There is an in-depth discussion around Blue Origin (Bezos’ space technology company) and how that has now become his major focus in life.

When Bezos started Amazon, he didn’t have to worry about building already established infrastructure such as the postal service, payment systems and the internet. He built on top of these things, saving him billions of dollars in capital investment. The way he now thinks about space is with a focus on helping to build the infrastructure for the next generations to start space-type companies from their dorm rooms. What seem like very futuristic concepts including relocating heavy industry to other planets and how sustainable life will work on the moon are other projects Blue Origin is currently working on.

The interview then turns back to Amazon and some of the business principles that have propelled him to be one of the most important people in modern history. Amazon has a culture of quick decision making but segregates between ‘one way door’ decision making to ‘two way door’ decision making. The ‘Day 1’ mentality is the main principal Amazon was built on, meaning it is never ‘Day 2’. That mentality has been very powerful in driving the company forward into new areas.

What is also remarkable is Bezos’ recollection of telling the early investors of Amazon that there was a 30% chance of getting your money back, implying a 70% chance they would not. I wonder what odds he gave investors that Amazon would become a trillion-dollar company?!

Link to Podcast

5. Book Review | The Checklist Manifesto: How to Get Things Right by Atul Gawande

How do we stay safe in the skies? We have implicit trust in the pilots who fly us from A to B. No doubt they are highly skilled, highly trained individuals but they also have another secret tool in their pilot hats (pun intended); they follow checklists. Pilots must adhere to a series of steps, procedures and processes as part of their pre-flight routines. There are also checklists to follow during flight as well as checklists to follow for any number of scenarios, however unlikely, should they occur whilst in the sky. Every different plane make, and model will have a tailored checklist, for which airlines may tailor further to better suit their own operations.

During WW2, in conjunction with Boeing, the US Air Force first developed a checklist for the B-52 bombers, which subsequently had a major impact upon the outcome of the war. Pilots, however, are not alone in using checklists. Experts within the medical field have adopted this mindset to great effect. The author of this book, Atul Gawande is a US based surgeon who grabbed the notion of a checklist and turned it into a global study to see the results of implementing simple procedural checklists within surgical theatres. The results showed a material improvement in outcomes. Gawande himself speaks of his personal experiences where the checklists he follows has literally saved the lives of his patients. He also discusses tips for a successful checklist including keeping it simple and not too long.

The world of equity markets is full of all sorts of investors, emotions and companies. Some of the most highly regarded value investors, such as Mohnish Pabrai, have seen the benefits a checklist can provide in other expert professions and implemented their own versions to better run their investment process. Fundamentally a checklist is a process to minimise the likelihood of mistakes and errors occurring, should aid in narrowing the variance of possible outcomes and perhaps most importantly provide the most appropriate solution in a time of crisis. This is precisely the way to improve your chances of long-term success when investing.

‍Link to Book

6. ‍‍Podcast Review | Renaissance Technologies by Acquired Podcast

The very popular Acquired Podcast series takes another deep dive into a fascinating company, this time in the world of hedge funds. Renaissance Technologies (or RenTech as it is commonly referred to) is seen as being the best investment firm of all time. Their long-term performance track record isn’t arguably the best, it is the best. RenTech is an investment firm, which according to their website has ~300 employees of which there are ~90 PhDs across fields such as maths, physics, and computer science. According to the podcast hosts, most of the employees of the investment side of the business do not come from careers in the investment industry, in fact a lot don’t have much knowledge of investment markets, nor know how to read a balance sheet. How can this be?

The history of RenTech is that it was the birthchild of the late Jim Simons, a former renowned mathematician and former wartime code breaker. After a career as an academic which culminated in establishing one of the world’s leading mathematics departments at Stony Brook University on Long Island NY, Simons gathered many of the same brilliant minds to join him on his quest of quantitatively outperforming financial markets. Quantitative trading is its own unique world whereby speed, patterns and signal processing matters.

RenTech is such a secretive organisation (with every former employee signing a lifetime non-disclosure agreement) so facts are hard to come by, however what we do know is that they appear to have >40 years of developing proprietary quantitative trading strategies, whereby everyone is working on the same system, strategy and code. They might not have been the birthplace of A.I. but with the sheer volume of compute power and data coupled with the brilliant minds behind it, it appears they managed to create (and continually refine) a system which has seen them significantly outperform the market across all market cycles for a very long period of time.

Closed to investors outside of their own employees and alumni, it is estimated that they have generated a financial windfall to the tune of ~US$60bn for themselves since inception. For those looking to learn more, there is a book about Jim Simons called ‘The Man Who Solved The Market’. The title of this book seems very accurate!

‍Link to Podcast

7. ‍‍Book Review | Poor Charlie’s Almanack: The Essential Wit and Wisdom of Charles T. Munger

What made Charlie Munger so great? Certainly, his investment track record at Berkshire Hathaway alongside Warren Buffett was outstanding, however what is an even bigger legacy is his lessons, advice and analogies which are not only applicable to investing but also for life itself.

His book, Poor Charlie’s Almanack is essentially made up of 11 separate talks/addresses/speeches that Munger has done over the years. There are lessons for anyone and everyone contained within, which are intertwined with a very healthy dose of ‘matter of fact’. One common thread seen throughout is that of building a series of mental models which can be used in conjunction with each other and have applicability across different decision-making areas. For investors, this is very much a foundational read that can be beneficial within your own investment process.

Side note: For those wondering about the peculiar name of this book? It comes from the yearly publishing of Benjamin Franklin called Poor Richard’s Almanack in the mid-1700s. Franklin’s almanac (which is a publishing similar to a calendar) was very popular at the time as it included his musings and proverbs which were seen as wise life lessons. Sounds a lot like Charlie Munger.

Link to Book

8. ‍‍Podcast Review | Why Most Stocks Will Lose You Money w/ Prof. Hendrik Bessembinder

Professor Hendrik Bessembinder is a financial markets professor from the Arizona State University who has published a series of research papers analysing data of both US and international stock markets. The study which he discusses on this podcast episode is principally associated with analysing performance data of the US market for the period 1926 to 2022. A few key findings from his research include:

• Due to the laws of compounding, positive skewness exists within markets, whereby a few outperforming companies drive the group average higher by more than overcompensating for the majority of companies which underperform.
• A study of 25,000 companies created ~US$35 trillion in net wealth. The top 4% of companies accounted for all of this wealth creation, hence 96% of companies did not contribute at all. The fact is that the majority of individual stocks do not outperform the compounded returns of treasuries over the long term.
• Companies with founder CEOs tend to outperform whilst even the best performing companies had experienced significant downturns.
• The technology sector was no more or less likely to be a sector producing superior outperformers vs any other particular sectors.

Based on the results of his research, Bessembinder believes that investing in a passive index fund akin to the venture capital investing approach where there will be only a few winners that offset the a significant number losers. The difference between them is that venture capital investors are more likely to understand this asymmetry prior to investing whereas passive equity index investors may not. Furthermore, the reweighting that occurs by passive index funds is effectively a form of diversification. Despite all the perceived negatives, stocks have consistently outperformed treasuries on the average over a long period of time.

For those looking to apply this research into their own investing journeys, what should we do? Focusing on companies delivering consistent growth, increasing their cash balances and focusing on fundamental analysis is Bessembinder's view. Furthermore, multiple expansion is likely to be a factor as for those companies which demonstrated strong outperformance over a long period of time had relatively high earnings multiples at the end of the decade(s) which was relevant to their period of outperformance.

Link to Podcast

‍9. ‍‍Book Review | Confessions of an Advertising Man by David Ogilvy

Confessions of an Advertising Man is an insightful deep dive into the world of advertising. Often referred to as the father of modern advertising, Ogilvy’s book is not only a masterclass in advertising, but also provides lessons on getting the best out of one’s employees and building a successful culture.

While the book was first published in 1963, the book is filled with timeless principles that still remain relevant today. His approach was very much driven by in depth research into human behaviours. But it’s his candid wit that shines through as he critiques everything from the industry and also other participants. Each chapter is well thought out and tackles everything from running an advertising agency to how to keep clients to how to build great campaigns.

For anyone looking to sharpen their advertising skills or polish up on sound management principles, this is worth a read. Four of our favourite quotes are below:

1. “The function of most advertising is not to persuade people to try your product, but to persuade them to use it more often than other brands in their repertoire.”

2. “After fourteen years of it, I have come to the conclusion that the top man has one principal responsibility; to provide an atmosphere in which creative mavericks can do useful work.”

3. “I admire people who work hard, who bite the bullet. I dislike passengers who don't pull their weight in the boat. It is more fun to be overworked than to be underworked. There is an economic factor built into hard work. The harder you work, the fewer employees we need, and the more profit we make.”

4. “Test everything – test your promise. Test your media. Test your headlines and your illustrations. Test the size of your advertisements. Test your frequency. Test your level of expenditure. Test your commercials. Never stop testing and your advertising will never stop improving.”

Link to Book

10. ‍‍Podcast Review | Turning $1m into $1b+: A Masterclass From The Indian Warren Buffett by My First Million Podcast

Whilst he may not be as well-known as some of the world's leading investors, in our opinion he certainly fits within that category. Mohnish Pabrai is the founder and portfolio manager of Pabrai Investments, a concentrated global value focused equity fund. Pabrai is an avid disciple of the Buffett & Munger investment approach, to the point where he has studied all of the investments including the mistakes they made in order to be able to use that as a lesson for avoiding the same mistakes himself. This has become a key principle of his personal investment checklist.

Pabrai started his professional life as an engineer before starting his own software company. He then turned his $1m nest egg into $13m before setting up an investment fund for others to join. Why he has attracted a strong following is his ability to share his wisdoms in a simplistic, easy to understand way. For example, his concept of ‘circling the wagons’ and thinking in the ‘rule of 72’.

During this podcast he identifies to be the #1 trait required to make a high-quality investor – people who have the personality of being content watching paint dry. He also became close personal friends with the late Charlie Munger and recounts some of his fond memories of their time spent together.

‍Link to Podcast