value and opportunity

I honestly never heard of Richard Oldfield before but in the UK he seems to be a well-known investment manager. He used to run Mercury Asset Management and now has his own company, Oldfield Partners.

The book is part autobiography and part investment philosophy, containing the wisdom of his 40 year career in investments.

I couldn’t really detect a structure in the book, but it is generally well written and contains a lot of wisdom. I liked very much that he started with his biggest mistakes. A couple of his thoughts mirrored my own to a 100% such as the fact that “armchair investing” might have a lot of advantages. He calls it “traveling narrows the mind” and gives some very interesting examples for this view.

Interestingly, the book was released in 2007, just before the financial crisis hit. I guess with his cautious style he clearly survived it but it is also clear that he didn’t see it coming. In one of the chapters he is discussing that the issues in the US housing markets were not as big as they were made in the press and he was invested in GM which went bankrupt a year later or so.

On the other hand, almost everything he writes reflects deep insight into investing. There is good stuff on how to select asset managers as well if and when to fire them.

One of the most relevant quotes for me was the one where he states that people who are good at stockpicking are usually not good in FX forecasting,, i.e. fundamental stock analysis and “macro” don’t mix well. He writes about an overlay hedge which killed a large part of the performance of a portfolio. This is an observation I made too and where I am currently suffering because of my TRY bet. Note to myself: Revisit the TRY bond position.

Overall I think it is a very good book and I might read it again because it is packed with good stuff and I maybe didn’t get everything for the first time.

I would explicitly recommend it to those investors who want some insight into “family office” like investing, but it is good reading both for beginners and professionals. Just don’t expect a “how to get rich in 12 month” type of book.