Joachim Klement is a native German, London based investment professional who, among other things writes one of my favorite financial blogs named “KOI – Klement on Investing”.
Despite having a full time job and a high quality, frequent blog, he also managed to write a book. Being a German of course, he doesn’t promise to make one rich quickly but it tries to identify and provide solutions for very common mistakes that indeed almost all investor make.
Although Klement is a more Macro oriented investor, his advice is great also for stock pickers or any other investment styles. He emphasizes a lot of points that I share 100%. The mistakes that he concentrates are:
As every year a very special “Thank You” goes to all readers, especially those who actively contribute either by comments or mails. I need to keep on mentioning that the interaction with readers is really driving the motivation to continue the blog in this format.
In this post I will reflect mostly on writing the blog, highlights and lessons over the last 10 years plus my 10 all time favorite book reviews. There will be a 10 Year investment/performance review in the beginning of January 2021.
10 year stat
All in all, I managed to post ~1600 posts over these 10 years which created close to 4 mn visits. The drop of visits (and comments) in 2018 & 2019 was clearly the result of posting less due to a lack of time from my side.
As my long term readers know, I love books about failed companies and WeWork is clearly one of the most spectacular failures in the recent times.
The book focuses initially mostly on the founder Adam Neumann, who grew up in Israel and didn’t achieve much there before going to the US. There he started a first business trying to sell baby clothing which was not too successful. He then met his co-founder Miguel McKelvey in the elevator of the building where both were working. Co-founder Miguel was intrigued by the fact that Neumann used to walk around barefoot and talked to everyone.
“Lights out” is a recently published book that covers the downfall of General Electric, which was in 2000 the world’s most valuable company with a market cap north of 500 bn USD and a proud history going back to Thomas Edison.
To the outside, the company led by “Neutron Jack” Welch looked unstoppable. With its famous management systems (Six Sigma and others) the company became a huge conglomerate, spanning business from their traditional light bulb and appliances business to turbines, financial, insurance and even TV and Movie studios. GE was most famous for continuous growth and an uninterrupted streak of quarterly profit increases until Jeffrey Immelt took over in 2001.
This is actually the second autobiography of a founder with the surname Schwab that I review. After tire trader Les Schwab, this book is written by the founder and name giver Charles “Chuck” Schwab who founded the financial services company with the same name.
This is another book that I have been waiting for to read for some time. Jim Simons is maybe not a household name in investing, but his Renaissance Technology fund (Rentech) has clearly on of the best track record of any investment vehicle in recorded history. However, other than some other famous investors, Rentech was (and still is) so secretive that hardly anyone had a clue how he/they did it.
“Super Pumped”, written by NYT reporter Mike Isaac is a very recent book about Uber, the world’s first and biggest ride hailing company. The book covers Uber from the very beginning until the most recent events when founder Kalanick was forced out by investors and replaced by Expedia CEO Dara khosrowshahi.
The subtitel claims that the book explains” Venture Capital and How to get it”. It is written by Scott Kupor, “employee Nr. 1 ” of Andreesen Horrowitz (A16Z), one of the most famous newer VC firms in Silicon Valley (Sand Hill Road is a street in Silicon Valley where many famous VCs have their offices).
Merger Masters, written by Kate Welling and supported by Mario Gabelli is a book similar to Jack Schwagers “Market Wizards” series, portraying some famous investors.
In this case the focus is on investors who are active mostly in the Merger Arbitrage Business, Some guys are very well known like John Paulson, Paul Singer or guy Wyser-Pratte but from other guys, who keep a low profile, most invetsors might have never heard of.
Personally I wish this book would have been written long ago and that I head read it long ago. It really offeres a very comprehensive view into this relatively arcane world of arbitrage investing with some very suprising insights.
It is also clear that there is not ONE recipe to be successful as an Arb. For instance the question on when to sell when a deal breaks divides these guys into two groups: Some of them say the only way is to sell directly after the news whereas others say that you should never sell directly but wait for a better price. Other notable differences are levels of concentration, use of leverage and if hostile deals are part of the universe or not.
I was also surprised on the depth of fundamental analysis that most of these guys seem to be doing before entering into a deal, at least they claim to do so.
What makes the book really special and even better than the Market Wizard series is the fact that there is also space for the “other side”, CEOs who have fought the Arbs in hostile deals an ultimately won. Most interesting was the story about the take over attempt of Airgas by Air Products which is described in very good detail and how Airgas Managment ultimately won although the odds were highly against them.
The content is clearly US centric, however I think most of the mentioned rules etc. can be applied internationally.
Overall, the book is extremely well written and offers a unique deep insight into the M&A arbitrage world. There is a lot of content in the book and I think I have to read it at least a second time to digest all of it.
Overall I can recommend the book highly to any investor, because sooner or later one will be involved in such a situation. For “special situation” investors this book is a MUST. For me clearly one of the best investment books that I have ever read.