Three Books Every Investor Should Read Now
A friend recently asked me how I was able to remain upbeat despite the constant threat of the coronavirus pandemic just outside my door. My response was simple and direct: “You have to assume that it will eventually pass and when it does you will be one of the survivors.”
Frankly, I don’t see any other constructive way of looking at it. If I’m not going to survive, I don’t want to spend my last few days on earth being sad and morose. If I do survive, I would have wasted a lot of time fretting about something that did not happen.
That’s the approach I take to managing all aspects of my life, including investing. Below, I’ll explain how this philosophy can be applied to the choices you make in the weeks and months to come.
That philosophy has been reinforced by my reading while cooped up in my house. While I am compelled to stay at home, I figure I might as well have something to show for it. Every evening, I turn off the television and read for a couple of hours.
Of the books I have read, there are three I recommend to anyone wishing to make sense of the current crisis. Each of them is worth reading on its own merits. Combined, they provide a holistic view of how individuals, governments, and societies can respond to tragedies. With the wisdom contained in these books, you can not only survive but thrive.
Know Thy Enemy
Almost every evening during his coronavirus task force news briefing, President Trump contradicts himself by saying that “the world has never seen anything like this before,” shortly before invoking the “Spanish flu” pandemic in 1918.
Not only has the world seen something like this before, but it has seen far worse. Back in 1918, the global death toll was considerably greater than what is expected this time. As many as 100 million people may have died of influenza from 1918 – 1920. If accurate, that works out to roughly 5% of the world’s population at the time.
There are approximately 7.6 billion people alive today. That means COVID-19 would have to kill 380 million people to achieve a similar death rate. That won’t happen, thanks in large part to the lessons learned 100 years ago. In The Great Influenza (2005), author John M. Barry meticulously explains the scientific journey taken to reign in the deadliest outbreak since the “Black Death” plague of the 14th century.
In describing COVID-19, President Trump often refers to it as the “invisible enemy” and himself as a “wartime president.” I agree with that analogy, especially after reading Erik Larson’s The Splendid and the Vile: A Saga of Churchill, Family, and Defiance During the Blitz (2020).
This book covers the early stages of World War 2, prior to America’s entry into the fray. After conquering France, Hitler tasked his air force with bombing London into oblivion so he could set his sights on Russia. He assumed that the citizens of England would weary of being locked up in their homes wondering if the next bomb might drop on them and insist that its leaders make peace with Germany.
If anyone other than Winston Churchill had been Prime Minister at the time, that assumption may have proven true. But Churchill possessed a combination of self-confidence (some might say arrogance), political savvy, and personal charisma that imbued him with a sense of destiny that never faltered throughout the crisis and ultimately led to victory.
Know the Score
Defeating an existential threat is only half the battle. The other half is what happens next. In Upheaval: Turning Points for Nations in Crisis (2019), author Jared Diamond examines several instances of how different societies responded to historical crises.
The author’s point is this: regardless of the cause of the crisis, the process of learning from it and making constructive change is the same. Diamond provides a list of 12 factors that define the outcome of a crisis for both individuals and nations (the greater the number of factors that are considered when overcoming a crisis, the greater the probability of a positive outcome).
It remains to be seen how the United States and the rest of the world change as a result of the current pandemic. Hopefully, we will be better prepared next time to respond quickly and effectively. If not, we should not be surprised if it happens again with equally damaging results.
My takeaway after finishing all three books is this: None of us have any control over how long it may be until the virus is fully contained. However, we do have control over how we deal with it and the choices we make until it has been eliminated.
One of those choices is how we manage our financial assets. Recently, I explained why younger investors should continue funding their 401k plans despite the stock market’s recent decline. Last week, my colleague John Persinos provided a list of steps you can take to quickly recover once the coronavirus pandemic has passed.
Also read: 10 Long-Term Plays to Quarantine Your Money
Of course, how you choose to deal with the current crisis is entirely up to you. If you aren’t confident making investment decisions while the global financial markets are gyrating wildly, you should consider letting someone else do that for you.
That’s why you should consider the investment advice of my renowned colleague, Dr. Stephen Leeb.
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