Human capital is the accumulation of skills, knowledge, and experiences that contribute to an individual's overall worth and potential for success. Knowledge is power, and this is especially true when it comes to building a strong foundation for our future. In a similar way to the art of investing, reading is an endless, intellectual labor of discovery. A constant self-recognition of the lack of knowledge, counterbalanced by the hunger to learn more. In the same way as any type of capital, the formation of human capital compounds over time. Similarly, it requires time, patience, and perseverance.
I would not want to miss this opportunity to wish you all a Merry Christmas. I hope you are enjoying these days with your loved ones.
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Reading is a key activity to increase human capital. It is not the only one, and perhaps it is not fundamental for many people, but as time goes by, I realize that it is becoming more and more so. Nevertheless, we continually encounter criticism from quite a few people about those who read a large number of books per year. The criticism is that such reading must necessarily be rushed and unreflective, advocating a much smaller and more reflective quantity. As in almost everything, there is no single methodology applicable to everyone and everyone has to discover what works best for them. Those who read many books can acquire a wide range of knowledge and perspectives that can be beneficial to their personal and professional development. The discussion is quite similar to the eternal battle between generalists and specialists. In either case, finding the right balance between quantity and depth of reading can be key to maximizing the benefits of reading and, therefore, increasing one's human capital.
My goal at the beginning of the year was to read 24 books. I considered it quite challenging. However, my count list ended up with 40. The number doesn't make me particularly proud, the learning and the journey do. Same goal to read 2 books per month as a way to “force” me to keep compounding.
Below you can find a brief review of the 10 books I read these last 3 months of the year. You can find similar reviews for the previous 9 months in these links: Books review from H1, Books review from Q3.
At the bottom of the post, a list of my 40 books of 2022 with my ratings. Hope you find something for your library.
Investing
Dear Chairman (46%)
Through a series of case studies, Gramm discusses the strategies and tactics used by shareholder activists to influence corporate decision-making and hold management accountable to shareholders. However, and even if I thought it was going to be super interesting, from each chapter/case of 20 pages, only a couple of them were actually about the case itself. It seem to me it was an excuse to talk about other topics. A bit disappointed.
Nothing but net (65%)
Another quite disappointing book this quarter. 10 basic, basic lessons garnished with some stories around some of the last decade tech companies. I should have expected when I read the praises from Cathie Wood, Jim Cramer, or Scott Galloway. Totally my fault.
The big short (82%)
I am surprised by the fidelity of the movie adaptation. They definitely did a great job. Nevertheless, the book is super interesting to understand the insides of Wall Street between 2005 and 2008, and if you want to expand better the circumstances around each of the different actors in the story (Michael Burry, Jared Vennett, Mark Baum and FrontPoint Partners, etc). I missed a critique of the real reasons for the madness we lived, but maybe it was out of scope.
Economy
An Austrian Perspective on the History of Economic Thought (96%)
If I have been unlucky with investing books this quarter, the opposite has happened with economics books. This one by Rothbard is an absolute masterpiece. Throughout its more than 1000 pages, it unravels the economic thought since ancient Greece from an Austrian perspective and in a pleasant and easy-to-read way. I have not finished it yet (I am alternating it with other readings), but it is a wonderful read to understand the ups and downs of economic thinking. How economic principles understood centuries ago disappear from contemporary thinking in a sort of cycle throughout history and how we fall back into the same mistakes over and over again. Simply a must.
The price of time: the real story of interest (94%)
In the beginning was the loan, and the loan carried interest. Interest is often described as the "price of money" but it is better called the "price of time". Time is scarce, the time has value, and interest is the time value of money.
Absolutely fantastic. However, I dare to post a small critique: it is a pity that Chancellor, in his magnificent analysis of interest along history, forgot to mention the scholastics of the Salamanca School. In a world where interest was usury and considered immoral, the School of Salamanca defended its legitimacy under 3 arguments:
The payment could be considered a risk premium for the possibility of losing the borrowed money.
It was a fair way of compensating for the opportunity cost of lending the money.
Money was nothing more than a commodity and, consequently, a price could be established
The Scholastic movement that happened in Spain during the XVI century is quite often forgotten. What these monks understood was a leap forward in the economic thought that set the basis for other schools hundreds of years later.
One of the best books I have read this year. Another absolutely must.
Others
Alchemy: the magic of original thinking in a world of mind-numbing conformity (85%)
A book with hundreds of 4-5 page chapters exploring the importance of creativity and originality in a world that often values conformity. It looks at the ways in which individuals can break free from the constraints of society and tap into their own unique perspectives and ideas. In some ways, it reminds me of Antifragile in terms of how disruptive many of the insights are. Likewise, read 4 pages and think.
Chip war: the fight for the world’s most critical technology (78%)
The history of the discovery and development of semiconductors from the main key players. The book is interesting, but there is something in the structure and how each of the chapters is written that has not completely convinced me. Anyway, important reading if you want to understand the history of one of today's key geopolitical industries.
Energy: a human history (70%)
A book that explores the role of energy in shaping human civilization and the impact it has had on our world. It traces the history of energy use from ancient times to the present day, examining the various forms of energy that have been harnessed and the technologies that have been developed to harness them. Informative.
When McKinsey comes to town (15%)
The worst book of my year by far. After 70 pages, I had enough. Not what I expected. Never considered myself a defender of consulting firms, but this is a woke manifesto against McKinsey, implicitly blaming them for some deaths that occurred after some operations and cost-cutting projects. I would have expected more of a 3 times Pulitzer winner. You can save your bucks.
Fiction
The Fountainhead (88%)
An absolute classic that I'm ashamed I didn't read when I was 16. A celebration of individualism and the pursuit of excellence, advocating for the importance of integrity and self-reliance in the face of society's expectations and demands. Atlas Shrugged is already in the queue for next year.
All in all, a great year with many learnings and many great books.
The rating for 2022 reads:
The new map: energy, climate, and the clash of nations (97%)
An Austrian Perspective on the History of Economic Thought (96%)
Quality Investing (95%)
Buffett: the making of an American capitalist (95%)
The price of time: the real story of interest (94%)
Red Notice (93%)
Capital returns (92%)
Lessons from the Titans (90%)
The Fountainhead (88%)
Austrian school for investors (86%)
The rebel capital allocator (86%)
Alchemy: the magic of original thinking in a world of mind-numbing conformity (85%)
Frédéric Bastiat: The Law, The State and Other Political Writings (85%)
The big short (82%)
China’s leaders: from Mao to now (81%)
El despertar de China (80%)
King of capital (79%)
Richer, wiser, happier (78%)
Chip war: the fight for the world’s most critical technology (78%)
The pyramid principle: logic in writing and thinking (75%)
Influence Empire: Inside the Story of Tencent and China’s Tech Ambition (75%)
Talking to humans: success starts with understanding the customers (75%)
China’s disruptors: how Alibaba, Xiaomi, Tencent, and other companies are changing the rules of business (73%)
$100M offers (73%)
Scaling up: how a few companies make it…and why the rest don’t (72%)
Cable Cowboy: John Malone and the rise of the modern cable business (72%)
Energy: a human history (70%)
Churchill Paul Johnson 65%
Nothing but net (65%)
How not to die (58%)
The Zürich axioms (55%)
Ray Dalio: a biography of the legendary investor (55%)
The warren Buffett portfolio (55%)
Atomic habits (55%)
Thinking in Bets (53%)
Dear Chairman (46%)
Range (45%)
Tim Cook: the genius who took Apple to the next level (43%)
Free Capital (23%)
When McKinsey comes to town (15%)
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#39 Compounding human capital
Always full of value.
Thanks for sharing, Javier!
Very impressive list here, and lots of good recommendations to add for 2023. Thanks and happy new year