Yew Jin's Sometimes Blog

The 80/20 rule, or the Pareto principle if you want to sound academic, states approximately that for many events, 80% of the effects is made by 20% of the causes. One digression is that this explains why principal component analysis and related methods work well in practice.

I strive to learn enough (20% effort!) about finance to (1) know when I am out of my element, (2) be able to invest and not speculate, and (3) be confident about my choices. Some of my readings include:

Berkshire Hathaway Inc. shareholder letters can be found online, but this collection of Buffett's letters are arranged and themed. Buffett dispenses pearls of wisdom on excessive CEO pay, commentary on his philanthropic thinking, the excessively esoteric greek symbols of modern finance, and more.

Plain-speaking, simple to understand and direct, Warren Buffett extols the virtues of patience and deliberate study of businesses before investing. It takes a genius to cut the chase and explain things so succinctly.

I had my reservations about The Five Rules for Successful Stock Investing since it is marketed as being written by the Director of Equity Research for Morningstar. Firstly, the majority of active mutual funds underperform passive/index funds (see S&P report), so should I trust the processes of this book? Additionally, the potential conflict of interests (hey, buy whatever Morningstar recommends!) sounded alarm bells for me.

What I found really useful is this book provides a nice framework (including a Discounted cash flow model) to evaluate companies, and provides a basic overview of the various sectors and business concepts.

A simple guide to accounting concepts. Again, I do not strive to be an expert in accounting,  but this book provides enough information to provide context for me to understand annual reports and 10-Q filings.

"Those Who Forget History Are Doomed to Repeat It" - I personally find this book to be difficult to read as it was written in 1949. The book has been republished many times since, but the style of writing and the events it describes are alien to me. However, its timeless philosophy on value investing are worth discovering. I recommend reading this after reading the essays of Warren Buffett.

Read this to pump yourself up - it does not provide sufficient framework or model to become an investor on its own, but it serves (at least to me) as an inspirational guide to how retail investors can succeed in the stock market.