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Adrian Mastracci, fee-only portfolio manager at KCM Wealth Management in Vancouver, says, "Together these three books will give you a pretty good grounding in portfolio management." |
By Fiona Anderson
Vancouver Sun
Friday, December 01, 2006
Everyone over the age of 25 has probably read at least one book on investing, whether it's a get-rich-guide like Rich Dad, Poor Dad or investment lists like Ranga Chand's Best of the Best Mutual Funds. But with so many books to choose from -- chapters.indigo.ca lists more than 9,700 on investing -- how can an investor decide what's worth reading?
Three investment professionals, all with different specialities, told The Vancouver Sun what books they recommend.
If your bent leans toward venture capital, Jim Heppell, president and partner at Lions Capital Corp., recommends The Venture Capital Cycle by Paul Gompers and Josh Lerner. Lions Capital manages the BC Advantage Funds, which this year won the Deal of the Year Award for its $225,000 investment in Aspreva Pharmaceuticals Corp. that in three years turned into more than $5.2 million.
Venture capital -- investing in start-up or early-stage companies -- is a pretty esoteric industry and many people don't understand how the money is raised or how to determine what companies to invest in, Heppell said. So anyone interested in investing in venture capital projects or entrepreneurs hoping to raise funds should read the book, he said.
But Heppell warns it isn't an easy read.
"The trouble with venture capital is it's hard to make it fun. It's a pretty serious business," Heppell said. "So it's not something you are going to pick up as a novel that you are just going to read for pleasure. It's well written and entertaining but you're still reading it to understand the industry."
For a lighter read that still gives an understanding of the industry, Heppell suggests The Billion-Dollar Molecule: One Company's Quest for the Perfect Drug by Barry Werth.
The book tells the real-life story of a start-up biotech company, Vertex, as it develops an immunosuppressive drug and eventually becomes a publicly traded company. At the time it was published in 1994, one reviewer described it as more akin to a John Grisham thriller than a science tome.
For investors looking to match their investments with their social outlook, Eugene Ellmen, executive director of the Social Investment Organization, recommends Global Profit and Global Justice: Using Your Money to Change the World, written by Deb Abbey and published by New Society Publishers on B.C.'s Gabriola Island.
"It's a couple years old but it's a really good review of socially responsible investment in Canada," said Ellmen, who has also written a book on ethical investing.
"It also involves a deeper discussion about why philosophically it is important for investors to think about matching their values with their investments," Ellmen said.
Ellmen is currently reading The New Capitalists: How Citizen Investors Are Reshaping the Corporate Agenda, by Stephen Davis, Jon Lukomnik, and David Pitt-Watson.
The book's premise is that the structure of modern capitalism has shifted from large wealthy investors to institutional investors like mutual funds or pension plans that represent and are accountable to "citizen investors," the millions of ordinary investors that buy mutual funds or are members of a pension plan.
"Because of this [shift], these large investors now have concerns like the long-term sustainability of societies in a way that old wealthy individual investors never had," Ellmen said.
"It's a fascinating book," he added.
Adrian Mastracci, portfolio manager with KCM Wealth Management Inc., has three books he recommends to his clients, all on the topic of how to develop a long-term investment strategy: Winning the Loser's Game by Charles Ellis, The Four Pillars of Investing by William Bernstein and The Intelligent Investor by Benjamin Graham.
"Together these three books will give you a pretty good grounding in portfolio management," Mastracci said.
But if you only have time for one of them, Mastracci puts Ellis's book at the top of his list. The basic message is "figure out what you are going to do, keep the faith and do it," Mastracci said.
"That's what I preach to my clients," Mastracci said. "Slow and steady wins the race."
"Ellis isn't the only one who said this. But he's the one who said it very eloquently," Mastracci said.
RECOMMENDATION
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
This book, a collection of the talks and public commentary of Warren Buffett's lesser-known partner, "is a witty look at psychology, human nature and investments. ... Without a doubt reading Poor Charlie's Almanack has changed my perspective on how to pick an investment and stop losses before they happen."
Adam Gant, CEO, League Asset Corporation
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