We’ve had some good discussions, internally and with clients, about a blog that I posted back in March titled Must-Reads on Investing. The list of books that I compiled covers a fairly broad spectrum of topics, ranging from tips on the basics of investing to gaining wisdom from Warren Buffett’s annual reports.

The list is by no means exhaustive, and I’m always interested in hearing what other investors are reading. To this point, I was reading a blog by Canadian Capitalist the other day titled Books Recommended by William Bernstein. Towards the bottom of the list, I noticed Winning the Loser’s Game by Charles Ellis. This is another great book, albeit a little dense, on investing. One of Ellis’ quotes (from a paper that he later wrote) rings particularly true with Steadyhand’s investment philosophy, and that of our managers. In fact, you can find it on CGOV’s website:

“Increasing the number of holdings dilutes our knowledge, disperses our research efforts, distracts our attention, and diminishes our determination to act – when really called for - decisively and with dispatch. If you work hard enough and think deeply enough to know all about a very few investments, that knowledge can enable you to make and sustain each of your major investments with confidence. The more you “diversify” by increasing the number of different investments you must understand, the more you risk increasing your not knowing as much about each investment as do your best competitor investors - particularly the most expert and thus the quickest to take preemptive action.”

It has been a number of years since I last read Ellis’ book. Bernstein’s list reminded me that I should dust it off and peruse it again.