Sunday, February 25, 2018

Book Review: Free Capital

“Free Capital” by Guy Thomas is a collection of biographical sketches of twelve individual investors who have made a living exclusively out of investing in the stock markets. The individuals have varying academic backgrounds and previous job profiles – usually unrelated to investing or fund management, and at some stage in their life have given up regular day jobs opting instead to focus exclusively on investing to make a living. All of them have exceptional track records and have built a fortune from modest beginnings.

The term “Free Capital” here refers to the corpus of savings the individuals have started with, essentially what is left over out of regular income such as salary after meeting day to day living expenses. Many of the individuals have chosen to remain anonymous in the book, with the author using dummy names instead.

Individuals who gave up day jobs to become full time investors

All of the investors have taken a different path to success. There are some who make broad macro calls such as on cyclical industries or commodity prices. Others use a bottom up approach, studying company fundamentals to exploit gaps between price and value. Some are day traders, investing for periods from just a few minutes to a few hours, while there are others who take upto 25 percent stakes in their target companies and put pressure on the managements to change course and create value. To each, his own. The book amply demonstrates that when it comes to investing, there is no One Way that is the Right Way to success. You have to choose what suits your style and temperament, and evolve over a period of time.

Despite these differences in investing styles, it is interesting to see some common patterns emerge from the profiles of these investors. There are similarities in personality traits and even personal backgrounds in many – though not all – cases.

This is not a typical investment book, though there surely are many nuggets of investing wisdom. The book does not seek to teach how to invest, or provide a roadmap for making successful investments.  The book narrates the personal stories of profiled individuals, as brought out from their own detailed interviews and the author’s external research on them. Free Capital is a small book that you can easily finish off in a few sittings.

If you are looking for an inspiration in your investing journey, this book will do the job.

No comments:

Post a Comment