Why is it necessary to read books for investing?

To know all the excellent investors, there isn't one who doesn't read (that's probably what it means). Recently, I've been pondering why it's necessary to read if you do well in investing?

1. The essence of investment is the realization of knowledge.

Investment is essentially the realization of cognition. To excel in investing, one must possess a level of understanding that surpasses the average person, being able to think of what others cannot and achieve what others cannot.

Most investors are very smart and hardworking. To surpass these individuals, one must gain a differentiated understanding that is above the ordinary. High cognitive investment is monetization, while low cognitive investment is a contribution.

The difference in perception lies in being greedy when others are fearful and being fearful when others are greedy.

Differentiated cognition lies in the ability to foresee the trends of industry evolution.

The differentiated cognition lies in the ability to accurately identify great companies with deep moats.

Differentiated cognition lies in the ability to avoid most companies that should be avoided;

Differentiated cognition lies in truly being a friend of time and accompanying for the long term.

2. Sources of Cognitive Enhancement

The sources of cognition mainly include two parts: reflection on one's own life experiences; summarizing others' life experiences and thoughts.

To have a differentiated understanding that is above the average person, one must excel in one of the two aspects mentioned above: either having rare life experiences and continuously reflecting on them, or being able to systematically learn and summarize the thoughts of other outstanding individuals.

Reflecting on our own life experiences, most of us are ordinary people, studying, working hard in our careers, raising children, supporting families, and looking forward to retirement. Life experiences are not scarce; it's difficult to derive insights from our own life experiences. Trying to forcefully reflect without experiences may lead to depression.

In the vast sea of people, there are you and me. Even in the enchanting and beautiful, only a small portion of people are favored by heaven.

There are very few entrepreneurs, outstanding politicians, and great thinkers who are willing to experiment and produce results with scarcity.

This type of minority can distill insights that exceed those of the average person through their own summarization and reflection, and when they turn to investing, they can cut through with ease and precision.

Typical representatives are Duan Yongping of BBK Electronics and Yu Yong of Hongshang Group. These top Chinese entrepreneurs, Duan Yongping and Yu Yong, have successfully managed excellent companies and have a profound understanding of business. With their unique life experiences, along with their habit of summarizing and reflecting, transitioning to investment is bound to be a dimensional reduction strike, allowing them to thrive.

Duan Yongping earned over 100 billion in cash through NetEase and Apple, while Yu Yong earned over 100 billion in cash through CATL and SMIC.

Most of us do not have the rare life experiences of outstanding entrepreneurs. We need to enhance our understanding and learn more from the thoughts of others, especially those with rare life experiences.

There are many ways to learn from others, including chatting face-to-face with experts, attending classes at school, listening to speeches, and reading books.

Face-to-face conversations are very effective. On one hand, in-person communication allows you to genuinely feel the thoughts of the other person that cannot be expressed in words; what cannot be expressed in words is the most valuable.

Additionally, some ideas are not suitable for written presentation and can be gained through face-to-face conversations. However, not everyone has the opportunity to communicate face-to-face with outstanding individuals; the vast majority of people will never meet Buffett, Munger, and others in their lifetime.

Moreover, many great people have passed away, separated by two worlds, how can we have a face-to-face conversation?

Therefore, learning and improvement through this method have significant limitations in terms of time and space. Attending classes at school also has its own temporal and spatial limitations. Not to mention the high tuition fees for various courses like EMBA, we cannot attend classes and study every year or every day.

But reading is fair to everyone and transcends time and space; you can read every day and read anywhere.

Throughout history, how many wise and dedicated individuals have summarized their thoughts in writing.

Anyone can take the time to have a one-on-one conversation with the author. When you open a book and immerse yourself in it, the whole world belongs to you and the author. You can learn from the best without worrying about tuition fees or being abandoned due to distance.

3. Reading is the shortcut for ordinary people to enhance their cognition.

Both you and I are merely mortals. Most people who choose to invest do not have rare life experiences like Duan Yongping or Yu Yong, making it difficult for them to gain insights that surpass the ordinary from their own life reflections.

And learning from others, for the average person, the most effective and timeless method is to read books.

Buffett spends several hours each day reading and studying. Is it because he knows that he doesn't have the rare life experiences in business like Huang Renxun or Musk, and can only grow through reading and learning?

Read different kinds of excellent books, learn from the thoughts of various outstanding authors, draw on the strengths of many, and elevate your cognition, so as not to be harvested in investments.

Is reading just about reading books on economics and investment?

This is far from enough. Investing is not a mathematical problem; it is not just simple arithmetic calculations, but a comprehensive intersection of sociology, psychology, economics, and other fields, each of which is very important.

Every trade in investment is made by a person, and each individual's decisions and judgments have uniqueness, marked by their own limitations, closely related to their growth environment, knowledge structure, etc. Moreover, each person's decisions are not independent; they are influenced by the external environment and others.

A good investor not only needs to assess the value of a business and predict industry changes, but also must have a deep understanding of human nature and social psychology, understanding the emotions of competitors, the good and evil of human nature, and the greed and panic of the public.

Of course, excellent investors must know themselves, firmly trust their own judgment, and not be disturbed by noise.

Understanding others and self-awareness is endless. Why invest, what kind of life do you want to live, how can you achieve happiness? All these questions cannot be answered by investment books. Therefore, one must read philosophy.

Experience the joy of metaphysical thinking from "The Story of Philosophy"; one must read literature,

Understand the warmth and coldness of social evolution from "The Long Day Will End"; it is essential to read history to appreciate the grandeur of past literati from "Southward and Northward"; it is necessary to read politics to understand the underlying forces behind the rise and fall of nations from "Why Nations Fail"; it is essential to read biographical experiences to learn from others' wisdom through "30 Lessons About Life" as a mirror to clarify gains and losses; it is crucial to read economics to learn about the ebb and flow of economic cycles from Yale's "A Brief History of Economics" so as not to be submerged by the tide; it is important to read investment to learn the thoughts and insights of great investors from "The Investment Path of Growth Stocks."

Books vary in quality, and our time is also limited. More important than reading is selecting the good books worth reading. Just as in investing, where you can only invest in a small number of good companies, in reading, you can only read a portion of good books.

Books that seek to attract attention are a waste of life to spend time on. Only those that have truly withstood the test of time and embody the author's hard work are worth immersing ourselves in. I believe that good books come from two sources: books recommended by readers we trust; and books recommended by the authors of good books within their own works.

Reading good books not only provides us with knowledge in history, literature, economics, and other areas, but more importantly, it continuously exercises and cultivates our thinking ability, which also has a good compounding effect on its development.

Good books can stimulate our brains to think and summarize continuously, training our logical ability and abstract thinking skills. The enhancement of thinking ability allows us to think more deeply in investment considerations and to take multiple aspects into account. This is also the source of why ordinary people among the masses have higher cognition than others, and it serves as a guarantee that investment is not about contribution but about realization.

4. The unity of man and book, investing in the intangible

The most fundamental aspect of investing is being a good person. Reading is not only the cornerstone for ordinary people to make good investments but also the source for discovering and understanding oneself.

There are ten thousand ways to invest, and ten thousand ways to live as a person. Investment can involve fierce competition, quantitative harvesting, or patiently accompanying excellent companies in their growth; being a person can involve deceit and trickery, having a sense of fairness, or striving to improve oneself while benefiting the world. The choice of investment style and the kind of person one wants to be can both be answered through continuous reading to understand the world and oneself.

In books, there are golden houses; in books, there are beauties like jade. A good book can certainly accompany us in finding the investment ideas that suit us, the life principles that resonate with our inner desires, and the passionate soul that leads us to freedom. There is no need to envy others, no need to compare ourselves to others, no need to cling to the past, no need to be anxious about the future; we only need to gaze at the starry sky and experience the present.

Investment experts can be like Thales of ancient Greece, whose main profession was philosophy, while also trading in olive oil presses; or they can be like Duan Yongping, whose main profession is playing basketball, while also trading in NetEase and Apple.

Masters are silent and formless, while ordinary people who want to get closer to masters can best shortcut by reading books. Even if one cannot roam the world with a sword, they can still travel far with books. Being one with the books and investing in the formless, here silence speaks louder than words.

5. Reading List

Compared to all the teachers, I am an illiterate and a fraud, with a huge gap in both the quantity and quality of my reading. Fortunately, I have never given up on myself.

Here are some recommended books that friends have suggested to me in recent years.

In the future, I will continue to read good books to nourish that soul that longs for freedom.

(1) Philosophy, Literature, Sociology

1、, by Will Durant, the author's magnum opus is which has always been unavailable, with beautiful prose, wise philosophical thoughts, and humorous language.

2. , by Bertrand Russell, a master of Western philosophy.

3, , author Alain De Botton, contemporary prodigy

4, , author Germaine Greer

5. , by Kazuo Ishiguro, a Nobel Prize-winning author of Japanese descent.

6、 Feng Youlan introduces Chinese philosophy to foreigners.

7、 Lin Yutang introduces Su Dongpo abroad

8、 The school of Life

9、 Terry Eagleton

10, author Morgan Housel, who is also the author of , is an easy-to-understand good book.

11、, author Shane Parrish

12, , by Michael J Sandel, renowned professor at Harvard University

13. , by Michael J Sandel

14、，作者Ellen J Langer

15. , by Lin Yutang, is a book written in English that introduces the Chinese people.

16, by Daniel Levitin

17, , author Stephen R. Covey

18、 by Daron Acemoglu, James Robinson

19、, author Samuel P Huntington

20, , by Kevin Kelly.

21, , author Jim Murphy

22, , author Bertrand Russell

23、 by Saul Perlmutter, John Campbell, and Robert MacCoun

24、, author Kevin Kelly

25, "Lectures on the History of Western Philosophy" Zhao Lin

26, "Guns, Germs, and Steel" by Jared Diamond

27, "Tao Te Ching" translated and annotated by Zhang Jing and Zhang Songhui

28, "Understanding Human Nature" by Alfred Adler

29. "The World of Yesterday" by Stefan Zweig

30, "Siddhartha" by Hermann Hesse

31, "Sapiens: A Brief History of Humankind" by Yuval Noah Harari

32, "On Grand Strategy" by John Lewis Gaddis

33, "The Great Demographic Reversal" by Charles Goodhart and Manoj Pradhan

34. "The Youth with Fresh Clothes and Angry Horse" Youth with Angry Horse

35, "Lychee in Chang'an" by Ma Boyong

36, "Philadelphia Story" Yi Zhongtian

37, "Peak: Secrets from the New Science of Expertise" by Anders Ericsson

38, "Reading Ruined Me" by Wang Qiang

39, "Home Field" Xia Peng

(2) Economic Investment Category

1. , by Niall Kishtainy, an accessible and easy-to-understand history of economics.

2,, author Bill Perkins

3、< Your money or your life >, author Vicki Robin

4、, author Howard Marks

5、，作者Tom Peters & Robert H. Waterman JR

6、，作者Terry Smith

7、, author Felix Oberholzer-Gee

8、, author Ray Dalio

9, , author Eric Jorgenson

10, , Author Jim Collins

11. , the author is also Jim Collins

12,, author Jeffrey D. Sachs.

13、, author Mark H Haefele

14, , by Morgan Housel

15. "The Great Game" by John Gordon

16, "Forge" Roland

17, "Big Money, Little Thoughts" by Joel Tillinghast

18, "The Next Big Bubble" by Harry S. Dent

19, "Letters to Shareholders" by Warren Buffett

20, "Climate Economy and the Future of Humanity" Bill Gates

21. "My Experience and Lessons" by Stephen A. Schwarzman

22, "The Lost Twenty Years" by Nobuo Ikeda

23, "Being Involved" by Lan Xiaohuan

24, "China's Choice" by Ma Kaishuo

25. "Civilization, Modernization, Value Investment and China" by Li Lu

26. "The Wave Cycle Theory" by Zhou Jintao

27, "A Century of Wall Street Investment Banking" by Charles R. Geisst

28, "The Simplest Thing in Investment" by Qiu Guolu

29, "The King of Capital" by David Carey

30, "A Random Walk Down Wall Street" by Burton G. Malkiel

31. "Beating the Street" by Peter Lynch

32, "Chip War" by Chris Miller

33, "A Brief History of Semiconductors" by Wang Qi

34, "Value" by Zhang Lei

35, "Fundamentals of Lithium Battery Science" by Li Hong

36, "The Great Power Photovoltaics" by Liu Jiaqi

37, "The Dao of Investment Q&A with Duan Yongping" Munger Academy

38, "The Invisible Path - 49 Investment Quotes from Duan Yongping" Liu Ruoyu

39, "Dare to be the Last in the World - The Biography of Duan Yongping" by Wang Guijuan

40, "Xiaomi Entrepreneurial Thoughts" by Lei Jun, organized by Xu Jieyun

41, "Because of Uniqueness" Li Xiang

42, "A Dream in Ten Years" by Qingze

(3) Historical Biography

1、, Author Eva Dou

2,, author Robert Iger

3、<30 lessons for living> Author Karl Pillemer

4、 Author Will Durant

5,, author William Green

6,, author Tae Kim

7、，author Charles D Ellis

8,, author Joel Creenblatt

9. "A Global History" by Stathis N. Kalyvas

10. "Southbound and Northbound" by Yue Nan

11. "A Minimalist History of China" by Albert Craig

12. "Sapiens: A Brief History of Humankind" by Yuval Noah Harari

13. "Sapiens: A Brief History of Humankind" by Yuval Noah Harari

14, "Sapiens: A Brief History of Humankind" by Yuval Noah Harari

15, "Civilization History" by Fernand Braudel

16. "The Rise and Fall of the Great Powers" by Paul Kennedy

17, "The Political Gains and Losses of Chinese Dynasties" by Qian Mu

18. "Those Things About the Ming Dynasty" by Dang Nian Ming Yue

19. "Forty Self-Description of Hu Shi" by Hu Shi

20, "Diplomacy" by Henry Kissinger

21. "Leaders" Nixon

22, "Gateway to Europe" Pu Luo Ji

23, "Beijing Chronicle" by Qiu Huadong

24, "Out of the Gobi" by Dan Weijian