Warren Buffett’s formula for becoming smarter in life and investing is simple – “Read. A lot.”
“I just sit in my office and read all day,” he is often quoted to have said this.
I have seen a lot of investors, including myself, take this advice seriously. Though I don’t read all day, reading books – and a lot of them – seems a great way to build my learning.
My bond with books has grown so stronger over the years that now, just holding a book in my hands makes me feels smarter. 🙂
I don’t have a name for this bias, but our mind plays this funny trick with us often. Just after we buy a book, or pay for an education, we “feel” we have learned what lies inside it.
That is probably the reason most people I meet in my investing workshops want to get my recommendation for the best investing books to buy. We all feel smarter just by owning these books.
But the question is – Can you really become a smarter investor just by reading all these books, blogs, and other resources out there?
Is there something else you need more to become educated and smarter as an investor?
J. Krishnamurti, one of the greatest teachers India has produced, writes this in his landmark book, Education and the Significance of Life …
The ignorant man is not the unlearned, but he who does not know himself, and the learned man is stupid when he relies on books, on knowledge and on authority to give him understanding.
Understanding comes only through self-knowledge, which is awareness of one’s total psychological process.
Thus education, in the true sense, is the understanding of oneself, for it is within each one of us that the whole of existence is gathered. What we now call education is a matter of accumulating information and knowledge from books, which anyone can do who can read. Such education offers a subtle form of escape from ourselves and, like all escapes, it inevitably creates increasing misery.
As it comes out clear from Krishnamurti’s thoughts, and this is also what I have experienced myself, self-awareness or ‘knowledge about self’ is the best education one can ever get.
Mere gathering of facts and bookish knowledge can only lead us to chaos. That chaos is what causes most people to fail in their investing lives despite all the books they read and courses they attend.
While it is obviously necessary to read the wisdom and ideas contained in all those great investment books, they will only help us with the “techniques”.
And without understanding ourselves, those techniques would only lead us to frustration (maybe, an ‘intelligent’ frustration) and ultimately failure.
As Krishnamurti writes…
Self-knowledge is not a thing to be bought in books, nor is it the outcome of a long painful practice and discipline; but it is awareness, from moment to moment.
I believe the right kind of investing education comes with the transformation of ourselves, which entirely depends on our awareness about ourselves – our behaviour, risk-taking capacities, and habits.
When we are aware of ourselves, we are in a better position to behave well. And that can help us save ourselves from self-destruction that most other investors lead them to.