Money Masters of Our Time
Profiles of the great money managers and their differing methods.
Summary
John Train profiles investors he considers exceptional, updating and extending his earlier books The Money Masters and The New Money Masters. Each chapter covers one investor's background, method and characteristic holdings, based on interviews and on published records.
The subjects include Warren Buffett, George Soros, John Templeton, Benjamin Graham, Philip Fisher, Peter Lynch, T. Rowe Price, Michael Steinhardt, Ralph Wanger, Julian Robertson, Mark Lightbown, Paul Cabot, John Neff, Richard Rainwater and others. Train's method is to identify what each does that is distinctive rather than to extract a common formula, and the book's usefulness comes from the contrasts. Graham buys statistical cheapness and diversifies; Fisher buys quality and concentrates; Soros trades reflexive feedback between perception and fundamentals; Templeton searches internationally for the cheapest markets; Steinhardt takes contrary macro positions with high turnover.
Train writes as an experienced money manager and the profiles are informed, but the book has the survivorship problem of every collection of this kind: it profiles people whose methods worked over the period selected. It also stops in 2000, so the subsequent records of several subjects are missing, including Robertson's fund closure in that year. The chapters on Graham, Fisher and Price are the most useful as statements of investment philosophy, and Train's summaries of each method are unusually precise.
Key takeaways 7
- Successful investors use incompatible methods, which shows there is no single correct approach rather than that most of them are lucky.
- Graham's method requires statistical cheapness and wide diversification, while Fisher's requires business quality and concentration, and the two cannot be combined.
- Soros trades the feedback between market perceptions and the fundamentals those perceptions alter, which is a different activity from valuation.
- Templeton's edge came from searching markets other investors did not cover rather than from analysing securities better.
- Every subject describes an explicit selling discipline, and most describe it as the harder half of the process.
- Train argues that each investor's method fits their temperament, and that copying a method without the temperament fails.
- Concentration and diversification are both defensible, and the choice follows from how much can be known about a single position.
Who should read it
Investors surveying different approaches who want precise summaries of what distinguishes the major schools rather than a synthesis of them.
About John Train
American investment adviser who founded Train, Smith Counsel and wrote profiles of the era's leading money managers.
The Money Masters profiled Buffett, Graham, Templeton and Price while several were still working, setting out each manager's method in a few pages and establishing the format every later investor-profile book uses. Famous Financial Fiascos covers the reverse case, running through manias and frauds from the tulip trade onward.
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